Last week Microsoft debuted Office for the iPad, finally stepping in to save the platform after its four years of doom … during which it redefined and dominated the tablet marketplace. Thankfully, Computerworld’s Gregg Keizer is here to tell us how Microsoft has outsmarted Apple yet again.
Microsoft returns to ‘freemium’ revenue model for Office for iPad, escapes the bulk of Apple ‘tax’
Apple loses again! Because clearly shipping Office for the iPad is a zero-sum game.
With the launch of Office for iPad yesterday, Microsoft again effectively cut Apple out of most of the revenue stream by making the apps free to download.
When you define “most of the revenue stream” as “revenue Apple never would have gotten anyway” then, yes, Microsoft cleverly took that part for itself.
But because the apps are free, Microsoft is not obligated to fork over 30% of the sales revenue to Apple, a condition of the App Store for paid apps and all in-app purchases.
Oh, really? Not even the part that comes from in-app purchases?
The only revenue for which Apple is due its 30% commission will be what’s produced by in-app purchases of an Office 365 plan …
So, in other words, Apple gets exactly what it gets from any other app. Those devious Microsoft geniuses have done it again!
Come on. Microsoft isn’t even cutting out Apple as much as Amazon is. Amazon doesn’t even sell its stuff at all through in-app purchases, it keeps it all. The reason Office for the iPad was delayed so long was that Steve Ballmer thought he could squeeze Apple on the 30 percent, but Apple said no. For years. Nadella is more pragmatic than Ballmer and rightly saw that not being on the iPad wasn’t doing the company any favors. It takes some hurricane forces to spin that as Microsoft screwing Apple.
Wes Miller, an analyst at Directions on Microsoft, a Kirkland, Wash. research firm that specializes in following Microsoft’s every move, said that Apple might take its cut here and there. “For some consumers, [the new apps] may get them to subscribe to Office 365, Personal in particular,” Miller said.
The bulk of enterprise users already have licenses to the Microsoft suite and just need to sign in. The bulk of consumers will probably buy licenses through in-app purchases because it’s easier.
But Microsoft is not obligated to share any Office 365 revenue from plans it sells directly to consumers through retail or its online store, or those it or its channel partners sell to corporations.
Uh, yeah, we got it, Gregg. That’s App Store 101.
In-app purchases have always been liable for the 30% commission to Apple, which some have derided as an Apple “tax,” but purchases outside apps have not.
Funny story about the “Apple tax”: You know what percentage Amazon used to take of self-published Kindle sales before Apple shipped the iPad?
Look it up some time, Gregg.
Apple will not get rich off Microsoft.
Of course it won’t get rich off Microsoft. Apple’s already rich.