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Apple confirmed to take 30% cut of Microsoft Office 365 subscriptions purchased in Office for...

post #1 of 54
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It was confirmed on Thursday that Apple will garner its stipulated 30 percent share of Microsoft Office 365 subscriptions purchased from the new Office for iPad app, which launched at a special event earlier today.



At the Office for iPad debut, Microsoft revealed it is using the so-called "freemium" sales model with the suite of productivity apps. In the case of Office, users can download the software for free, but will need to stump $99 per year (or pay a recurring $9.99 per month fee) for a Office 365 subscription if they want to edit documents.

In a statement to Re/code, Apple confirmed it will take the usual 30 percent cut of all Office 365 subscriptions purchased from any Office for iPad app. Apple does not profit from customers who use an existing subscription, or purchase a new subscription from Microsoft's website, to access the Office apps.

Apple's charge to publishers for all in-app sales was thought to be one of the major roadblocks in Microsoft's launch of Office for iPad.

Microsoft on Thursday introduced the long-awaited Office productivity suite for iPad, which includes custom-built versions of Word, Excel and PowerPoint.

AppleInsider was able to spend some hands-on time with the new offerings and came away with the impression that Microsoft made a concerted effort to make the apps feel native to iPad, not just a mere port of existing software.
post #2 of 54

And in other news, Tim Cook's personal secretary advises Tim will be unavailable for the entire day as he currently in his office rolling on the floor laughing.

 

 

White Flag raised: Resistance was futile.


Edited by GTR - 3/27/14 at 3:08pm
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post #3 of 54
Why do people care about this? Seem like inside baseball that only tech journalists and maybe some Wall Street analysts would be interested in.
post #4 of 54
..And why the **** shouldn't they? Office on iPad opens up Microsoft to potentially millions of new customers. iOS devices users are the most lucrative users to have, and the platform is the healthiest of any. Thats the cost of doing business on the most successful appstore in the world.
post #5 of 54
To quote from http://www.asymco.com/2013/08/26/steve-ballmer-and-the-innovators-curse/
Quote:
Steve Ballmer will not be remembered as favorably as the man who created Microsoft. But at least he won't be remembered as the fool who killed it. That epitaph is reserved for his successor.

It will be very interesting to see how MS handles the next 5 years. The 5 after, more so.
Edited by jinglesthula - 3/27/14 at 3:28pm

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post #6 of 54
Quote:
Originally Posted by Rogifan View Post

Why do people care about this? Seem like inside baseball that only tech journalists and maybe some Wall Street analysts would be interested in.

People don't. It's fresh meat for the forums. Google ads are waiting to be served.

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post #7 of 54
Love it.

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GOA

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GOA

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post #8 of 54
This may seem harsh but it's not because some of the advanced features like live wrapping of text around images in Word for iPad come from Apple's advanced text engine. So... Good for Apple. Microsoft probably cannot write these applications for WindowsPhone yet. Microsoft will make a killing with businesses anyway.

I have tried the MS Office for iPad and it looks like it needs polishing in the UI and presentation when compared with iWork. Some of the rough desktop look and feel of office are still there. While businesses will certainly use it because of their investments in office and office 365, end users will likely flock to iWork.

Office Video

Edited by AppleSauce007 - 3/28/14 at 3:25am
post #9 of 54
Quote:
Originally Posted by Slurpy View Post

..And why the **** shouldn't they? Office on iPad opens up Microsoft to potentially millions of new customers. iOS devices users are the most lucrative users to have, and the platform is the healthiest of any. Thats the cost of doing business on the most successful appstore in the world.
Nadella gets it, Ballmer didn't. I agree with MG Siegler who wrote on his site that this is Microsoft basically admitting Surface is a failure. I do wonder what their OEM partners think about this as Office was one thing they could tout as an advantage, now they can't. I get the feeling Nadella is more interested in the services side of Microsoft and probably won't be making decisions based on what will protect Windows and PC OEMs.
post #10 of 54
Quote:
Originally Posted by jinglesthula View Post

To quote from http://www.asymco.com/2013/08/26/steve-ballmer-and-the-innovators-curse/

"Steve Ballmer will not be remembered as favorably as the man who created Microsoft. But at least he won't be remembered as the fool who killed it. That epitaph is reserved for his successor."

It will be very interesting to see how MS handles the next 5 years. The 5 after, more so.

A stupid comment. Look there are far more iPads sold per quarter than Macs. The ratio is between 3-7 to 1 depending on the quarter ( last Q was 26 million to 4 million). So most iPad users are windows users, often at home but sometimes in the office. Since Microsoft is a software not a hardware company and since this could sell in the millions this could be a win for them and Apple. It might even stop some migration to Macs. The sacrifice on that for Apple will be offset by the 30% they are getting and the increased iPad sales.

MS != Windows.
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post #11 of 54
Quote:
Originally Posted by Rogifan View Post

Quote:
Originally Posted by Slurpy View Post

..And why the **** shouldn't they? Office on iPad opens up Microsoft to potentially millions of new customers. iOS devices users are the most lucrative users to have, and the platform is the healthiest of any. Thats the cost of doing business on the most successful appstore in the world.
Nadella gets it, Ballmer didn't. I agree with MG Siegler who wrote on his site that this is Microsoft basically admitting Surface is a failure. I do wonder what their OEM partners think about this as Office was one thing they could tout as an advantage, now they can't. I get the feeling Nadella is more interested in the services side of Microsoft and probably won't be making decisions based on what will protect Windows and PC OEMs.

I'm the furthest thing from a Ballmer fan ... But, you have to give credit where credit is due -- these apps started on the Ballmer's watch!

I don't know though, whether Ballmer would have released it on the iPad before releasing it on the Surface.

I suspect that iOS has better APIs and a richer SDK than the Surface does.
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post #12 of 54
Quote:
Originally Posted by Rogifan View Post


Nadella gets it, Ballmer didn't. I agree with MG Siegler who wrote on his site that this is Microsoft basically admitting Surface is a failure. I do wonder what their OEM partners think about this as Office was one thing they could tout as an advantage, now they can't. I get the feeling Nadella is more interested in the services side of Microsoft and probably won't be making decisions based on what will protect Windows and PC OEMs.


Which makes him an incredibly smart man and very well could be the man that saves Microsoft. Ballmer was an idiot that has almost run the company into the ground.

 

For all of people's complaints MS does make pretty good products they just price them out of all but the business's hands.

post #13 of 54

Why should users have to buy Office360 account only on apple appstore?

post #14 of 54

Don’t rush out for early Easter gifts for kiddies and friends, Tim & Jon. The coin may not be as much as MS would like to think.

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post #15 of 54
Is it safe to say MS was holding this back until they reached a certain number of 365 subscribers, so as to avoid losing revenue on many 365 subscribers if they signed up through iPad in the last year? Or two?
post #16 of 54
Quote:
Originally Posted by Dick Applebaum View Post


I'm the furthest thing from a Ballmer fan ... But, you have to give credit where credit is due -- these apps started on the Ballmer's watch!

I don't know though, whether Ballmer would have released it on the iPad before releasing it on the Surface.

I suspect that iOS has better APIs and a richer SDK than the Surface does.

 

From what I've heard is that he intentionally held back the release even though it was further ahead in development than the Windows version.

post #17 of 54
Quote:
Originally Posted by Rogifan View Post

Why do people care about this? Seem like inside baseball that only tech journalists and maybe some Wall Street analysts would be interested in.

It's a big deal.

 

It's a serious app for serious people.  If you need it (spend $100 now and get the bid sheet out for the contract, or not... and lose the bid), you will spend it.

 

if the numbers are right,  $30/head per year... for hmmm, lets say 100 million people who pay for it via the iPad (in 2010, there were 750 million licenses of Office, and we are approaching 200Million iPads, at nearly 20 million a quarter... I think the gating factor will be how quickly businesses ramp up iPad support for office).    Apple spends $3 processing the charge. 2.7Billion in gross profit,  figure salaries, CapEx to service the clicks, let's go half on that ... 1.4B  Net profit a year for just processing the payment of one customer.

 

Visa made $4B last year.   Apple, servicing one customer, will make 1/3 of that. 

 

Remember... this will be a 'I need it now!' buy... you're tooling around the country on your iPad., and it says... 'times up... pay M$!, ' you're not gonna run to your PC, and web in and pay microsoft the same amount of money.  you click, type in your AppleID password... and continue spreading your sheets (sound bad ;-), 30 seconds of discomfort (after my battles with Excel today at work... 30 seconds would have been a godsend!)

 

It's a big deal.

post #18 of 54
Quote:
Originally Posted by Chandra69 View Post
 

Why should users have to buy Office360 account only on apple appstore?


They don't have to!

 

What this article is saying is that IF a user buys a subscription using an in-app purchase, then (and only then) does Apple get it's 30%. Since most Office users actually subscribe online using Microsoft's web site, or they already use existing enterprise subscriptions, then Apple will see very little of this potential profit because it's not an in-app purchase.

post #19 of 54
Quote:
Originally Posted by Chandra69 View Post
 

Why should users have to buy Office360 account only on apple appstore?

it's more of where you are when you need to buy it again.    Unless I'm a MS sharedholder,  if I'm on my iPad, and it says, 'pay up'  and it's 99/year on the ipad and 99/year on the Office365 website (or PC, or surface)... what incentive will I have to leave the environment, pull out my credit card, and type in all the info.   Why not just click pay, enter my AppleID password, and continue working?

post #20 of 54

Apple only gets 30% if it's an in-app purchase. If the subscription is not an in-app purchase, such as buying online on Microsoft's web site, or using an existing enterprise subscription, then Apple won't get it's 30% cut.

post #21 of 54
Quote:
Originally Posted by WP7Mango View Post

Apple only gets 30% if it's an in-app purchase. If the subscription is not an in-app purchase, such as buying online on Microsoft's web site, or using an existing enterprise subscription, then Apple won't get it's 30% cut.

Nevertheless most new customers downloading this for the first time would use the IAP subscription model.

As for the cost to apple of hosting it - about the same as any digital bytes of the same size. It's probably much smaller than a HD movie.
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post #22 of 54
Quote:
Originally Posted by asdasd View Post


A stupid comment. Look there are far more iPads sold per quarter than Macs. The ratio is between 3-7 to 1 depending on the quarter ( last Q was 26 million to 4 million). So most iPad users are windows users, often at home but sometimes in the office. Since Microsoft is a software not a hardware company and since this could sell in the millions this could be a win for them and Apple. It might even stop some migration to Macs. The sacrifice on that for Apple will be offset by the 30% they are getting and the increased iPad sales.

MS != Windows.

 

MS currently has to main cash cows: Windows and Office.  Electing to give 30% of subscription revenues to Apple that happen via the platform (iOS) that's growing in popularity (contrast with the recent consistent decline in PC shipments worldwide) is an indicator that their business model has been affected.

 

As for MS being a software company rather than a hardware company, this is yet again another point where we can see that they have been affected.  They were.  Now they are (in their own words) transitioning to being a devices and services business.  I suspect it's because they've seen how Apple's integrated/ecosystem approach has upset their hardware OEMs.  Also, following Mavericks free release MS cut Windows upgrade prices.  These are all just signs that the more-or-less self-contained hegemony they once enjoyed has changed.

 

As for it being a stupid comment it was in 2 parts.  The second was simply my expression of interest in watching how they will continue to respond to the changing consumer tech landscape.  The first was a quote of someone who (while I don't agree with everything Deidu says) is one of the sharpest analysts out there.  He's been wrong occasionally, but his posts always reflect careful thought and research.

 

Honestly, I think it would be silly that MS would ever just outright fail and close the doors.  They will evolve, but when it finishes whatever changes it will go through as it adapts I think it will have shed enough of what it once was that you could safely say that the essence of the MS business as it was from '84 to '04 will no longer be.  Another good article along these lines: http://www.asymco.com/2012/07/04/the-building-and-dismantling-of-the-windows-advantage/

 

As for it being a win, I think you're right.  Apple will probably pick up some more iPad sales for corporations and business types.  MS will probably pick up some more Office 365 subscriptions from which they'll get the lion's share of the profits.  I even think it's the right thing for MS to do (much better to skate to where the puck is than to simply stand still).

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post #23 of 54
Quote:
Originally Posted by asdasd View Post


Nevertheless most new customers downloading this for the first time would use the IAP subscription model.

 

I'm not so sure. Most new iPad Office users will be existing subscribers, based on enterprise usage.

 

Basically, Apple is now an official Office 365 reseller, well at least for Word, Excel and Powerpoint. I wonder how long before Access and Outlook become available...

post #24 of 54
Quote:
Originally Posted by asdasd View Post


A stupid comment. 

 

Incidentally it's worth noting that I don't think Deidu is saying Ballmer's successor is a fool, nor that he'll be the one to kill MS.  I think he's saying that's how people will perceive it.

 

Personally his assessment of Ballmer's tenure seems sound to me.

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post #25 of 54
By stupid comment I was taking about the Asymco quote not you - although he wasn't talking about being doomed in this particular context. Asymco - normally very good - seems to believe that MS are doomed regardless of the CEO. In any case the quote was a few months back.

Office may well become microsofts biggest money earner particularly if the sub model takes off. It's near guaranteed income every year.

EDIT: we crossed posts there. You might be right that Deidu means the perception would be that this CEO "doomed" MS. I think this is a gutsy move.
Edited by asdasd - 3/27/14 at 4:25pm
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post #26 of 54
I really hate subscription models. If its something you are using daily for work, and/or your work is paying for it, so be it. Guess I don't fit that model.
post #27 of 54
Apple is now the king of hardware AND OS' evidently shown in this article. Apple scraping away 30% for in app purchasing for office is kind of a sweet revenge whether intended or not. If you zoom out of the big picture Microsoft is now scrounging at the feet of Apple to just stay relevant nowadays.
post #28 of 54
Quote:
Originally Posted by emerica View Post

Apple is now the king of hardware AND OS' evidently shown in this article. Apple scraping away 30% for in app purchasing for office is kind of a sweet revenge whether intended or not. If you zoom out of the big picture Microsoft is now scrounging at the feet of Apple to just stay relevant nowadays.

 

Yep. But you wouldn't really know that from the "Apple is going downhill" tone of all tech blogs, comments, online and offline media outlets, etc. Apple has NEVER been in as strong a position as they are today, in any respect. Yet, as usual, up is down. 

post #29 of 54
Quote:
Originally Posted by asdasd View Post


Nevertheless most new customers downloading this for the first time would use the IAP subscription model.

As for the cost to apple of hosting it - about the same as any digital bytes of the same size. It's probably much smaller than a HD movie.

How many people wake up one day and decide to buy an office suite just to check it out? Most purchases of Office would probably be planned business decisions, in which case downloading the app would be the last step, not the first step.


Edited by d4NjvRzf - 3/27/14 at 10:31pm
post #30 of 54
Quote:
Originally Posted by AppleInsider View Post

It was confirmed on Thursday that Apple will garner its stipulated 30 percent share of Microsoft Office 365 subscriptions purchased from the new Office for iPad app,...
In a statement to Re/code, Apple confirmed it will take the usual 30 percent cut of all Office 365 subscriptions purchased from any Office for iPad app. 

Where did Apple confirm this?

All Tim stated on Twitter was, "Welcome to the #iPad and @AppStore! @satyanadella and Office for iPad".

They could have made a deal.


Edited by Chris_CA - 3/27/14 at 8:41pm
post #31 of 54
Quote:
Originally Posted by Rogifan View Post

Why do people care about this? Seem like inside baseball that only tech journalists and maybe some Wall Street analysts would be interested in.

 

It impacts the stock significantly. WSJ and others expect Office for iOS to be a big cost leader for Microsoft. Having 30% of that lead go [as it should] to Apple like any other 3rd party developer means money in Apple's pocket.

post #32 of 54
Quote:
Originally Posted by AppleSauce007 View Post

This may seem harsh but it's not because some of the advanced features like live wrapping of text around images in Word for iPad come from Apple's advanced text engine.

That's exactly right. There is a lot of stuff app writers don't write these days, they just link to libraries, and a lot of those are in the OS. Probably more than 30% of the code that's actually running when you use Word is Apple's.

post #33 of 54
All of this makes the Surface even more pointless.
post #34 of 54
Quote:
Originally Posted by jinglesthula
MS currently has two main cash cows: Windows and Office.  Electing to give 30% of subscription revenues to Apple that happen via the platform (iOS) that's growing in popularity (contrast with the recent consistent decline in PC shipments worldwide) is an indicator that their business model has been affected.

 

FYI:  Another indication is that they actually have THREE main cash cows - the third is Server - which I believe is now the biggest. 

And it's a case of not only its growth, but strategically importantly, the stalling to declining revenues in Office and  Windows.  Which has been fairly dramatic since mobile computing just took off.  So MS really doesn't have a lot of choice about whether to go for the successful mobile platforms. 

And will get some IT uptake in the BYOD segment of the market - plus a lot of users.  Maybe me when I finally get a new iPad this fall.  Word's a necessary evil in my life, what can I say, and already paying the freight for having it on three machines - so this one won't even cost extra.  (Something I haven't noticed any one else point out, btw.)

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post #35 of 54
Quote:
Originally Posted by ascii View Post

Quote:
Originally Posted by AppleSauce007 View Post

This may seem harsh but it's not because some of the advanced features like live wrapping of text around images in Word for iPad come from Apple's advanced text engine.

That's exactly right. There is a lot of stuff app writers don't write these days, they just link to libraries, and a lot of those are in the OS. Probably more than 30% of the code that's actually running when you use Word is Apple's.

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post #36 of 54
Quote:
Originally Posted by Chandra69 View Post
 

Why should users have to buy Office360 account only on apple appstore?

 

They don't.  You can purchase your subscription from anywhere.  *IF* you choose to purchase your subscription through Apple's app store, Apple will get a 30% cut.  So the question is more if there is a MFN-like pricing clause or not.  Otherwise MS could just jack the price up on the App store by 30% to let Apple users pay the extra Apple fee or have sales lowering the price when purchased through MS.  Apple is usually too smart for that though.

post #37 of 54
Quote:
Originally Posted by bigpics View Post

FYI:  Another indication is that they actually have THREE main cash cows - the third is Server - which I believe is now the biggest. 


And it's a case of not only its growth, but strategically importantly, the stalling to declining revenues in Office and  Windows.  Which has been fairly dramatic since mobile computing just took off.  So MS really doesn't have a lot of choice about whether to go for the successful mobile platforms. 


<...>



Some food for thought :


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post #38 of 54

After Amelio got tossed from Apple an early culture change was getting rid of the notion that for Apple to win, Microsoft had to lose.  It sounds like Microsoft might be discovering the same truth, post-Ballmer.

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post #39 of 54
Quote:
Originally Posted by Quadra 610 View Post

All of this makes the Surface even more pointless.


No it doesn't, because the Surface is still a much more productive tablet than the iPad, mainly for the following reasons -

 

1. Viewing two apps side by side.

2. Multi-user account profiles, especially useful if you are sharing devices with other users.

3. Full USB 3.0 port for simple connectivity to flash drives, non-wireless printers, external hard drives, smartphones, etc.

4. Micro SD card for additional storage (up to 128 GB).

5. Access to the desktop environment, which when docked to an external monitor, mouse and keyboard, turns the device into a desktop PC. Even if it's the ARM version, having a "windowed" environment makes it extremely productive as a desktop machine, especially since you can extend the desktop over two screens, rather than just mirror to single external monitor.

6. Access to the full file system.

7. Live Tiles (particularly the use of secondary live tiles, or live in-app short-cuts if you prefer) allows you to configure your start screen for improved efficiency and productivity in ways that aren't possible on the iPad.

 

That said, Surface is just one type of device. Personally, I have a preference for the Surface Pro 2 or the Dell Venue Pro 11 or the HP Omni 10.

post #40 of 54
Quote:
Originally Posted by WP7Mango View Post


No it doesn't, because the Surface is still a much more productive tablet than the iPad, mainly for the following reasons -

1. Viewing two apps side by side.
2. Multi-user account profiles, especially useful if you are sharing devices with other users.
3. Full USB 3.0 port for simple connectivity to flash drives, non-wireless printers, external hard drives, smartphones, etc.
4. Micro SD card for additional storage (up to 128 GB).
5. Access to the desktop environment, which when docked to an external monitor, mouse and keyboard, turns the device into a desktop PC. Even if it's the ARM version, having a "windowed" environment makes it extremely productive as a desktop machine, especially since you can extend the desktop over two screens, rather than just mirror to single external monitor.
6. Access to the full file system.
7. Live Tiles (particularly the use of secondary live tiles, or live in-app short-cuts if you prefer) allows you to configure your start screen for improved efficiency and productivity in ways that aren't possible on the iPad.

That said, Surface is just one type of device. Personally, I have a preference for the Surface Pro 2 or the Dell Venue Pro 11 or the HP Omni 10.


why don't you admit it, as MS did : this battle is lost.

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