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Microsoft balks at Apple's 30 percent iOS Office cut

updated 05:54 pm EST, Tue December 11, 2012

Microsoft said to want discount on Office 365 subscriptions

Even as Microsoft and Apple spar over Microsoft's SkyDrive iOS app, the two companies are also at loggerheads over the future of the forthcoming iOS version of Microsoft's popular Office productivity suite. Reports have it that the two companies disagree over whether Apple should charge its standard 30 percent commission on Office 365 subscriptions that would be sold through Microsoft Office for iOS. Apple is said to be unwilling to negotiate a more lenient split for Microsoft, while the details of Microsoft's position remain unknown.

According to AllThingsD Apple seems unwilling to negotiate a different commission rate, even for a software giant such as Microsoft. Microsoft's Office suite, despite increasing competition from other options, remains the dominant productivity suite in the world, as well as a perennial cash generator for Redmond. Office 365, which Microsoft would sell as an in-app purchase, is a subscription product that extends the productivity suite over desktop, cloud, and mobile platforms. Conceivably, giving Apple a 30 percent cut of Office 365 originating on iOS devices could result in Microsoft continuing to pay a yearly commission on those subscriptions to Apple, even if the customer purchasing the subscription no longer accessed the service from an iOS device.

Bringing Office to Apple's iOS and Google's Android platform could serve to generate ongoing revenues for Microsoft in the new computing era, an era in which Microsoft has been struggling to catch up. The Redmond giant, though, would likely be reluctant to sacrifice 30 percent of the proceeds from Office subscriptions as a toll to enter Apple's platform.

Bringing Office to Apple's platform would likely only strengthen the position of iOS devices in the growing Bring-Your-Own-Device trend, as it would make them even more compatible with the standard enterprise productivity suite.

Apple, though, has reportedly been adhering to its developer license and unwilling to budge. As Apple controls the iOS platform, the company decides who can sell what on the most lucrative mobile operating system. AllThingsD's sources say that the disagreement over Apple's commission has bloomed into a considerable argument between the two companies, one with no immediate end apparent.



By Electronista Staff
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  1. daqman

    Junior Member

    Joined: 09-15-00

    In the words of the ancient French prophet "Screw 'em". Microsoft is another App developer treat them that way or the whole ecosystem collapses.

  1. panjandrum

    Junior Member

    Joined: 12-01-04

    Unfortunately Apple is currently in the process of proving that "power corrupts". As evil as Microsoft was/is, Apple is quickly demonstrating that they are indeed "better at everything" by becoming even more evil than Microsoft. Not just in this case, but in *every* case a 30% cut is just absurd. 30% for providing a platform-locked distribution system in which the distributor (Apple) has complete say over whether or not your app can even be sold. All of this spells trouble down-the-road for Apple. Those of us who have been around a while saw it all happen before, and unless Apple changes their ways it is going to happen all over again. They need to open things up and they need to stop asking for extortion-level fees.

  1. apostle

    Junior Member

    Joined: 04-16-08

    I can see not wanting to pay Apple a commision for customers who no longer access MS through iOS. However, I'd think MS would be more willing to make concessions at this point, given the companies growing irrelevance these past ten years under Ballmer. Sign a year by year contract. Fire Ballmer. Bring back Gates. Rebuild the company. Then MS will be in a better bargaining position.

  1. Don108

    Registered User

    Joined: 03-25-10

    If you buy a copy of Office in a store, the retailer generally gets 30%-50% of the price. Apple provides the storefront, publicity, order tracking and more for iOS software. 30% seems rather reasonable to any who actually understand retail business.

  1. bjojade

    Fresh-Faced Recruit

    Joined: 06-07-07

    Originally Posted by Don108View Post

    If you buy a copy of Office in a store, the retailer generally gets 30%-50% of the price. Apple provides the storefront, publicity, order tracking and more for iOS software. 30% seems rather reasonable to any who actually understand retail business.



    I WISH retailers would get 30-50% of the sale. In reality, the margin that retailers get on software is closer to 15%, or even less. If you know of a legal way for me to get 50% profit on the sale of software, please let me know.

  1. SierraDragon

    Mac Elite

    Joined: 03-22-04

    Originally Posted by panjandrumView Post

    Unfortunately Apple is currently in the process of proving that "power corrupts". ...but in *every* case a 30% cut is just absurd.



    Obviously you have never developed anything. For folks making real, honest products the developer services Apple provides and the 30% fee is a spectacular bargain.

    You say ...30% for providing a platform-locked distribution system in which the distributor (Apple) has complete say over whether or not your app can even be sold. as if it is a bad thing, but I say Apple provides predictable, safe environment to develop for; with SDKs, testing capability, etc. Real, honest developers do not see "platform-locked" as evil they see stability, predictability and opportunity; a good place for their apps to live. And Apple platform app marketing structure is hella worth 30% and more.

    Unlike almost all other developers Microsoft may have less need for the services and structure Apple provides - - but I am not so sure about that. MS horrific OS code under Gates brought millions and millions of PCs to virus corruption. If I was Apple I would assume more resources need be applied to vetting MS app code, not less. [And please do not tell us Win virus issues were due to Win market share. Mac OS 9 had many viruses written for it, just like DOS/Win did. With OS X Macs have now had functionally zero virus problems.]

  1. pairof9s

    Mac Enthusiast

    Joined: 01-03-08

    Conceivably, giving Apple a 30 percent cut of Office 365 originating on iOS devices could result in Microsoft continuing to pay a yearly commission on those subscriptions to Apple, even if the customer purchasing the subscription no longer accessed the service from an iOS device.

    Not sure how this is any different than me having a New York Times subscription that I continually renew in iTunes but never use my iPad to read the news. Seems to me, the determining factor of the fees should be the originating method of the subscription. If I started the O365 through an in-app purchase in iTunes, Apple is owed the fee; however, if I had or get the subscription somewhere else (and should have full access via my iOS O365 app), then Microsoft is due the full fee.

  1. simdude

    Fresh-Faced Recruit

    Joined: 06-01-04

    Microsoft sells through many channels. Let's say the wholesale price of their mobile MS Word will be $15. Just jack up the price 30% on Apple's app store price to make the equivalent. Microsoft still gets the $15 they would get if selling a box version of software.

  1. Spheric Harlot

    Clinically Insane

    Joined: 11-07-99

    Originally Posted by SierraDragonView Post

    Mac OS 9 had many viruses written for it, just like DOS/Win did.


    Um.

    Sixty viruses, at last count, for OS 9.

    Vs. how many thousands of DOS/Win viruses until 2002 (when OS 9 was retired)?

    Good post otherwise; I just take exception to this bit.

  1. Spheric Harlot

    Clinically Insane

    Joined: 11-07-99

    Originally Posted by simdudeView Post

    Microsoft sells through many channels. Let's say the wholesale price of their mobile MS Word will be $15. Just jack up the price 30% on Apple's app store price to make the equivalent. Microsoft still gets the $15 they would get if selling a box version of software.



    Office itself will be free.

    The point here is the Office 365 SUBSCRIPTION that will be required to edit anything.

    Subscriptions aren't boxed products, and what happens when a subscription is automatically extended, rather than expiring and then re-subscribed?

    If Microsoft wants subscriptions to auto-renew (which I'm sure they do — maintaining a large portion of their customer base through sheer laziness has been a big part of the subscription model forever), it means that people who subscribe through iOS may well thus be required to pay 30% extra in perpetuity, which I'm sure customers will not be too happy about.

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