Stephen Foley: Apple's 30 per cent bite leaves a nasty taste


US Outlook: It took just a week for Apple's controversial app subscription model to start unravelling. Last Saturday, I wrote how developers and publishers will soon be more inclined to produce applications for smartphones and tablets that run Google's operating system Android than for the currently sexier iPhones and iPads from Apple.

The reason is that Apple takes 30 per cent of revenues from everything ordered through its App Store, compared to 10 per cent by Google, and also imposes lots of onerous restrictions and obligations on developers.

Now it looks like Apple's rules are not just unreasonable, but actually unworkable. While magazine publishers complained most loudly about Apple's 30 per cent cut, a more important revolt was brewing among software-as-a-service (SaaS) companies.

Instead of downloading bulky software, these days many businesses access applications that run on other people's servers – "in the cloud," as they say – paying a subscription in return for the flexibility of being able to access everything from accounting spreadsheets to sales systems from any device. If SaaS companies want to offer iPad access to their customers, they will now have to create a whole new payment method and risk losing a chunk of revenue to Apple.

They won't do it, and suddenly we have looped back to the moment that nearly destroyed Apple in the Eighties, when businesses chose the much more open and flexible Windows operating system and Apple was reduced to being a niche player for creating firms and high-spending consumers.

The Apple boss, in a curt email to one developer last week, said, "We created subscriptions for publishing apps, not SaaS apps." But his comment sowed only confusion. After all, there hasn't been a line between publishing and SaaS since the advent of Web 2.0. Is YouTube offering a service to people who want to upload and share videos, or is it a publisher of video content? What about Flipboard, an iPad app that allows you to build your own magazine with content scavenged from around the web? If business magazines such as Forbes build online seminars and discussion forums into their apps, do they turn from publishers into SaaS companies?

Is the iPad a Web 1.0 device?

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