Office on the iPad: It's not about the money, it's about Microsoft's soul

Office on the iPad: It's not about the money, it's about Microsoft's soul

Summary: For Microsoft, deciding whether to put Office on the iPad is about much more than the money. It’s about deciding Microsoft's place in a new world.

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There have been rumours about Office for iPad for a couple of years now — indeed, a Microsoft executive can rarely appear in public these days without getting asked about it.

Although Microsoft CEO Steve Ballmer recently seemed to quash speculation about it once more, the rumour keeps on springing up. That's because Microsoft's decisions about Office for iPad send a signal about its broader strategy.

Potential cash bonanza

Investment bank Morgan Stanley recently weighed in, suggesting Microsoft could make billions from an iOS version of Office. A research note from the bank's Adam Holt said that although Microsoft has held back from offering Office on the iPad, it may do so if Windows 8 tablets fall short of expectations. 

Selling Office with all-new iPads across 2014 could raise $1.3 billion, the bank calculated; selling Office (at $60) to a third of the iPad install base could also raise $2.5 billion, with Android sales on top.

That would make more money than Microsoft could generate from an 11-percent market share in tablets. "Office exclusivity on Win tablets important, but the iPad opp. may be larger," said the note; "the math is compelling and may drive MSFT to move Office."

Gartner research director Michael Silver also argues that Microsoft should release Office for iPad — and soon. As the PC market continues to erode and the tablet market continues to grow, there's still a really big opportunity there, he argues.

Sell Office or prop up Windows?

Microsoft also has to make a bigger strategic decision. "The Microsoft Office group needs to decide if they're in the business of selling Office products or propping up Windows," says Silver. "If they're in the business of selling Office, then the iPad and other tablets are a huge opportunity — and if they don't do it, someone else will."

Silver added: "Propping up Windows is a bit of a dangerous proposition because organisations are using more and more non-Windows applications and Windows is getting somewhat weaker. It's back to the innovator's dilemma — that if they don't [deliver Office for iPad] someone else will, and they could end up losing both franchises."

But if Microsoft doesn't act soon, there are plenty of other office suites out there that could start picking up users, he warned: "The danger is that people will see a $20 or $30 product, get used to it, and decide that it's good enough."

"Microsoft's problem over the last decade has been the inability to create cash cows other than Windows and Office" — Michael Silver, Gartner

Pricing is another tricky balancing act, according to Silver: "If and when they do come out with it, they will need to decide how to price it. If the product does too much of what Office does and they price it too low, then that's going to cannibalise the traditional desktop Office product."

"They need to figure out the tipping point where the benefit outweighs the danger. If you look at Office as well as Windows, it's becoming relatively less important than it used to be because people are doing things with other applications and other devices."

Silver points out that the Office division makes more money than the Windows division — and that's part of a broader problem. As Bill Gates himself has acknowledged, Microsoft has been slow to move beyond the desktop and into mobile, for example. 

"Microsoft's problem over the last decade has been the inability to create cash cows other than Windows and Office — other products that are as big and lucrative," said Silver.

Microsoft Surface, Windows Phone and Windows 8 are all about Microsoft's attempt to reinvent itself for a world of tablets, smartphones and cloud computing.

But it's been a conservative, defensive reinvention — on Microsoft's terms — that still assumes Windows is the centre of the universe, and still the default platform for enterprise and consumers.

Although it's still early days, things don't seem to be working out particularly well so far, with lukewarm reviews for Surface and consternation about the changes to the Windows user interface.

Microsoft is clearly watching the non-Windows tablet space with interest: Lync and OneNote already exist for the iPad, and there's a long-standing Mac OS version of Office.

A matter of timing

The timing of an iPad version of Office will indicate how well Microsoft's new strategy is playing out.

If Microsoft feels it has stopped the erosion of its position with Windows 8 and its mobile and tablet initiatives, then there's less need for an iPad version of Office — apart from the cash.

By offering Office on the iPad, Microsoft would be effectively acknowledging that Apple had won: it would be an admission that Windows 8 tablets — including its own Surface Pro — had failed to grab market share.

In turn, this would signify that the tenure of Windows as the default platform for enterprise customers and consumers is over. And that's why Microsoft is thinking so long and hard about it.

Topics: Microsoft, Enterprise Software, iPad, Mobility, Tablets

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32 comments
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  • iPad/iOS needs mouse support so MS Office be effective

    as both support mouse/touchpad/trackpad, Android & Windows 8 tablets more suitable to create & edit using MS Office spreadsheets, Presentations, Documents, drawing, etc

    so i expect MS Office for Android..
    Khaled Mourad
    • You made two assumptions - which might not prove factual over time.

      The first assumption is that Office for iPad would not appear or act functionally different than the latest Office version for Windows 8/RT class machines. (Actually, a good assumption)

      The second assumption is that Apple will never introduce a cursor control device for it's iOS class machines. (So far, that assumption is holding up, but ...)

      It should be noted that Patently Apple has just published a series of Apple submitted patents that describe an intelligent stylus which, if brought to market, would render you assumptions moot and allow the current version of Office (both for Win/RT and Windows Pro 8 class machines) to function on any iOS tablet. www.patentlyapple.com/patently-apple/2013/02/apple-secretly-filled-three-dynamic-smart-pen-patents-in-europe-that-are-chock-full-of-cool-ideas.html

      Regarding your first assumption, if Apple does not market an optional external cursor control device for it's iOS tablets, than Microsoft "could" alter it's Office UI for any hypothetical iOS version of Office in order to make those apps more touch friendly - as Apple did with it's iOS Office suite of apps (Pages, Numbers, Keynote)

      But, if both of your assumptions remain intact than a simple port of the Office Suite used on Win/RT machines would NOT work well on any iPad, IMO.
      kenosha77a
      • If you see a stylus, they blew it

        "Apple submitted patents that describe an intelligent stylus"

        Oh boy, what fantastic irony. Once again, apple trails the rest of the market. Once again, apple proves that steve jobs was wrong.

        Those words are going to haunt him nearly as badly as "you aren't my daughter, get away from me, I hate you, you are disgusting".
        toddbottom3
        • Just for a point of fact, Todd. SJ was referring to a dumb plastic stylus.

          The latest patents are for an entirely different "active" stylus design.

          Personally, after living with my Surface Pro for about two weeks, I can categorically state that when in the traditional desktop mode, navigating around or selecting menu items, the supplied active MS stylus is ESSENTIAL for a satisfactory user experience.

          Having said that, Apple's iOS multi-touch design works as advertised as 150 million users can attest to.
          kenosha77a
        • While the irony isn't lost on me...

          While the irony isn't lost on me, it is completely overshadowed by your need to rejoice every time Apple, or the late Mr. Jobs, is shown to be wrong in some way, (as everyone surely is at some time.) As evidenced by the success of Apple in the last decade, (the stock value going from $11/ share to over $400/ share currently, and over $100 Billion in cash reserves, unit sales that are the envy of everyone in any industry,) that both Apple and Mr. Jobs have done more right than wrong.

          Seriously, everyone has a pet peeve, but you should consider professional help.
          mlashinsky@...
      • If we know Apple...

        and I think we do, they are very unlikely to make such a big change with introducing a pointer device. How hard was it to include a USB port? I think it is the company's culture that Apple never does anything collaborative when it feels "forced" to do so.

        They feel confident enough about their domination and monopoly of the mobile market that they won't allow others making a monopoly of their own in Apple's ecosystem. Macs were never really business machines, and that's why allowing Office on Mac might have been a good idea. But as businesses focus on mobile devices and Apple owns a big piece of the pie in that department, they'd rather provide their own services without allowing others - especially Microsoft - in.
        Ehsan Irani
    • Or you could do without Microsoft.

      There are other viable options. Google Docs will run on any platform that has a web browser. and I'm sure Apple has developed or is developing iWork for the iPad (I would be surprised if that weren't the case!).
      Richard Estes
      • iwork for the Ipad already does exist, and has for about 2 years.

        Also, you can import MS Word, PowerPoint, and Excel docs, using Pages, Keynote, and Numbers. The only issues are that the Iwork suite is not as feature rich as MS Office; though to be honest I have not had any issues with Pages and Keynote.

        I haven't decided whether or not I really want Numbers on my own Ipad, for I use mine mostly for just writing books, and I enjoy being able to go back and forth between Pages and Word for that.

        But writing is something I do on the side of my normal work, and in my own opinion a tablet makes a great companion device, especially for on the road, but I will always want to have at the very least a good laptop, for at home and work.

        For me, the Ipad works out great, and I'll keep using it, I've tried out the Surface, and the Pro, they're not for me. But everyone has different likes and dislikes, and that's what's great about having different choices.

        I also don't believe that if MS came out for Office on the Ipad and / or Android, that it would be admitting defeat, I think MS will do just fine with their tablet's; and by offering Office on multiple platforms, they'll be able to get on everyone's devices.

        And that's the best kind of advertising there is, get it out there in people's hands, and they would probably also pick up more tablet sales in the future.

        Thanks..
        TW
        T-Wrench
  • Why doesn't Apple make all of their software for Windows then?

    Apple makes practically all of their software only for their own operating systems (except iTunes). Windows is the more popular operating system with more market share. Why don't they make all of their software for Windows then? It's so that using Apple's operating systems have more value. Microsoft should do the same.
    AdamzP
    • Different but converging models

      The main difference is that the two companies are converging on the same area from two different business models. Apple makes hardware - until recently Microsoft hasn't. Right now it looks like the Apple model is more effective for lots of reasons - hence the creation of produts like Surface.
      Steve Ranger
      • "It looks like the Apple model is more effective for lots of reasons"

        I don't know. The go your own way rout works as long as people are willing to come along with you. But Apple really only makes one highly successful product: iPods (of varying sizes with and without a phone in them). But Windows 8 and Android are both making serious inroads against the iPod by virtue of their greater diversity and affordability.

        Apple is still making fantastic profits from this single device, but it is "uncool" now that everyone over 50 has one, and so the trendsetters are abandoning Apple. Apple are certainly going to be making boatloads of money for some time to come, but their fall may either be reversed (if they can get their mojo back) or accelerated (if they can't), and only time will tell.

        MS, on the other hand, is a much more diverse company with an audience (the enterprise) that is far less fickle. They are definitely threatened, but I actually see them as less vulnerable than Apple due to their diversity.

        If they start to hitch their wagon increasingly to their own hardware platforms, they may find themselves getting richer in the short term but mortgaging their diversity (i.e., their hardware partners), which could potentially hurt them in the long haul.

        Interesting times.
        x I'm tc
        • and so, to your agument

          MS has jumped the couch now that they have released their own branded hardware devices....
          paddle.
        • Here we go again...

          The only people that say Apple devices are "cool" are Apple haters hating Apple. The success of Apple devices is because they are simple to use. (No, I do not have an idevice of any kind, but I know lots of people that do. They are so simple to use, I don't have to give them tech support. Thank goodness!)
          mlashinsky@...
    • Apples and Oranges

      Apple is a hardware company
      Microsoft is a software company
      Google is an advertising company
      thekman58
      • That may have been true 5 years ago

        But they all want to be all three now.
        Alan Smithie
      • Apple is a systems company.

        They make money on their systems engineering by selling hardware.
        Bruizer
        • The same off-the-shelf hardware everyone else has

          Even Apple's own processor is just a modified ARM clone...
          HypnoToad72
      • That used to be the case

        A more accurate interpretation today would be;\

        Apple is a platform company
        MS is a platform company
        Google is a platform company

        Today a platform comprises a tight integration between Supply Chain + Hardware + OS + Cloud services.
        shameermulji
    • They do, for what makes sense

      Apple does make their software available on Windows and has done so for very long time.

      iTunes, Safari, iCloud -- are all available on Windows.

      Most of the other Apple software has already comparable if not better alternatives on Windows (audio and video editing), or it is hard to build it for the same experience on Windows. The rest of the software that Apple offers is more or less UNIX specific and porting them to Windows will be fruitless.

      It always amazes me how people compare Apple and Microsoft, as if they are in the same business. They are not. Nor have they ever been.

      Historically, Apple is building personal computer and Microsoft is writing application software for personal computers, including Apple's. It was only when IBM came along with the desire to kill Apple, when they contracted Microsoft to provide software for their IBM PC. Microsoft got so excited, that they even robed IBM (the OS/2 contract breach and later lawsuit) -- so they could have an "OS of their own". For so many years, it is not obvious that Microsoft just does not get operating systems -- but that is ok -- many don't.

      As I see the dillema for Microsoft is, whether they continue to play the game they play now and eventually lose their "leadership" (IBM is gone from the PC business, already). Or, they return to their well understood original business of writing application software, such as Office.. and provide Office for all possible computing platforms, of which there are many.

      Like it was already mentioned in the article -- at the moment there are enough Office alternatives, including fully touch optimised suites for tablets/phones. If Microsoft does not participate, more and more people will forget about Office -- and Microsoft will lose that business too.
      danbi
    • Safari for Windows was a smash hit.

      Right. Xcode makes a small amount of logic but not much.

      The key point is, none of Apple's software products are huge profit centers. They simply add value to the Apple ecosystem.

      Office is a massive profit center and extending its reach has huge financial impacts to MS.
      Bruizer