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Microsoft woos Windows Store developers with higher revenue shares

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Microsoft is looking to woo Windows developers towards selling their Windows 8 applications via the Windows Store…in part by offering them a better revenue split than they can get from Apple’s iTunes or Mac App Store, or from the Android Market. Microsoft plans to take a 30 percent cut of all app sales on the Windows Store—the same share charged by Apple and other app stores. However, when an app makes more than US$25,000, Microsoft will drop its cut to 20 percent, meaning developers will get to keep 80 percent of their revenue if they can pull in more than $25,000 with their app.

But there’s a slight catch: Windows Store apps will start at $1.49, rather than the $0.99 typical of other app stores; developers will be able to set their apps prices higher in intervals of $0.50 up to $4.99, although higher pricing tiers will also be available.

“Combining the broad reach of Windows, a new developer platform, best-in-class developer tools, a reimagined user experience, support for new chipsets, and a built-in Store with industry-leading business terms—Windows 8 is the largest developer opportunity, ever,” wrote Microsoft’s Antoine Leblond on the MSDN blog.

The Windows Store will be a core feature of Windows 8, and will be the only distribution point for Metro-style applications, including those that can run on tablet devices running ARM chipsets. The Windows Store is expected to launch with a beta release of Windows 8 in February 2012. Third party apps will be available for the Windows 8 beta on an invitation-only basis: Microsoft hasn’t announced when it plans to open the doors to the broader ecosystem of Windows 8 developers.

The Windows Store will also offer trial versions of all apps, enabling users to test out whether software meets their need (or whether games are any fun) before buying.

Microsoft’s pitch to Windows developers, particularly for Metro-style apps, is that while there are more than 240 million Android devices and over 150 million iOS devices in the world, Microsoft has sold more than 500 million copies of Windows 7: that’s sheer sales momentum unmatched on any platform. And Microsoft plans to offer the Microsoft Store on a nearly worldwide basis, with localization to more than 100 languages.

Microsoft’s revenue sharing strategy seems most beneficial to developers who aim at the low end of the app pricing scale. An app priced at $1.49 will earn developers about $1.04 for every sale until it reaches $25,000; after that, the same app will earn $1.19, a 14.4 percent increase in per-copy revenue. The minimum price of $1.49 also means Microsoft earns about $0.35 per sale even with the 80/20 split, which ought to be enough to handle transaction costs and still have a little bit of money left over for Redmond. If the Windows Store minimum app pricing were $0.99, Microsoft might not be able to cover its own transaction costs with an 80/20 split.

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Geoff Duncan
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