Why Microsoft Is Giving Apple A Cut Of Office 365 Signups

Office Mobile for Office 365 subscribers for iPhone (is that the worst product name ever?) launched last week, the news slipping out almost unheralded. 

In amongst the various reviews that pointed out its limited functionality and unavailability for the iPad was a curious feature: in-app purchase of an Office 365 subscription.

Unlike Amazon which sends all of its iPhone app purchases out to the web browser, thus avoiding the Apple tax, Microsoft is handing over 30% of its Office 365 fees to Apple for as long as that account remains signed up. 

This sounds like a crazy thing for Microsoft to do, but I believe the logic behind the move is sound. 

Microsoft is desperate to move its Office user base to a subscription model - ongoing revenue and the removal of the need for major releases being just two reasons why that's desirable.

Apple users aren't necessarily a fertile ground for Microsoft's "Office in the cloud" message and those trying the app on their iPhones represent a large opportunity to convert a cash rich and otherwise Microsoft averse crowd into paying customers. 

These are subscription sales that Microsoft are unlikely to have converted outside of the in-app purchase. Paying Apple a 30% cut looks like a bargain with that in mind. 

A sign of better strategic thinking from Microsoft?

0 comments: