Windows: a new front in the app store wars?

Apple, having pioneered the concept of apps and an app store with iOS and iTunes, is facing increasing competition from Android; both from Google’s App Marketplace and Amazon’s App Store. Earlier this week Microsoft announced that they were joining the battle, with a Windows Store for apps to be released in February at the same time as the Windows 8 beta version is made available.

Windows was in danger of dropping into irrelevancy in the iPad-dominated tablet market. Apple’s share of tablet shipments in A3 2011 was at 67%, with Android the nearest competitor at 27%; Windows tablets took less than 3%. (Worth noting too that shipment figures almost certainly underestimate the strength of the iPad – Apple’s sales share is greater than its shipments share.)

Microsoft have no intention of being quietly sidelined, though. The next version of Windows, Windows 8, is designed as a single operating system to be used on desktop, laptop and mobile. Some applications will use cut-down ‘metro’ versions on mobile devices, but the operating system will be common to all types of devices. This is a step ahead of Apple, who maintain a distinction between iOS for mobile devices and Mac OS for traditional computers.

The announcement this week underlines Microsoft’s intention to move in on the app store revenue model. The Windows Store will follow the precedent set by Apple in many ways: apps will undergo a review process before they’re added to the store, and Microsoft will take a 30% cut of revenue from sales of apps and of purchases made within apps through Microsoft’s payment systems.

One edge that Microsoft’s pricing model offers over Apple’s is that after the first $25,000 of revenue from an app, Microsoft’s cut drops from 30% to 20%. That’s mainly relevant to the larger players. However, there’s a less-discussed difference which could be hugely attractive to publishers and content providers in particular. Microsoft’s announcement discusses how app providers can grant access to content to users authenticated through third-party systems. This of course is also possible with iOS apps, and is how our dual subscriptions system works. What the announcement implies with their Telegraph example is that Microsoft will allow apps to direct users to external payment systems for in-app purchases – thereby avoiding the 30% cut in revenue. That’s a big no-no for iOS apps, and  sometime between now and when the Windows Store payment system goes live it’s possible Microsoft will decide it’s too big a concession; but if not then publishers will be delighted to have a way to offer commission-free purchases directly within their apps.

Other interesting features planned for the Windows Store are that they support trialing of apps, where the user can download the app for a period before deciding whether to purchase or not; built-in support for payment by subscription; and app installation controls aimed at corporate environment apps.

The initial release of the Store will contain only free content, with purchasing support to follow.

Categories: Experts, Industry Research

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