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

[haravikk]

Yeah, Apple and its HUGE ecosystem of millions of users and uniquely attached devices should be a free platform for advertising what you really want to sell (without paying a commission of course). Yeah.

Um, no.

And where exactly did I say that? I didn't say anything about mobile apps pushing users to subscribe elsewhere, that's already against the Apple ToS I think, and the last thing I want are apps pushing me to use websites for everything as that would defeat the point of the app.

What I'm saying is that if a user purchases a subscription on their iOS device then by all means, Apple can take their cut. But if that app is part of a multi-platform lineup and the user decides to renew their subscription via the PC version of the app, then they shouldn't be constrained by Apple in any way.

So if the iOS versions of office attracts new users who get their subscriptions from that app, then Apple is entitled to that, but users who are coming from existing subscriptions that they manage elsewhere and just want to use the iOS companion app on the go shouldn't be affected. Unless they decide that the iOS app is now their preferred method of renewing their subscription of course; if that's what Microsoft is up in arms against then they need to think about why users would prefer to do this via iOS rather than their other methods of renewal.

I'm not saying Apple should widely enable out of app subscriptions; in-app is much easier on the user, and that's the service that Apple takes their cut for. But on the other hand Apple must be careful not to interfere with subscriptions that come from non-iOS devices, but still apply to iOS apps, as it only makes things harder for everyone and could prevent users from switching to the iOS version of an app (and thus potentially using in-app purchases more in future).


If Microsoft is asking for preferential treatment when it comes to subscriptions paid for by in-app purchases then to hell with them; the same rate should apply to all developers, but only where it makes sense for it to be applied.

However that said, I do agree that 30% is too steep (for everyone, not just MS); PayPal is a payment processor and yet their fees are minuscule by comparison. Given the size of the app market I can't believe that a lower percentage wouldn't still be extremely profitable. At the very least Apple should be considering a tiered percentage based on price; it's all the same time to the user anyway, and could be used to encourage more, higher-quality apps rather than the current trend of extremely low priced ones giving mostly what you pay for.

 

[dernhelm]

Well microsoft, use this to your advantage.

Release Office only for mobile windows and leverage that face: MS office available only on microsoft powered phones and tablets, great for businesses and consumers alike. The best compatibility between your desktop and tablet, at a level iOS cannot achieve.

Ha ha ha ha ha ha!

Funniest thing I've read in a while. This is fine as long as Microsoft doesn't actually need to cover their costs for developing Office mobile. How many people are going to switch to Microsoft phones because it's the only one that'll let them run Excel?

 

[Stella]

Ha ha ha ha ha ha!

Funniest thing I've read in a while. This is fine as long as Microsoft doesn't actually need to cover their costs for developing Office mobile. How many people are going to switch to Microsoft phones because it's the only one that'll let them run Excel?

Well. Tablets actually. Corpororations for said reason. Businesses is where the cash cow is - consumers change on a dime and latest fashion. Businesses IT needs don't. If people like what they use at work, they will buy it for home use.

 

[M-O]

screw microsoft. we don't need em. stick to your guns, apple!

 

[viacavour]

Apple does provide much more value add than PayPal ! While IAP is a payment processor, it's not the only thing developers use on the iOS platform. Citing a small paragraph on IAP can't prove that other things don't exist. Marketing, bandwidth for redownloads, access to market, security, QA, etc. are also provided on the iOS app platform.

 

[uknowimright]

Renzatic, I feel for you. I have that guy on ignore. You'll go on and on and on and he'll keep coming back. His method of winning an argument ? Never relenting or ever giving you ground. He'll counter and counter and counter, without ever providing sources but by dismissing any you come up with. Just let it go man, save some grief.

instead of arguing I just sit back and laugh, it's great for the ol' health

 

[pandamonia]

Just make people buy the subscription online and use a log in to the Free app on iOS and Apple get nothing.

Problem solved.

 

[viacavour]

Well. Tablets actually. Corpororations for said reason. Businesses is where the cash cow is - consumers change on a dime and latest fashion. Businesses IT needs don't. If people like what they use at work, they will buy it for home use.

Yes, that's why Google has started to attack that market too. They took away the free business services.

If MS gives Android the advantage, they will lose the entire game; lock, stock and barrel. Apple will protect their margin. Android business and consumer services and hardware will be offered on the cheap.

The best approach is to work with both entities using Office as an entry point. Then roll out value added services on their own. Renegotiate later when they are stronger.

 

[The Phazer]

Said it once, so I'll say it again:

Why doesn't MS decide on the price that it wants to charge for Office iOS, and then add 30% to provide Apple its cut.

Probably because the Apple T&Cs explicitly prohibit this.

 

[KnightWRX]

Apple does provide much more value add than PayPal ! While IAP is a payment processor, it's not the only thing developers use on the iOS platform. Citing a small paragraph on IAP can't prove that other things don't exist. Marketing, bandwidth for redownloads, access to market, security, QA, etc. are also provided on the iOS app platform.

Sure they are, but those are provided to anyone who pays 99$/year. It has nothing to do with IAP and its 30% cut, or the obligation of using Apple as a payment processor.

Apple, with IAP, is only a payment processor. Your argument is saying "sure the iPod Nano is 150$ and that might seem expensive, but you're forgetting Apple also has tons other products like Macs, monitors, wireless networking products, etc..!". Yes, but I have to pay seperately for those other products and they are not the topic we are discussing.

 

[viacavour]

Probably because the Apple T&Cs explicitly prohibit this.

They can but it means Apple get "free" money, and they still don't own the customers exclusively.

Steve Balmer wants it quick, and his way but they started too late. MS may have to pay a high price now for special treatment. I actually think that a free iOS service is best, to attract iOS users. Many countries dislike subscription apps because they are slow (slow network) and users lose control (network kaput means lost productivity). They will need sometime to buy in. Salesforce.com took a long time to catch on, and only in some countries.

Ironically, Apple may be forcing them down the right path to compete successfully with Google. Once the free services catch on, do their own marketing to build thir exclusive user base.

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Sure they are, but those are provided to anyone who pays 99$/year. It has nothing to do with IAP and its 30% cut, or the obligation of using Apple as a payment processor.

Apple, with IAP, is only a payment processor. Your argument is saying "sure the iPod Nano is 150$ and that might seem expensive, but you're forgetting Apple also has tons other products like Macs, monitors, wireless networking products, etc..!". Yes, but I have to pay seperately for those other products and they are not the topic we are discussing.

No. For $99, you get to submit the app and developer access, just like MSDN. It only covers the development aspect since it doesn't scale with actual downloads/usage.

Your example doesn't make sense here since those products are not made by third parties. The Made for iOS program is more similar. But being a physical goods, Apple can manage it differently, but still tightly.

 

[Brenster]

i want imcrosoft one note for mac, is it coming out yet??

As a heavy OneNote user at work, I gave up waiting for a mac version and went for Evernote. Doesn't integrate quite as tightly with Office:mac 2011 as OneNote does on the Office for Windows side but is otherwise quite superb. The Evernote iOS client comfortably eclipses Onenote iOS. I've been using the Office 2013 preview in a virtual for a while and it's nice, esp the Skydrive integration - much improved over 2010, and the same applies to OneNote 2013 too. No mention of OneNote for mac still, even under the Office 365 stuff being proposed for Office 2013. Oh well, Evernote it is then. Microsoft's loss.

 

[The Phazer]

They can but it means Apple get "free" money, and they still don't own the customers exclusively.

No, they can't. The App Store submission guidelines say you can't charge 30% less for the subscription via other routes than the do via the app store.

 

[bbeagle]

Apple set the rules so that 3rd parties are forced to use Apple as a payment processor, disallowing any use of any 3rd party payment processors, even if you as a developer already have a huge setup and contracts for payment processing and they are asking for exhorbitant fees for the priviledge.

3rd parties who use the App to get payments are forced to use Apple as a payment processor.

Say I have a subscription service. I'm Netlix. Someone can sign up with Netflix at Netflix.com, NOT USING APPLE, and then download the Netflix app for free and NEVER PAY APPLE A DIME.

However, if I find this app on the Apple App Store FIRST, and USE THE APP to buy a subscription, Apple is the payment processor and gets 30%. Apple led the customers to Netflix and thus is the advertising vehicle.

Netflix can very well release an app that does NOT allow in-app purchases, and you MUST subscribe at Netflix.com, but they can't tell you inside the app (because Apple got you the app, not Netflix), you must find out about this at Netflix.com.

Very simple. What's hard to grasp?

I can easily make a game, I'll call it 'Laser Cows'. I can host it for FREE on Apple's App Store. Apple doesn't get a dime when people download my app. I can have all sorts of extra upgrades in my app that people can pay for, like a multi-stream laser. I want to charge 99 cents for this feature. I can have a website called LaserCows.com where people can purchase these upgrades and get codes. I can then allow people to enter codes in my game. This is all COMPLETELY ACCEPTABLE to Apple, as long as I don't link this inside the app. People must find out about this on their own through my advertising.

As a developer, it's easier to do in-app purchases, than hope people jump through hoops by leaving your app, going to a website, and coming back. 30% is well worth it.

 

[KnightWRX]

No. For $99, you get to submit the app and developer access, just like MSDN. It only covers the development aspect since it doesn't scale with actual downloads/usage.

Sorry, no. 99$ gives you application hosting, the downloads, listing on the app store with screenshots and detailed info, possibility to push updates to your users, analytics (iTunes connect) to oversee the relative success your app is having.

I pay the 99$/year, I know what it includes.

All those things you list as "Apple provided" are provided to anyone who ponies up 99$/year for the developer program. End of Story.

IAP is a payment processor. It provides payment only. See the above link documentation. The facts are simply against you, I have provided the necessary documentation so you can educate yourself.

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3rd parties who use the App to get payments are forced to use Apple as a payment processor.

Very simple. What's hard to grasp?

It's not hard to grasp. I understand the situation, I even explained so myself. I see it as a problem. The App doesn't belong to Apple. That I set up a link in my app to my payment processing system shouldn't be their business at all. It doesn't touch their servers, it doesn't use their infrastructure. It uses mine.

If Apple has problems affording to subsidize free applications (really, they don't. Free applications subsidize themselves through device sales. All that nice marketing about "There's an app for that!" ? That's where you subsidize these free apps, for the devices they sell. No apps, and device sales would plummet), then they need to stop providing space to host and distribute free applications, not try to nickle and dime the developers on artificial barriers like forced payment processing.

Very simple. What's hard to grasp ?

 

[The Phazer]

Very simple. What's hard to grasp?

Why Apple thinks punishing customers by making app providers hide information to protect their uncompetitive payment processing is a good idea?

 

[ncaissie]

Microsoft wouldn’t have any problems charging 30% in their stuff yet they expect everyone to low their cost for them.

 

[viacavour]

No, they can't. The App Store submission guidelines say you can't charge 30% less for the subscription via other routes than the do via the app store.

Sure but they can package Office differently on iOS, like include Vizio and other stuff for the 30% premium, as a random example. MS would have to prepare for this much earlier of course.

The other route is to have a free version.

KnightWRX, the $99/year package enjoys those benefits because you offer your services and apps for free. That's why Apple don't mind bearing the cost.

If you start to charge, they will want the $$$ to offset their cost and enjoy the upside too.

They expand their digital marketplace to more countries, even areas not really known to consume digital goods. It's a new behavior. I suspect they will have to do aggressive marketing there to encourage spending, versus piracy.

 

[theluggage]

Apple set the rules so that 3rd parties are forced to use Apple as a payment processor, disallowing any use of any 3rd party payment processors, even if you as a developer already have a huge setup and contracts for payment processing and they are asking for exhorbitant fees for the priviledge.

3rd parties are at perfect liberty to tell Apple where to stick that deal, and support Android and/or Win 8 mobile instead. Customers are free to vote with their feet and switch to a less proprietary platform.

So why don't they? Ans: because Apple give them access to a huge, cash-rich user base. In a capitalist system, that is a valuable resource and Apple are entitled to charge what the hell they like for access to it*. Maybe we'd all be happier and more fulfilled under a non-capitalist system, maybe not, but I'm pretty certain the gadgets would't be so cool** if it was harder to make shedloads of money from them.

Meanwhile, look at what MS is proposing here: they want Apple to let them distribute MS Office for iOS - in direct competition with iWork (and we're talking about the power of the MS Office brand here, not some also-ran SoopeOfficeDoublePlus app). They then want to subsidise this by selling Office 365 subscriptions (itself a competitor to iCloud) - maybe even offering the iOS app for free and, if not, probably undercutting iWork. Why on earth would or should Apple roll over and allow that?

(*up to the point where Apple run into anti-trust law - but they have plenty of healthy competition, unlike Microsoft in their heyday, when using any other system was a labour of love. MS Office is still a bigger force for anti-competitiveness than anything Apple is doing).

(**but maybe that would make us happier?)

 

[Leonard1818]

Ha ha ha ha ha ha!

Funniest thing I've read in a while. This is fine as long as Microsoft doesn't actually need to cover their costs for developing Office mobile. How many people are going to switch to Microsoft phones because it's the only one that'll let them run Excel?

What?

now THAT is funny... "how many people are going to switch..." well, anyone who gets a phone through work. When it's not your decision to begin with, it's not a matter of "switching". Many companies buy many many phones to distribute to their employees. They used to always buy blackberry handsets but we know how RIM is doing...

I think it's a perfect opportunity for MSFT to grab more ofthe "business handset" marketshare.

obviously some bean counter at msft has already determined it would be more profitable to pursue office for iOS so that seems to be the route they're taking.

 

[basesloaded190]

Not true. Bigger clients always get discounts - how else does Walmart gives you insane prices? They get discounts from all consumer goods companies.

Good comparison

 

[tatonka]

Very simple. What's hard to grasp?

Why Apple thinks punishing customers by making app providers hide information to protect their uncompetitive payment processing is a good idea?

It is quite clear why Apple decided to go down that route. More and more developers where releasing free apps that would unlock the full content upon paying via a separate payment processor. That way Apple got tricked out of their usual 30% cut on the app sales. To put an end to that behavior, Apple required every payment to got through Apple, so that they still get to collect their cut. Seems understandable.

In general I even agree with the policy, since it builds trust in the iOS environment by locking out dodgy payment processors and even provides an incentive to ask for a fair, up-front price rather then having to pay dubious in-app packages with unclear volumes.

There are certainly cases where the model doesn't fit. That is well established businesses that only offer the iOS app as benefit for the customer such as Amazon Kindle, Netflix or this case of Microsoft. I would have imagined Apple to allow for separate negotiations here and I still believe they are doing just that for bigger key clients such as MS. They just wouldn't admit that publicly, since that would hurt their general stance.
Maybe not with Amazon as they are direct competitors in a different market as well.

T.

 

[DeathChill]

I don't like the IAP/subscription system Apple currently has. All it's doing is make so many apps unable to allow the user to sign up from within the app. However, it also isn't as secure to allow every app to use their own payment services as eventually one fraudulent one may slip through with things like sneaky recurring billing and what not.

It's a tough situation but I think the 30% fee is too high for subscription services. There must be some solution that's secure and benefits all parties.

 

[SolRayz]

I want iOS Office on my iPad just about as much as I want an infestation of skabies, or crabs, or bed bugs, anything horrible like that.

 

[viacavour]

Good comparison

Bulk discount works for physical goods because there is inventory cost and supply issues. It's less clear for digital goods.


Actually, the other option is bartering. Have MS pay the full fees, but Apple pays MS back for something else.

At this moment, I still like the free option best. I think it's the best way for MS to gain a foothold. Bartering is not bad since it encourages collaboration. However I fear that the subscription Office may plateau quickly.