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SkyDrive decision reveals Microsoft's Office on iOS strategy

Gregg Keizer | April 5, 2013
"Microsoft doesn't want to give Apple any money," summarizes analyst

And the Web purchase mechanism is used by scores of companies, including Amazon, one of the first to have a major dust-up with Apple over in-app purchases.

The 2011 brouhaha began when Apple told developers and publishers that they must remove all links within their apps to outside-the-App-Store purchasing methods, as the store would now support in-app purchases. For that support, Apple said it deserved its cut. The face-off ended when Amazon deleted a link to its online store within its iOS Kindle apps, and required -- as it still does -- that customers browse to via Safari to buy an e-book.

Amazon wasn't alone in blinking; Google also complied with the new in-app publishing rules around the same time.

"Calling [this method] the 'Kindle app approach' is interesting," said Miller, of the long-time workaround that steers customers to the Web to avoid Apple's 30%. "Amazon is one of the most inconvenient apps because of it. But in a Kindle app, [the manual browsing to the store] is required for Amazon's entire content channel. It's not just a one-time thing."

Since SkyDrive customers will be stepping outside the app only when they change storage plan, the Apple rule makes SkyDrive less inconvenient for users than the Kindle apps on iOS, Miller argued. That may have been at the front of Microsoft's mind when it agreed to strip all SkyDrive storage purchase opportunities from the new app.

"And it's easier for Microsoft to lead users to a purchase [on the Web] than for Amazon," Miller added, citing possibilities such as, Microsoft's vast collection of other websites, and even the Office suite itself.

Because Microsoft could have done the SkyDrive upgrade this way -- pulling any reference to additional storage purchases -- months ago, it gives weight to the reports late last year that Microsoft and Apple were negotiating, or arguing, over Apple's slice of the App Store pie. If so, yesterday's SkyDrive shows Microsoft was unable to convince Apple to lower the number.

SkyDrive also adds credence to the theory -- which has gained headway in recent months -- that Microsoft will not sell future iOS Office apps in the App Store. If Microsoft was unwilling to share the relatively small income from SkyDrive storage purchases, Miller said, it would certainly not split the far more lucrative Office revenue with Cupertino.

Instead, said Miller, it increasingly appears that Microsoft will go with Option B: Tying Office iOS apps to a subscription to Office 365, its expanded line of rent-not-buy plans.

The $100-per-year Office 365 Home Premium, for example, gives a customer the right to install Office on up to five Windows PCs and Macs, as well as five mobile devices, including smartphones and tablets.


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