Microsoft's Word for iPad cracks top 10 in gross revenue

In-app subscriptions to Office 365 Home provide revenue, and Apple's 30%

Microsoft's new Word for iPad app has cracked the top 10 on Apple's App Store "Top Grossing" chart.

The app, which was released March 27, was in the No. 6 spot on the U.S. App Store's chart Sunday. The other Office for iPad apps, Excel and PowerPoint, held No. 11 and No. 32, respectively.

As of early Monday, those rankings had slipped slightly, to No. 8 (Word), No. 16 (Excel) and No. 40 (PowerPoint).

Apple does not publicly disclose the dollar amounts that apps for its iPad gross, but simply ranks them. Only Apple and the app developer knows the exact amount of revenue generated by any specific app.

Although Microsoft made its Office for iPad apps free to download for viewing documents, to edit existing or create new documents, spreadsheets and presentations, customers must subscribe to an Office 365 software rent-not-own plan. Those plans can be obtained through a number of non-App Store outlets: Consumers, for example, can purchase a subscription from Microsoft's website or at retail, while businesses can obtain Office 365 from Microsoft directly or from one of its channel partners.

But Apple's tally of gross sales considers only those through its App Store, either as pre-paid apps and in-app purchases. In Word, Excel and PowerPoint, Microsoft offers an in-app purchase of Office 365 Home, a $99.99 consumer-grade plan that allows subscribers to install the desktop Office on up to five Windows PCs or Macs, as well as use the suite on up to five tablets.

It was those in-app purchases of Office 365 Home, which were charged to customers' iTunes accounts, that Apple calculated when it ranked the apps in its Top Grossing chart.

Without a gross revenue figure, it is impossible to estimate the number of customers who used in-app purchase to buy an Office 365 Home subscription, or calculate how much Apple retained as its 30% commission of all app sales and in-app revenue.

Apple will continue to take its cut from those subscriptions in upcoming years, as the Office 365 Home plans purchased from within a Microsoft app will be "automatically renew[ed] within 24 hours prior to the end of the current subscription period" and again charged to the customer's iTunes account.

Early Monday, Microsoft's Word app for the iPad was the No. 8 highest grossing app in Apple's store, with in-app subscriptions to Office 365 Home driving the revenue.

But the ranking of Word above Excel and PowerPoint signaled that the former was more likely to drive subscriptions than Excel, which in turn was more likely to prompt people to subscribe than PowerPoint. (On Monday, the three apps remained much more closely bunched, at No. 1, 2 and 3 on the download chart.)

While revenue is revenue, and Microsoft must be encouraged by the uptake on app-driven subscriptions, it's not surprising that Word, Excel and PowerPoint ranked as highly as they did: The $99.99 subscription fee dwarfs the value of most other top-grossing apps' individual in-app purchases, so fewer customers are needed to reach the gross of other apps.

Clash of Clans a game that was advertised incessantly over the weekend on the broadcasts of the NCAA men's basketball tournament, was ranked No. 1 on the Top Grossing list, with its most popular in-app purchase a $4.99 deal for a "Pile of Coins." Another game, Hay Day, was ranked at No. 6 on Sunday, immediately above Word; its top purchase was a $1.99 in-app buy of a "Pile of Diamonds."

Only Intuit's TurboTax 2013 iPad app, which ranked No. 9 on the Top Grossing chart, had a top in-app purchase even close to Word's: An $89.99 purchase that permitted e-filing of both a federal return and one from a single state.

But as numerous analysts have pointed out, Microsoft is in the devices and services business for the long haul -- Office 365 is one of its preeminent services -- and an accurate measurement for Office on iPad's ability to drive customers to subscribe may take months or longer.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

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