Thursday, December 13, 2012

Negotiating from power position, Apple stonewalls Microsoft on reduced Office for iOS rev share

As reported on Tuesday, Microsoft isn't keen on giving Apple 30 percent of its take on SkyDrive subscriptions. How do you think Microsoft feels about the same situation for Office for iOS? You'd be right, worse.

A new report goes deeper into the Microsoft - Apple dust-up. While Microsoft could lose revenue if SkyDrive is unable to be monetized, consider that Office is one of its cash cows, along with Windows. Microsoft could lose a significant amount of money if Apple were to take 30 percent of Microsoft Office for iOS revenue, as it normally does with App Store or iOS in-app purchases.

According to the report, although Microsoft will rake in significant income from Microsoft Office for iOS, it will also be a boon to Apple's mobile platform, giving it even more attraction to the enterprise than it already has. With that, Microsoft feels it is "owed a discount" on the 30 percent share that Apple would normally take on Office 365 subscriptions sold to iOS users through it.

Microsoft might want to bring up the fact that when Apple was on the verge of bankruptcy, Steve Jobs went to the company and practically begged for the Redmond-based giant to continue developing software for the Mac, which it eventually did. Oh, how the times have changed, however.

Microsoft is pushing Apple to adjust its 70/30 revenue split (the developer gets 70 percent, while Apple takes 30 percent). Naturally, Apple has stonewalled Microsoft.

According to AllThingsD's report, Apple is taking a “the rules are the rules” approach to the negotiations, which means it's not negotiating at all. Considering Apple's market share in mobile, it has all the power it needs. It can also -- and does -- state that it wouldn't be fair to other developers.

Company spokesman Tom Neumayr said:
Apple provides customers and developers the largest selection and safest way to discover apps with our curated App Store. We’ve designed our rules to be fair and consistent for every developer -- free apps and services are distributed for free, paid apps and services provide a revenue share to Apple. We’ve paid out over 6.5 billion dollars to our developer community who have created over 700,000 apps.
Fair and consistent is the key phrase and the statement. While Apple would love to see Office for iOS, it can afford to wait out Microsoft, which probably needs Office for iOS more than Apple does.

Microsoft Office for iOS is expected to launch sometime in 2013.

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