Apple getting its standard 30 percent cut on Office for iPad subscriptions

By , Mar 27, 2014

word-in-app

Following today’s long expected release of the Office for iPad applications, Apple’s boss Tim Cook issued a nice tweet welcoming Word, Excel and PowerPoint into the App Store. Returning the favor, Microsoft’s newly installed chief executive Satya Nadella took to Twitter to thank Cook, saying he was “excited to bring the magic of Office to iPad customers”.

Redmond couldn’t have wished for a better endorsement than this!

So, why are these powerful Silicon Valley executives droning politely on to each other, do you think? And how come Cook is promoting Office for iPad even though the software competes squarely with Apple’s own iWork suite, free with iDevice purchases?

Could it be because folks at Cupertino are getting their standard 30 percent cut on Office 365 subscriptions sold within the app…

As first discovered by Re/code, Microsoft chose to sell Office 365 subscriptions to Office for iPad users via Apple’s in-app purchase mechanism and hand over 30 percent of that revenue to Apple.

Indeed, Microsoft does offer Office 365 subscriptions within the just-released Word for iPad and the other Office apps and, yes, it is paying the 30 percent cut, Apple confirmed to Re/code. Microsoft declined to comment on the matter.

There’s nothing unusual about this.

Microsoft is simply abiding to the same revenue sharing rules regarding In-App Purchases all of Apple’s registered iOS developers do.

The newsworthiness of this stems from the fact that Microsoft’s actually agreed to Apple’s terms, even more so knowing Apple’s 30 percent cut has been the sticking point for some other developers and publishers on the App Store.

You’ll remember how the two firms locked horns over in-app purchases in Microsoft’s SkyDrive cloud storage client for the iPhone and iPad.

As Apple didn’t relent, Microsoft eventually removed the option to purchase additional storage within the app rather than agree to share 30 percent of that revenue with Apple (Dropbpox doesn’t have such religious issues, however).

The iPhone maker also issued the following statement regarding Office for iPad’s arrival.

We’re excited that Office is coming to iPad — now part of the more than 500,000 apps designed specifically for iPad. iPad has defined a new category of mobile computing and productivity and transformed the way the world works.

Office for iPad joins an incredible lineup of productivity apps like iWork, Evernote and Paper by FiftyThree, that users can choose from to inspire them to do more with this powerful device.

An Office 365 subscription is required to edit and create documents on the iPad.

Office for iPad (App Store teaser)
Apple is featuring Office for iPad in the App Store.

The subscription fee is $9.99-per-month, or $99.99 per year, for a Home Premium package that includes unlimited access to the Office applications for Windows, Mac and mobile. A more affordable Office 365 Personal tier costing $6.99 per month ($69.99 per year) is coming soon, though it’ll limit your Office usage to a single PC or Mac desktop, plus one tablet.

The reason it took so long to bring Office to the iPad, according to Microsoft’s boss, is their desire to do it right and tailor the app to Apple’s tablet and iOS 7, he told reporters at Microsoft’s San Francisco event on Thursday:

We’ve been obviously working on this for a while. The thing we wanted to get most right was the combination of what I would call the combination of the app, the enterprise architecture, the developer APIs, and then marry it with the device and what you expect from the device. It’s not just a trivial thing, let’s port Word for Windows to a particular device.

Early tests of Office for iPad seem mostly positive, with reviewers praising the crisp typography, snappiness, adherence to Apple’s design principles in iOS 7 and rich features.

Here’s Cook’s tweet.

And Nadella’s.

And just like that, Nadella started following Cook on Twitter.

Bjwo50YCUAAtzlb.png-large

History has been made, indeed.

Earlier this month, Microsoft unleashed a nice OneNote for Mac application in the Mac App Store, made Mobile Office for iPhone free for home use (no subscription required) and is slated to update Office for Mac with a plethora of much-needed new features.

This may come as a surprise to our younger audience, but those who have been around for some time will remember that the Windows giant – despite the ups and downs in the Apple-Microsoft relationship – was the key Mac developer from the onset.

The two companies were partners early on in the game: for example, Word for Mac debuted in 1985 as the first graphical version of Microsoft’s word-processing program.

So, what do you think about this revenue sharing scheme?

Is Microsoft potentially going to make Apple a lot of money by agreeing to implement in-app purchases for Office 365 subscriptions and share revenue with Apple?

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  • Framboogle

    Too bad no one will actually buy a subscription…

  • Kartik Dhawan

    It’s definitely a win for Apple, it might turn out extremely advantageous for Microsoft aswell.

    I love Satya’s attitude about this.

  • ap3604

    $9.99 a month just to edit documents? #%&! that nonsense!

    • smtp25

      You get the whole suite, and can use on your iPad or desktop. For businesses this is an acceptable cost.

      • JSintheStates

        Acceptable cost? Are you lawyers, or shills for MS, or just plain trolls? Absolute nonsense! It’s technically extortion! And you fools buying into it makes it that much more difficult for the rest of humanity!

      • jack

        you are going every MS-negative comment and defending Microsoft. are you an employee?

    • Kartik Dhawan

      The plan you are referring to is for professional use, as said in the article.
      To me 10$ per month for professional use is a great value (I’ve got a subscription anyway).
      A personal plan (more affordable) is coming soon.

  • jack

    Pathetic… subscription to use a program that has been used offline for decades by millions of people and companies without problem? I don’t need to pay monthly just to be able to upload my office files to OneDrive. STUPID AND GREEDY STUNT.
    Each app should’ve been sold @ 10 bucks each

    • smtp25

      You do know how much Office 2013 sells for don’t you? Based on the $10 a month you could subscribe for 3 years before you equal the cost of Office 2013 Pro

      • jack

        I use Numbers/Pages/Keynote for a long time and I don’t wanna worry about subscriptions.

  • Kartik Dhawan

    After this series of tweets, I’m keeping iWork and Office apps in the same folder.
    XD

  • Yujin

    office is free on iphone, but didnt see much to get me to even try or use it Still iWork for ios is the best i have seen. competition is good cause it will force apple and microsoft to make better apps

    • lolder

      Microsoft doesn’t need to make Office better. It’s industry leading. But Apple need to improve theirs

  • JSintheStates

    $70 per year? To run Word and Excel — over the internet — I don’t actually have the software on my iPad? You have got to be F—ing kidding me! Utter nonsense! You buy into this scam, and you’re supporting these ripoff artists for the rest of eternity!

    P.S. Check out Office2 (that’s Office squared) on the app store! Do it now!

    • https://twitter.com/MrElectrifyer MrElectrifyer

      Said the iDiot who’s never used it…if you had, you’d realize they’re local apps; each at-least 200MB in download.

  • https://twitter.com/MrElectrifyer MrElectrifyer

    If you’re a student, get the uneversity edition for $75 for 4 years…

    • ✪ aidan harris ✪

      Where can I get the lifetime edition? Oh yeah that’s right nowhere since with Office 365 I own squat and just continuously lease software from Microsoft. Thanks but no thanks…

      • https://twitter.com/MrElectrifyer MrElectrifyer

        If you actually open your eyes and do some research instead of ignoramusly hating, you would have come across this (http://bit ly/1jCh6AI) in two clicks from Officecom

      • ✪ aidan harris ✪

        Perhaps I’m still being an ‘ignoramus’ but I see no link to a lifetime edition of Office for 365 without the subscription rubbish. If you could ever so kindly point it out to me though I’d be happy to evaluate it…

      • https://twitter.com/MrElectrifyer MrElectrifyer

        Right, those ones are only permanent for Windows platform. The others who ditched Windows would have to keep paying every year they choose to use Windows’ software…or they could wait for Office 2014 if they’re on a Mac. Otherwise, sucks to be them…

        They’ll most likely be fine without the most versatile productivity suit, Office, ’cause they’re fine without the most versatile OS, Windows.

      • ✪ aidan harris ✪

        I’d agree with everything you say there except your last paragraph. Believe me when I say this Windows is not very versatile. For one thing every time I run it from Parallels on OS X it de-activates itself and then when I boot from it directly it re-activates itself…

      • https://twitter.com/MrElectrifyer MrElectrifyer

        Kindly share with me your reasons why you’d say that. The example you gave sounds like a bug in Parallel’s virtualization technology, have no such problem with XP running in Hyper-V on my Surface Pro…

      • ✪ aidan harris ✪

        There’s lots of reasons that Windows isn’t very versatile. For the most part Windows is a great OS but It has it’s fair share of problems. One of the main things I dislike about Windows (and this could just be me) but anytime you resize partitions the Windows bootloader just borks at you which is why I’m now stuck making a bootable USB :(

      • https://twitter.com/MrElectrifyer MrElectrifyer

        Right, I’ll admit, I’ve come across many problems with Windows 8 that I never expected from Windows (never experienced usage problems in Windows 7). From basic stuff like forgetting a network through a GUI (even iOS can do that) to more advanced stuff like managing properties of network connections through a GUI, Microsoft chose to dump such handy features during the transition from Windows 7 to 8 for whatever nonsense Ballmer reason…

        Regarding the problem after re-partitioning, depends on the software you use to re-partition. I’ve used GParted Live dozens of times to resize my partitions without any negative side-effects…

  • diggitydang

    The double space in Cook’s tweet between “and” and “Office” bothers me soooooo much!!! I mean, this guy is the CEO of the richest company! Hahahaha!!

  • Jose Antonio Gomez

    Waiting for a good tweak for this, is to expensive!

  • Sebastián Junca 

    Tried the app, looks nice, but i´ll keep using pages, numbers and keynote that are totally free, and i can share documents in word format.

  • Marcus Winchester

    And you can bet Microsoft will do all it can to encourage you to not buy the subscription through the App Store so that they get the whole cut and avoid that 30% loss per sub