Apple and Microsoft at odds over SkyDrive app subscription fees [ux2] - Page 2

Quote:

Originally Posted by TheOtherGeoff 

 

err, those billion dollar datacenters are all about moving bits (and moving the bits to entice you to move the bits).  Apple has to recoup the cost of those systems.

 

but you're right, the discussion about how to 'fix' inapp purchases shouldn't be here.  It's really all about the contractual requirement to lock prices across all e-retailers, which I find is anti-competitive.   One way is to fudge the pricing based on the 'size' of the transaction, which was really my point (bits and bytes), and a bad one at that.

 

The issue isn't 'stupidity' of Apple (their model is very smart, as their profits rise dramatically from a .99 to a $19.99 purchase), it's the agreement to fix the price everywhere to Apple's price, which again, is smart on Apple's part, but on the surface, it seems like it's using it's monopoly to fix prices to it's model.

I think you are very confused. Much of your post seems to lack all understanding both of the post you are replying to, and the App Store business model.

But, since you continue to push this red herring about bits, let's harpoon that fish for good and all...

What you pay Apple to offer your app in the App Store has absolutely nothing to do with its size, the amount of data served to customers installing it or unlocking a feature, or anything even remotely related to bits. Did you understand that last sentence? If not, or if you still somehow think it's related to serving bits, keep reading the first sentence of this paragraph until it sinks in. This is not a point of argument, so don't bother trying to make an argument that it does have to do with bits served. It just doesn't, and that's an immutable fact, not a point up for debate.

Now, are you grounded in reality, or do you still have thoughts about App Store costs being related to bits served. If the latter, jump back to the previous paragraph. If you now understand that it's an indisputable fact, not an opinion, or point for debate, that the money you pay Apple has nothing to do with bits served, you can continue reading. Otherwise, keep rereading the preceding paragraph and this until it sinks in.

What you pay Apple to offer your app in the App Store is a 30% share of the revenue your app generates. Yes, that's right, the App Store does not operate on a cost of services model. The App Store operates on a revenue sharing model.

There, see how simple that was to understand once you threw away your misconceptions?

No, don't click reply and start typing about how it's just my opinion that that's how it works. It's not an opinion, it's a fact, the truth, reality, the way things actually are... The App Store operates on a revenue sharing model.

Quote:

Originally Posted by oomu 

"I wonder if this would push MS so far as to pull their Office apps from iOS completely?"
there is no office apps for ios for now.
-
"I just hope Microsoft doesn't try to get some vengeance on the mac-side of things."
Microsoft is soon free of their partnership with Apple for Office on Mac.
They may decide to renew it or to stop, we don't know.

but MS can stop the process for ios version of office.

I wonder why Microsoft wouldn't pay up.  That company is loaded with cash and they're always throwing it around on everything else, so why not this.  This sounds like another unsubstantiated rumor circulating to stir up trouble between rival companies.

Quote:

Originally Posted by asdasd 


Apple doesn't host anything - except the original app - when the app makers have their own billing system, and hosting service. As for the app store that's forced on the users.
If a future version of Windows were to force all applications to be signed and downloaded through their app store, including iTunes, and then demanded 30% from Apple eliminating apples margin I expect the arguments would be different here.

Sounds like the Windows 8 store. Haven't seen anyone complaining about it. Oh, you were trying to compare desktop apps on Windows to iOS apps. Well, come back when you have a valid comparison.

Quote:

Originally Posted by SolipsismX 


Hmm.... I wasn't aware of hyperlinks to a browser being forbidden for bypassing the restriction.
I don't agree that if you make a purchase via an iDevice once that all future purchases for a cross platform service should get 30% funneled to Apple.
What does Skype et al. do for their cross platform service? So Skype et al. Any offer a link to their web settings which also allow for the purchase of additional services?

I don't believe you are allowed to include a link to a web site where you can make your "in-app" purchase outside the app. You can offer it on your web site (at least for subscription content, I believe, or books (e.g., Kindle)) but you can't include a link in the app to by pass in-app purchases.

30% is the deal, across the board. Microsoft shouldn't get a special deal, just because they are Microsoft. In fact, Apple could find themselves in legal trouble if they started offering certain "developers" better deals than everyone else.

Quote:

Originally Posted by asdasd 


Don't see what is necessarily invalid in that comparison. A tablet is basically a computer.
Apple should get paid when it hosts extra content and when the developer needs to use Apples fulfilment system. Maybe they could even charge free apps with external fulfilment systems a price per download or active user i.e a user active in a period. Something nominal like 5c a period. The trouble with the 30% is that it eliminates the entire margins of some companies, that is it takes 100% of profits from companies who are themselves retailers and could handle their own transactions.
Faced with competitors who give away hardware for free to push services Apple wants to make money on the hardware and all the services. The result is increasing hostility from medium to large devs who have their own fulfilment system, a movement to android from those devs, a move into hardware by scorned retailers ( Amazon) and a worse experience for users who would prefer the Kindle app to have a button which buys books, rather than having to go to Safari.
Not that that makes much difference to me - all my ebooks have been found on Kindle because iBooks did not have much. I now have that collection on Kindle, along with a Kindle fire. I also have an iPad but not the mini. The fire would never have been bought were it not for the Kindle collection and the 2nd class citizenship the app has on an iOS device, in fact I would go further and say it never would have existed. Amazon possibly entered the tablet war because Apple squeezed them out of profitability on the iPad rather than make a deal - I don't know how many iBooks you have to sell to make up for the profits lost on a iPad, but let's say lots and lots.

OK, well, despite your rambling post that seems to have little to do with anything, the ecosystems for traditional computers and current mobile devices don't follow the same business model, so, while it's a nice little fantasy game to play, it's irrelevant to this discussion.  

Quote:

Originally Posted by SolipsismX 


I don't see how it's fair that one can have Skype on multiple devices but if they have a Skype client on an iDevice Apple gets 30% from all sales regardless if the sale happened within that app or not. If the sale happens within that app then it's an in-app sale and Apple should get 30% and it should be charged via the App Store, but if the sale happens elsewhere and is attributed to a services account, like a Skype In number or call time, then I don't think Apple should get 30% just because they approved the Skype client for iDevices.

Because the revenue was generated though the App Store. Remember, it's a simple, straightforward revenue sharing model of business. If you generate revenue through the App Store, you share 30% of it with Apple. They don't force anyone to have In-App Purchases. But, if you do, and you generate revenue through them, you agreed to share it with Apple. And, if the sale happens elsewhere, Apple doesn't get any revenue. It's that simple. You just aren't allowed to send customers out to the back alley. If they find their way there on their own, it's fine, though.

Edit: Finding their way to the back alley is ok for some categories of purchases, but not others. For example, I don't believe you are allowed to sell game levels or consumables in the back alley at all. Subscriptions, though, clearly do allow this, they just aren't allowed to post a sign saying, "Back alley subscription sales, this way ->". :End Edit

It's not like Microsoft doesn't know this. They are just trying to throw their weight around. Unfortunately for them, they've been on a diet for the past decade, and they don't really carry enough weight these days to bully their way to what they want.

Quote:

Originally Posted by asdasd 

The "rambling post" was clear enough. ...

Just as a data point ... I found it rambling too and was going to reply with much the same comment but refrained after seeing someone else do it. 

Both yourself and "TheOtherGeoff" seem to be holding down the major contrary opinions on this thread but even after careful reading and re-reading I can't make out what either of you are on about.

As several others have already said, the 30% deal and what Apple does with the app store have all been talked about over and over again and the consensus of opinion is that what they do is both reasonable and fair. As has also been pointed out, Microsoft does the exact same thing with their store.  

Finally, just because no one has mentioned it ... this whole situation is basically Microsoft's fault.  

They knew the rules before they began and they not only violated them, they included the violation baked into the SDK so that many of the developers making SkyDrive based apps or having SkyDrive access added to their app, have also had their apps refused from the App store simply because they used the default information provided with that SDK.  

Microsoft did this.  100% their fault, their problem, generated by them either out of stupidity or malice or whatever.  

Quote:

Originally Posted by TheOtherGeoff 

 

OTOH, in the ad free world of Apple, they want to make their money without resorting to crapware or in OS ads.   And if money changes hands, then that is a logical place for Apple to get their 'taste'    I do think 30% is too much for in-app purchases (really, shouldn't it be about storage and bandwidth).  Why not 15% for purely money handling with a 'floor' value of $0.30 (30% of a .99 purchase for less than 100K of 'data', and a Cert is usually less than that)).  If you move bits/bytes (100K+), it's 30% of the market value.

Yes, but the 30 percent subsidizes the loss leaders. Namely, the apps Apple hosts for free. 

You also made the point that retailers don't normally control price. That depends. If you are Walmart or Amazon, you are putting extreme pressure on producers to lower the price to meet Walmart's or Amazon's goals. Walmart is known to tell american manufacturers to produce overseas to lower cost, or it will not sell their product. 

Quote:

Originally Posted by SolipsismX 


I don't see how it's fair that one can have Skype on multiple devices but if they have a Skype client on an iDevice Apple gets 30% from all sales regardless if the sale happened within that app or not. If the sale happens within that app then it's an in-app sale and Apple should get 30% and it should be charged via the App Store, but if the sale happens elsewhere and is attributed to a services account, like a Skype In number or call time, then I don't think Apple should get 30% just because they approved the Skype client for iDevices.

If you have a Skype account, in all likely hood, you are going to give Microsoft money if at all through it's website. You already know how to do this. So, Microsoft doesn't need to offer Skype users the ability to pay in the app. If it does, Apple takes a cut. It is like with Netflix. Netflix offers me the app as a convenience, but I had the account prior to downloading the iOS app. Netflix doesn't need to allow people to subscribe via the app. 

Quote:

Originally Posted by TBell 

 

 

Yes, except it should be referred to as the retail tax. Walmart doesn't let you sell stuff in it's stores without a share of the profit. Not sure why Apple would be expected to do less. It does actually cost Apple money to host, distribute, and process payments for the apps. 

Agreed.  And while the 30% does seem like a lot, traditional software distributors for physical product, such as Ingram Micro-D, take a far bigger cut, usually 50 to 55%.  

Having said that, the App Store has become so big with so many applications downloaded, maybe it's time for Apple to reduce their fees a bit.    Or maybe they can have a two-tier fee based  upon the number of downloads that you sell.    If you go over, let's say 2500 units, maybe you pay 20% or 25% instead of 30%. 

Originally Posted by Gazoobee 

Microsoft did this.  100% their fault, their problem, generated by them either out of stupidity or malice or whatever.  

Bold and italic like that, I did a double-take to make sure you hadn't posted a tiny image of their logo.

And then you gave me an idea. Both versions!

Quote:

Originally Posted by SolipsismX 


From what I read, we're not talking about the app itself changing in anyway, like it would when you buy extra levels in a game. This is simply a service that allows for additional cloud storage access right?
The argument I read was that if you make the purchase via an iDevice for (say) 1 year of an additional 100GB for $50, but after that year you want to add another year but you are not using an iDevice Apple still wants to get 30% because you are still making a purchase for a service that was once tied to an App Store app. That is what seems unreasonable to me. If there is no App Store app involved, in any way in purchase then I think that Apple should be able to take a cut.

That sounds like,

a) not what we're talking about here, in the context of the disagreement with Microsoft, and

b) a possible issue that no one's thought through yet.

It might depend on whether it was an auto-renewing subscription or not.

Quote:

Originally Posted by LarryA 


Put a Word doc from work into iCloud and get back to me.

No doubt. It's unfathomable to me how iCloud is better for document handling than Dropbox (or SkyDrive, from the sound of it) for anything I want to actually do. Very irritating to have new documents on Mountain Lion now try to start by pushing stuff into iCloud by default too. WTF? Boom, it just works, just not how I need it to.

Share docs with family / friends / co-workers? How about any of the above that additionally don't have an Apple ID? Oh hell no, that must not be what I really want. :/ (And if I can't realistically have it share with my wife / kids / family / friends, then I'd argue it misses on a HUGE piece of what todays "average user" with fancy Internet access would expect it to offer.)

And that's not even getting into the issue that trying to make Microsoft pay 30% of subscription fees to a service they're running themselves is crazy.

The problem with a lot of these arguments and the 30% is that Apple and defenders of this policy have previously argued that Apple is bringing the business to these apps.  And yes a lot of these apps were nothing until Apple made the App Store and they were created and became something.

The problem is taking that to established players like Microsoft Office.  What happens when a user who has been thinking about getting an iPad, finally jumps in because he hears there is Office.  Does Apple really deserve that 30%?  Or of course if a SkyDrive users changes to Android or Windows but still keeps his iTunes account and uses that for billing because users are lazy and won't change things they don't have to.  30% is outrageous for billing when expensive players like PayPal charge 3%.

And then there are grey lines.  There is reports that Microsoft wanted to remove in app purchases, Apple is saying no.  I speculate because of grey lines.  Like if you don't have a Microsoft Account it sends to you to the web to create one and the link to pay is all to close, though not officially part of the process.  (And yes, plenty of Office users don't have Microsoft Accounts, its currently not required but is now being encouraged for cloud sync with Office 2013).

Ultimately it would be in Apple's favour to make an agreement, as selling to corporate and other users will be easier with Office, even if Apple manages to convert some of them to iWork.  Sure it might bring some new sales Microsoft's way, but who hasn't used Office in some shape in their life?  Very few.

Quote:

Originally Posted by KootenayRedneck 

I use SkyDrive on a Mac and very limited on a iPad. I would rather use a html interface than the app since it quite simply better than the app.

and this article is about an updated app that MS is ready to release.

Sorry folks, but I'm so not caring about some fee-based storage app on iOS peddled by a company that grows more irrelevant by the second. 

Quote:

Originally Posted by Gatorguy 

I wonder if this would push MS so far as to pull their Office apps from iOS completely?

hasn't hurt Apple before.

Quote:

Originally Posted by SolipsismX 


Um, that's exactly what I initially replied to in this thread. Here is the article quote in question...

"Microsoft does not appear keen to pay Apple the 30% cut, as it lasts in perpetuity, regardless of whether a user continues to use an iOS device or not, as the billing is through their Apple account," author Alex Wilhelm explained."

I don't know where Alex Wilhelm is getting this idea, but I don't think, in fact I'm 100% certain, he doesn't know what he's talking about. 

From Apple's documentation, SkyDrive would use, I would think, a non-renewing subscription.

With "One year of VoIP telephone service" -- a non-renewing subscription service -- being the example given that would seem to most closely resemble SkyDrive. In which case,

so the would certainly be no cut that, "lasts in perpetuity, regardless of whether a user continues to use an iOS device or not," in this case, and, there is no type of purchase listed in the documentation that would have this result. Even an auto-renewing subscription, which I don't believe would be the appropriate type, based on Apple's guidelines, still allows the user to cancel the renewal.

Now, while it's most likely that Microsoft just doesn't want to have to give up the 30% cut at all, it's possible that maybe the argument is over some point such as, "your application must include a mechanism to deliver the purchased Non-Renewing Subscription In App Purchase to all iOS devices owned by a single user," and Microsoft want to charge by device. But, the most likely scenario is that they are just trying to wriggle out of the straight 30%, and it's entirely in character for them to try to do that.

Quote:

Originally Posted by UltimateKylie 

The problem with a lot of these arguments and the 30% is that Apple and defenders of this policy have previously argued that Apple is bringing the business to these apps.  And yes a lot of these apps were nothing until Apple made the App Store and they were created and became something.

 

The problem is taking that to established players like Microsoft Office.  What happens when a user who has been thinking about getting an iPad, finally jumps in because he hears there is Office.  Does Apple really deserve that 30%?  Or of course if a SkyDrive users changes to Android or Windows but still keeps his iTunes account and uses that for billing because users are lazy and won't change things they don't have to.  30% is outrageous for billing when expensive players like PayPal charge 3%.

 

And then there are grey lines.  There is reports that Microsoft wanted to remove in app purchases, Apple is saying no.  I speculate because of grey lines.  Like if you don't have a Microsoft Account it sends to you to the web to create one and the link to pay is all to close, though not officially part of the process.  (And yes, plenty of Office users don't have Microsoft Accounts, its currently not required but is now being encouraged for cloud sync with Office 2013).

 

Ultimately it would be in Apple's favour to make an agreement, as selling to corporate and other users will be easier with Office, even if Apple manages to convert some of them to iWork.  Sure it might bring some new sales Microsoft's way, but who hasn't used Office in some shape in their life?  Very few.

You miss the point. First, Apple is not just a payment processing system like Paypal. Apple also hosts the apps, distributes the apps, and to a lessor extent markets the apps. Like with any retailer, the 30 percent also has to pay for the loss leaders. Namely the free apps. This is little different than a flower shop that substantially marks up the price of flowers because it has to pay for the 50 percent of flowers its buys that do not get sold. Or restaurants that have to factor food wastage into the price of the food it sells. 

This is all about Apple acting as a retailer and making a profit when it brings a sale to Microsoft. The person who buys an iPad because he or she hears you can use Office on it 1) should do a little research, and 2) could go to Microsoft directly to pay for the subscriptions it wants. When Microsoft sells Office at Walmart, Microsoft isn't complaining about giving Walmart its cut. Further, besides withdrawing its apps, it is easy for Microsoft to avoid paying Apple the fee. Take for instance the rumored version of Office that is supposed to be released to iOS devices. The free version is just supposed to allow people to view Office docs. The subscription service allows people to create and edit such documents. If Microsoft wants to allow in app subscriptions, it will have to pay Apple. To avoid this, Microsoft just has to invest in letting people know about its products and have them sign up for the subscriptions not using Apple's services. This is what the other big companies like Netflix and Hulu Plus do. However, Microsoft wants to use Apple's infrastructure to let iOS users know of services it has for sale without paying Apple.

Quote:

Originally Posted by GadgetCanada 

 

I think Apples terms are the app store price cannot be higher if the app or service is available through another portal.

That is called a most favored nations clause. In the case of Apple, it only applies to books, and maybe music. Apple will let you sell the in app purchase for more through the apps store. As somebody else pointed out, there are plenty of apps that cost money on the app store, but are free (but ad supported) on Android. 

I had a feeling this is what the discussions were really about. Apple isn't pushing for anything. Apple has rules that apply to all developers, including Microsoft. Microsoft is the one pushing, and Apple is not likely budging. It can't have a special Microsoft rule. 

Quote:

Originally Posted by UltimateKylie 

... The problem is taking that to established players like Microsoft Office.  What happens when a user who has been thinking about getting an iPad, finally jumps in because he hears there is Office.  Does Apple really deserve that 30%? ...

I'm sorry, but I don't understand why "established players" should get some sort of special treatment. Is the point to discourage "new players" from getting into the market?

I also don't understand why your hypothetical user bought an iPad and not a surface if the only reason they are buying is for Office.

You're speculating because you wanted to make a particular statement without any facts to back it up, so you created grey lines.