Microsoft selling Office 365 within iPad apps, Apple getting 30 percent cut

While one of the big holdups for Office for iPad was getting the software just right, another was Apple’s policy that apps that sell things — including subscriptions — use Apple’s in-app purchase mechanism and hand over 30 percent of that revenue to Apple.

This had been a big sticking point historically, so it was one of the key question marks looming over this launch.

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.

Wonder if that was the real sticking point that kept iPad versions of Office in the can? Maybe the previous regime refused to budge, newer thinking prevailed? Just a thought.

  • I doubt that was the main sticking point. It’s too easy to get around that by not using in-app purchase, and having customers sign up for Office 365 at MS’s website.

    If we were talking about some other company, an outside the app purchase system for subscribing would severely hurt sales, but this is MS. Those who want genuine MS Office are not casual users and would have jumped through this hoop.

  • Brian Mauter

    My thoughts exactly. I was criticized for bringing that very issue up in the MacRumors forums yesterday. Thanks Dave.

    @ShawnLevasseur:disqus It is easy to work around the in-app purchase part, but I don’t think most users are savvy enough to do it. For them, the app would simply not work right. MS had to offer in-app purchase and Apple had to require the 30% otherwise many developers (myself included) would be hacked off.

  • Master of Thumbs

    I think it was a combination of Ballmer’s MS hubris and his history of “warring” with Apple that kept it out. The iPad came out at the height of Office’s dominance of productivity software. The sales potential was astronomical. 70% of 10 or 50 million sales is far better than 0% of that. But the true cost was losing the mindshare of tablet (iPad) users. When people are prevented from doing things one way, they tend to find another. And in this case, they found a way to do things without Microsoft; and they may never see a need to come back. See the Quark/OSX debacle. That is what truly put Microsoft in the downward spiral they’re in.

  • JohnDoey

    It cost more than $30 to acquire a new MS Office customer, produce a DVD for them, ship that DVD to them, and handle the tech support when they fail to install it. Apple is doing all that for Microsoft.