Microsoft and Apple Facing Off Over Office for iOS Subscription Revenues, Not SkyDrive

[CWallace]

Honestly, who wants to pay another subscription for something we could pay one time on?

You haven't checked out the pricing for Office 2013 have you? They've made the subscription for Office 365 over outright Office 2013 purchase very attractive.

Exactly.

The cost of upgrading the Office Suite each generation is very expensive and more and more companies and users are sticking with older versions.

By moving to a subscription model, the monthly cost is lower even if the total cost of the service over the two years might be higher than just upgrading each generation. So budgeting is easier.

Office 365 also offers ongoing technical support as part of the subscription price, whereas with standalone Office it's limited time only (unless you purchase a separate support contract). So for smaller businesses, this is a benefit.

 

[Liquorpuki]

Say that again...

Image
It would seem Microsoft needs Apple platform more than Apple needs Microsofts Office products on IOS.

That graph says nothing except Apple's net income > MS's net income. What is your point?

Find a graph that shows how much of Apple's net income comes from hardware sales and how much of MS's net income is comes software sales. Then understand that hardware and software are complements and read about how it's in Apple's best interest to commoditize its complements if it wants to sell hardware. Why do you think the app store is flooded with cheap junk?

 

[TennisandMusic]

I may be in the minority here, but as a result of MS Office lacking on iOS, my personal AND business software has shifted to Pages, Numbers, and Keynote (and now I use them on my Macs). I've held up just fine.

The reality is...MS is lacking more in the tablet/mobile space than Apple is in the enterprise/personal document space. MS has more to lose here than Apple.

Just want to say this is a load of baloney. Which would hurt more to the world, the iPad disappearing or Microsoft's Office suite. Anyone who thinks it's the iPad, lives in a secluded world.

If you think Apple is anywhere close to Office in the enterprise, then you don't really work in the "enterprise". Personal business use in no way reflects what's going on in large, high-level organizations.

 

[billyjp]

M$FT please focus on the product

Hello, Redmond.

Welcome to The Race To The Bottom.

Isn't it ironic that the same type of "Windows Tax" that you forced on PC retailers is now coming back around to bite you on the butt in the form of the "Apple Tax" on iOS developers?

OK, let's think through your strategy:
30% is a percentage. So, the product needs to pull in 43% more in gross sales to zero out the commission lost to AAPL.

The way you do this is either:

A) Price your product 43% higher. This will zero out the 30% commission you lose to AAPL. For a long time Office has been bloatware. Why not make the iOS version bloated-price-ware?

B) Focus on making a frickin' awesome product, so that users actually want to buy it, AAPL wants to promote it* and you can sell a boatload of copies.

In case you haven't realized yet...selling Office to BYOD iPad users is going to be very different from forcing "license renewal" compliance through CIOs and enterprise IT.

Heck you might actually sell greater than 43% more copies by making a product users want to buy, rather than need to buy.

And, by the way...Office ain't going anywhere on iOS without Apple's help. So you better buckle up and become a better partner.

Finally, sorry about the $99 iOS Developer program fee. We all have to pay that, too. Rules are rules.

 

[sinsin07]

That graph says nothing except Apple's net income > MS's net income. What is your point?

Find a graph that shows how much of Apple's net income comes from hardware sales and how much of MS's net income is comes software sales. Then understand that hardware and software are complements and read about how it's in Apple's best interest to commoditize its complements if it wants to sell hardware. Why do you think the app store is flooded with cheap junk?

You read into it what you want to.

All app stores are flooded with cheap junk. What's your point?

What point will it show providing a graph of Apple hardware sales vs MS Software sales?

Microsoft sees the most profitable mobile platform on the planet and wants in, else why not just stick with their own mobile platform and screw IOS. Not a question.

 

[bumblebritches5]

My opinion on the "Nobody needs Office" is that MS should redo their code, not rewrite, but massively optimize and remove old **** that nobody needs anymore. We don't really do much printing anymore, but I think we should leave that stuff there, BUT we should focus the office apps on e-reading. Idk, I'm just a big fan of optimizing the **** out of stuff. :/

 

[viacavour]

Exactly.

The cost of upgrading the Office Suite each generation is very expensive and more and more companies and users are sticking with older versions.

By moving to a subscription model, the monthly cost is lower even if the total cost of the service over the two years might be higher than just upgrading each generation. So budgeting is easier.

Office 365 also offers ongoing technical support as part of the subscription price, whereas with standalone Office it's limited time only (unless you purchase a separate support contract). So for smaller businesses, this is a benefit.

That's what they want to sell the users on. Here's my speculation, after observing their past tactics.

In reality, they will adjust the price of existing licenses to migrate users to 365 to curb piracy. They will also maximize their profit by increasing virtual hosting costs, so only they can run Office hosting service profitably.

Once or before everyone is on their 365 program, they will create another app economy like salesforce.com. Then they will turn around to ask Apple, Samsung and Google to pay up to access their Office Suite network.

User benefits ? It's still the same old Word and Excel that people use. The Asians are going to pirate and use their existing copies till the end of the world, which may be Dec 21 this year.

 

[kyjaotkb]

I'm sure this is a PR stunt by AAPL & MSFT to let everyone believe that MSFT is indeed paying the 30% revenue share to Apple. But let's be honest, you don't become the biggest content provider in the world by letting big music Labels and Hollywood Studios pay the same 30% you let small developers and independent artists pay. Of course Microsoft will obtain a discount... But the official word will be they won't, so smaller developers won't complain of the inequity of the deal.

 

[sjo]

If MS Office on a mobile device turns out to be a killer application (especially for businesses ) and gains traction for mobile windows then its in microsoft's favour.

If business adopts windows mobile for whatever reason you can be pretty sure consumers will follow.

Sure, the uptake isn't great at the moment, but that can change in a short space of time... given the right strategy.

MSFT has been trying to do that in the mobile device space for about 15 years now. It's just not gonna work, their own divisions are facing the fact now, and realizing that they can't drag the whole company down chasing a pipe dream. That's the whole point. If MSFT believed in the strategy you outlined, they wouldn't even try to bring the Office 365 to idevices. It's getting embarrassing.

 

[AndyAtTheCroft]

Back before Lion I had Office for pre-Intel Mac. After I got iWork (as it was then) I found myself using Office less and less. After Lion went Intel-only I scrubbed Office from my hard drive and haven't missed it for a microsecond. On the other hand I do have to use Word at work and find it more painful than root-canal treatment.
Office's ubiquity is what keeps it going. If the illusion was dispelled that you *have* to have Word or PowerPoint or Excel then people would look at cheaper, less bloated, more intuitive alternatives that more closely suit their needs. Microsoft know this - that's why they want to be on every platform. I fail to see why Apple should break their own rules to help them maintain the illusion that Office is a "must have" product

 

[Popeye206]

I'll start by saying, I've used MS Word since 1986 and Excel since about 1991... of course, for the Mac.

Office has been a money maker for MS for a long time. A standard for many companies. But, this and Apple aside, MS seems to be under fire from many directions and Office is not immune to the fire. There's so many good lower cost (and no cost) alternatives to Office now it will be interesting to see how long MS can keep this going.

As for this issue, I don't think Apple should bend the rules for MS... they should treat all developers the same or it's not fair to the small guys.

 

[Liquorpuki]

You read into it what you want to.

All app stores are flooded with cheap junk. What's your point?

What point will it show providing a graph of Apple hardware sales vs MS Software sales?

Because it shows they're in different markets - one is in hardware, and one is in software. Those markets are complements - if you buy one you have to buy the other. It benefits Apple to carry Office because it will fuel iOS HW sales as much as it's in MS's benefit to spread Office around on multiple platforms. Only difference is MS gets its profit from SW so that 30% cut means more to it because it goes directly to its bottom line. Whereas Apple is always willing to take a loss on software if it leads to hardware sales.

Once they're done screwing with each other, it's in Apple's best interests to get Office on iOS no matter what. That 30% is trivial compared to the iPad revenue it would create

 

[sinsin07]

Back before Lion I had Office for pre-Intel Mac. After I got iWork (as it was then) I found myself using Office less and less. After Lion went Intel-only I scrubbed Office from my hard drive and haven't missed it for a microsecond. On the other hand I do have to use Word at work and find it more painful than root-canal treatment.
Office's ubiquity is what keeps it going. If the illusion was dispelled that you *have* to have Word or PowerPoint or Excel then people would look at cheaper, less bloated, more intuitive alternatives that more closely suit their needs. Microsoft know this - that's why they want to be on every platform. I fail to see why Apple should break their own rules to help them maintain the illusion that Office is a "must have" product

Heard this for a few years now. Doesn't make it any more true now then when it was said in 2008.

----------

Because it shows they're in different markets - one is in hardware, and one is in software. Those markets are complements - if you buy one you have to buy the other. It benefits Apple to carry Office because it will fuel iOS HW sales as much as it's in MS's benefit to spread Office around on multiple platforms. Only difference is MS gets its profit from SW so that 30% cut means more to it because it goes directly to its bottom line. Whereas Apple is always willing to take a loss on software if it leads to hardware sales.

Once they're done screwing with each other, it's in Apple's best interests to get Office on iOS no matter what. That 30% is trivial compared to the iPad revenue it would create

OK. I understand your points. However the graph shows Apple can live comfortably without a Microsoft compliment.

I don't have graphs, just this:
Apple's iPhone Business Alone Is Now Bigger Than All Of Microsoft

Apple has the platform, Microsoft wants to get on it. Microsoft has another option. Android.

 

[skaertus]

so strange: ive never played AB, and my idevices continue to help me run my business smoothly by keeping me connected to email, contacts and documents -- both consuming and generating. ive found no need to pay the Office tax and enjoy the iwork apps.

ive never considered it a toy, or anything other than what it is -- a tool.

iPads and iPhones may be used for business, of course, and they may be useful tools for lots of things.

However, if you take a look at the App Store, what you'll see is Angry Birds and Instagram. The App Store is dominated by games and by social/media/entertainment apps. Of course there are people using iPads and iPhones for productivity, and of course that is possible, but the main customers of these devices are consumers.

Microsoft Office is the standard in business applications. Large corporations pay the full price to have the flawless compatibility of Microsoft Office. Of course people can just use the existing apps for productivity. But most large businesses will not jump into iPads running the risk of not having the market standard in office productivity. It's just not a serious contender.

 

[pacalis]

Because it shows they're in different markets - one is in hardware, and one is in software. Those markets are complements - if you buy one you have to buy the other. It benefits Apple to carry Office because it will fuel iOS HW sales as much as it's in MS's benefit to spread Office around on multiple platforms. Only difference is MS gets its profit from SW so that 30% cut means more to it because it goes directly to its bottom line. Whereas Apple is always willing to take a loss on software if it leads to hardware sales.

I agree. Also, Office does not need to be installed through the store. Especially if it's for business for med to large business which can easily provide tech support.

Apple is playing with fire here and I think are overconfident that MS is so concerned with Google that they won't go with them first. Reality is, where MS goes will fundamentally shift enterprise mobility to either iOS or Android. And that is worth a discount.

 

[skaertus]

The only people who are calling it a toy are those that really have no concept of just how easy it is to do business on an iDevice or have never done business or any business like work on an iPad or iPhone.

It may be easy to do business with iPads and iPhones, and they may suit you and lots of people for productivity purposes. However, most large companies will not even consider iPads and iPhones without being able to count on Microsoft Office. The real thing, not some replacements or alternatives. They'll just continue using Windows PCs, which will not be threatened by the iPads, no matter how popular they become.

 

[Morgenland]

It may be easy to do business with iPads and iPhones, and they may suit you and lots of people for productivity purposes. However, most large companies will not even consider iPads and iPhones without being able to count on Microsoft Office. The real thing, not some replacements or alternatives. They'll just continue using Windows PCs, which will not be threatened by the iPads, no matter how popular they become.

Do you own a large company?? ;-))

 

[ArtOfWarfare]

It's a slippery slope if you let one developer in with different rules than what the rest are playing by.

There is one developer playing by a different set of rules...

Apple receives 100% of the revenues for Pages, Keynote, Numbers, Garage Band, iPhoto, etc...

Having said that, I back Apple here. I also back Microsoft on the idea of decreasing Apple's cut - I'd really like to have a bigger cut, too.

 

[jctevere]

Maybe its just me, but I kind of find having microsoft office on my iPhone a waste of money and (most likely) big amounts of space. Its not like I'm going to type out my essays on my iPhone... Perhaps MAYBE on my iPad, but then I'd just be more likely to use the notes app or pages for much cheaper...

Am I the only one with this logic?

 

[skaertus]

Do you own a large company?? ;-))

Not yet. But I work in one.

 

[MacDav]

Perhaps you didn't get what I posted? I was not insulting you. You implied that Microsoft felt that it should get special treatment, my response meant that Apple does the same thing with everyone they do business with. I apologize if I wasn't clear enough and you took the post personally, that was not my intent.

I know it must be hard for you to focus, but we are talking about the fact that every other App. developer on the planet pays 30% to be part of the iOS ecosystem. Why should Microsoft be any different? We are not discussing other avenues of business. If you would like to talk about some other aspect of the Apple business environment then start another topic for discussion. This topic is about whether Microsoft should pay the same amount as everyone else. If you disagree with the idea that they should pay the same as everyone else, then please give some intelligent reasons as to why this should be so. Otherwise don't bother to respond and waste my time.

 

[Broph]

My opinion on the "Nobody needs Office" is that MS should redo their code, not rewrite, but massively optimize and remove old **** that nobody needs anymore. We don't really do much printing anymore, but I think we should leave that stuff there, BUT we should focus the office apps on e-reading. Idk, I'm just a big fan of optimizing the **** out of stuff. :/

Please, just stop.

 

[viacavour]

There is one developer playing by a different set of rules...

Apple receives 100% of the revenues for Pages, Keynote, Numbers, Garage Band, iPhoto, etc...

Having said that, I back Apple here. I also back Microsoft on the idea of decreasing Apple's cut - I'd really like to have a bigger cut, too.

I think in exchange for bigger cuts for devs, I would like them to support something together, like better iCloud features. In essence, the devs makes more money, Apple get to improve iCloud and users get more benefits: win-win-win and a bigger pie for all. A zero sum game is too short sighted now.

----------

I agree. Also, Office does not need to be installed through the store. Especially if it's for business for med to large business which can easily provide tech support.

Apple is playing with fire here and I think are overconfident that MS is so concerned with Google that they won't go with them first. Reality is, where MS goes will fundamentally shift enterprise mobility to either iOS or Android. And that is worth a discount.

MS already wants to weaken or kill Apple before this debacle.

The thing is both are better served if they work together for real. I just don't think it's a either them or us thing. Look at other providers that thrive on iOS thus far.

 

[tillsbury]

I know it must be hard for you to focus, but we are talking about the fact that every other App. developer on the planet pays 30% to be part of the iOS ecosystem. Why should Microsoft be any different?

Microsoft shouldn't be any different. Age of Empires shouldn't be different. But Office is different from any other program/suite. Having Office on the iPad (and I mean real Office that doesn't barf at any existing Office document) would be a really big deal for the iPad. If I were Apple I would do almost anything to get a good version of Office available for the iPad. Except tell anyone that that's what I was doing. It would of course kill the Surface stone dead, so I have no idea what Microsoft is really trying to do, unless it already knows this.

 

[Liquorpuki]

OK. I understand your points. However the graph shows Apple can live comfortably without a Microsoft compliment. Apple has the platform, Microsoft wants to get on it. Microsoft has another option. Android.

Yeah, Microsoft is also gambling on its Win8 platform to blow up on mobile and change what type of software people expect a tablet to run. MS is actually exploiting the budget nature of the mobile ecosystem Apple created. Apple's usual strategy has been to commoditize software to sell hardware. They did this on mobile by creating a large ecosystem of cheap software commodities to fuel iPad sales over the past couple years.

MS is trying to use Win8 to merge mobile and desktop ecosystems together, which would liberate mobile devices from their budget ecosystem. If they're successful, they're a threat to both iOS and Android. Apple has no easy way to merge iOS and OS X, they'd have to blow it all up.

If the Surface Pro fails though, MS loses its leverage