Will Microsoft Office Make the iOS Jump?

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One of the biggest hopes of enterprise users everywhere is that Microsoft (NASDAQ: MSFT  ) Office will become available on Apple (NASDAQ: AAPL  ) devices through iOS, specifically on iPads. Much ink has been spilled on the topic, and Microsoft officials always seem to tap dance away from the topic. The simple truth is that Office is a huge point of differentiation for the software giant that gives its Surface Pro tablet a fighting chance. Equally obvious is the reality that, by keeping a full version of Office off of Apple devices, Mr. Softy is probably leaving a lot of money on the table. Ultimately, I think this is the right call if Microsoft really wants to compete in this arena.

The Surface Pro
Microsoft's second-ever computer offering, the Surface Pro -- which is really a PC-tablet hybrid -- may have received mixed reviews, but there's one point where no dissension existed: The ability to run a full version of not only Windows, but the Office productivity suite, was a critical advantage for the device. The Wall Street Journal's Walt Mossberg complained that the device was too heavy to be a "real tablet," and that it wasn't heavy duty enough to be a competitive PC. The New York Times' David Pogue called the device a game-changer, and noted that it had the potential to usher in a new era in computing.

One of the points on which the two agreed was that the inclusion of Office helps the device standout. Pogue asks: "Are you getting it? This is a PC, not an iPad." While Mossberg is less enamored with the device, he does concede that "the Pro is a serviceable laptop, especially since, unlike on an iPad or Android tablet, you can use full-fledged PC programs." The takeaway here is that the ability of Microsoft's devices to run Office allows them to stand apart. Taking this unique feature away before the devices have had time to gain significant traction would undermine this effort.

Lost revenue
Earlier this month Adam Holt, an analyst at Morgan Stanley, estimated that the decision to forgo an Office release for iOS could be costing Microsoft as much as $2.5 billion in revenue:

Office on iPad could be a several billion dollar opportunity. While MSFT has resisted offering a full version of Office for the iOS, the company may ultimately decide there is more upside with Office on iPads, particularly if Win tablets fall short of expectations. The Surface RT likely sold only 900,000-1 million units in calendar Q4, while OEMs have pulled back on tablet builds and it may be difficult for MSFT to reach much more than 10% tablet share in calendar 2013.

Holt further notes that the numbers that Microsoft could achieve are even higher if the company would simultaneously release a Google (NASDAQ: GOOGL  ) Android version of the software. In certain ways, an Android release would make even more sense, as the company has seen much stiffer competition for productivity uses from Google Apps than from anything on iOS. While Apple offers various productivity applications like Pages and Numbers, most serious enterprise users prefer Microsoft or Google options.

Microsoft may app out
Another option that Holt explores is the possibility that Microsoft will focus its efforts on expanding its Office 365 apps for iOS and Android. This would allow the company to keep the programs from becoming native to these other operating systems, while still providing users with enhanced options over what is currently available. The multi-level approach -- offering a basic web option, an enhanced app version, and a full native version -- may give the company the ability to laser target its strategy. The risk, of course, is that if it allows too much functionality out of the barn, nobody will have any motivation to ever return to Windows devices. The decision remains a delicate balancing test between immediate revenue and creating a long-term, renewable revenue stream.

Ultimately, I think that the solution for software must lie in the cloud. This means that whatever solution Microsoft develops to maintain control over Office in an Apple or Google environment must reside in the cloud, and allow users to have some flexibility over what device they use. Conceding the war to win the battle would be a mistake, meaning a full version of Office for iOS should not be a near-term consideration. But the release of a version of Office 365 that can limp along on iOS and Android, and hum on Windows, seems like the best bet for the software giant. Microsoft has done an impressive job diving back into the fray and, as such, belongs in your technology portfolio.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 01, 2013, at 6:15 AM, H3D wrote:

    Is a desktop i7 faster than the current generation low power consumption ARM? Sure.

    Is a low power consumption x86 faster than the current generation low power consumption ARM? No, it's slower.

    Is word processing or spreadsheet handling a heavy lifting application that requires the muscle of a high power consumption desktop chip? No way.

    So your comment that...

    "...the release of a version of Office 365 that can limp along on iOS and Android, and hum on Windows..." a fantasy, unless MS deliberately choose to make the software inefficient.

    And while years ago MS may have been able to maximise its profits by producing inefficient software, those days have gone. MS now need to produce their best work, to survive.

    Already Apple's Pages users get better MS Word compatibility with new Word releases that come out, than users of previous Word releases get.

    People are starting to notice this. And it will probably force MS to stop playing that particular incompatibility game.

    If MS don't release Office for iOS, then I suspect that Apple probably will release iWork for Windows.

    For the vast majority of users, the only serious capability difference between the two is that Pages is far more efficient with very large documents.

    And far to many Windows users are using Pages every day on iOS to believe that compatibility is anything other than a scare story.

    MS should have done their best work and released the more efficient ARM based Surface complete with a full ARM based Office. If they had, sales of the Surface Pro would have been minimal. But the Surface RT would have had a much better chance of a place on the podium.

    That they chose not to do this indicates that MS has lost touch with reality, or that the bloat and decay in the source of Office has got to the level that it reached in the Vista version OS Windows. Their strategy was defensive, not assertive. They're scared.

    Serious commercial users to not use Google's cloud document services. They cannot allow their documents to be scanned and the content used to assist the marketing and sales divisions of would be suppliers. Yet that is the reason for the existence of Google. It is, and always has been, how they make their money.

  • Report this Comment On March 01, 2013, at 12:46 PM, Hoptopia wrote:

    I've been in IT for over 20 years since the dawn on that thing called MS Windows. If MS had stuck with being an application provider to an array of OS's rather than forcing most people (except Mac users) to run a poorly designed and exploited OS they would likely be in a better position and certainly more respected.

    That said a cloud based solution would seem a better fit for tablets especially ipads which hide the file system from users.

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