Microsoft Dangles Carrot In Front Of Developers With Windows Store Economics, But Will It Be Enough?

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Tonight Microsoft revealed that the public release of its Windows 8 Beta will be taking place sometime in late February of 2012. Along with Windows 8 Beta, Microsoft will also be launching its “Windows Store”, which was announced back in September. (You can check out the details on the Window Store’s new blog.)

In previewing the new app store, Microsoft also revealed some details about what developers can expect in terms of both pricing and revenue share. For starters, as the company has previously said, users will be able to license, purchase, and download Metro-style apps from the Windows Store — meaning that it will be the sole source of Metro apps. (Metro being the name Microsoft uses for the design language it developed for its new, touch friendly Windows Phone 7 interface.) While Microsoft is already operating app stores for Xbox and Windows Phones, this is their big push to create an in-Windows app store to take on iTunes.

Microsoft will begin initially with free apps, and has set the pricing of paid apps between $1.49 to $999.99. Developers will be able to offer both free and paid apps, and setting up a dev account will cost $50. In terms of revenue share, the initial split will be 70/30 for developers. However, the Store offers some unique incentives for developers, as the terms state that once an app does $25,000 in sales, Microsoft will reduce its share to 20 percent. There will also be a 70/30 split for in-app transactions, but only for those apps using Microsoft’s billing system.

Why does the Windows Store set the low price for apps at $1.49, rather than the typical $0.99? Is it to compensate for offering the additional incentive and revenue share to developers whose apps push past $25K in sales? That’s what it looks like. Of course, it’s all about delivering users. And you can’t buy those, something that Microsoft learened with its ill-fated “Bing Cashback” program, which allowed users to save money when purchasing items found using Bing search before it was discontinued.

It seems to me that Microsoft really needed to go further to differentiate itself from Apple, push its split to 25/75, for example. The $25K threshold will have more of an effect on bigger app publishers, not so much for the little guys. It would have been nice to see them bite the bullet and take a risk on 20/80 or 25/75 flat, but no dice.

Of course, in the way of enticing developers, Microsoft does have reach. Especially internationally. At the Window Store’s preview event today, Microsoft claimed that there are now 1.25 billion Windows PCs in existence, and that 3 million copies of the Windows 8 developer preview have been downloaded since September. What’s more, the IDC has estimated that 433.5 million PCs will ship in 2013, which will represent, of course, the first full year that Windows 8 will be on the market.

Obviously, Microsoft hopes that, with the reach of its operating system, its new Windows Store will become a big new revenue generator, something the company could use right about now. Giving users a place to buy and download apps in one place from all Windows desktops and tablets will undoubtedly be a huge step forward for PC users’ experience, allowing them to move past having to go to a fragmented group of sites to purchase and download.

Microsoft is also providing developers with a few more carrots to get them jazzed about the new Windows Store, including the ability to offer trial versions of apps, which can then later be purchased and downloaded from within the app — as well as creating expiration dates for certain versions of apps. Publications will also be able to sell subscriptions to their users from inside their apps, something that should be appealing as an alternative to iTunes.