Microsoft Corporation Could Be About to Kill the Surface Tablet

Microsoft (NASDAQ: MSFT  ) could release a touch-based version of its Office software suite for Apple's (NASDAQ: AAPL  ) iPad before it's released on Microsoft's own Windows tablets, according to plugged-in Microsoft blogger Mary Jo Foley.

If that's the case, Microsoft could be about to deal a crippling blow to its Windows tablets, which have already vastly underperformed Apple's devices. With Office on the iPad, it's difficult to see how Surface and other tablets running Microsoft's operating system survive.

Selling the Surface
Microsoft has run several different TV ads for its Surface tablets, and though they vary significantly, all of them contain the same phrase: "It has Office."

The inclusion of Microsoft Office has been a key selling point for Microsoft's devices, including the Surface and other tablets running the full version of Windows 8. Compared with Apple's iPads, Windows tablets have far fewer apps -- in fact, the Windows app store is so far behind Apple's iTunes, it's difficult to even compare them.

In that regard, it's not surprising that Windows tablets have struggled. Last year, Microsoft took a $900 million writedown on the Surface tablet, after the device sold worse than Microsoft had anticipated. Surface sales have improved but are still nowhere close to the 26 million iPads Apple sold last quarter.

Other companies have tried their hand with Windows-based tablets but haven't found much success, either. Research firm IDC concluded last year that Windows tablets continue to struggle.

Getting rid of its only selling point
Releasing Office on the iPad would shift the balance even more in Apple's favor. Not only can it access a library of hundreds of thousands of iPad-exclusive mobile apps, but it can also run Microsoft's Office. Why would anyone in his right mind still buy the Surface?

They wouldn't. Unless they can't live without a built-in USB port, there simply wouldn't be any reason to purchase Microsoft's tablet over Apple's superior alternative. Although I wouldn't expect Microsoft to explicitly kill the Surface tablet, releasing Office for the iPad would do exactly that.

The Office juggernaut
That said, even if it kills Microsoft's tablet efforts, Office for the iPad could be a boon to the company's shareholders. Last year, Morgan Stanley analysts argued that releasing Office for the iPad could bring in billions of dollars in additional revenue.

There's clearly a demand for Office among iPad owners -- consider all the copycat alternatives that have sprung up on Apple's app store. Even Apple itself, perhaps sensing an opportunity, made its own competitor, iWork, free for iPad owners last year.

Office remains deeply ingrained among corporate workers, making its downfall highly unlikely. Still, the longer Microsoft goes without releasing Office for the iPad, the higher odds become that a true alternative to Office emerges. Given how important Office is to Microsoft (accounting for around a third of its revenue and more than half of its profit), porting it to Apple's iPad seems like the right move for shareholders -- but don't be surprised if Surface doesn't survive.

A better investment than Microsoft? Get our top stock pick for 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (10) | Recommend This Article (4)

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 February 16, 2014, at 4:44 PM, Drichter wrote:

    According to a blogger...

    Vastly underperformed...

    Its only selling point...

    Did I stumble into the comedy section by mistake? I mean, the whole groupthink thing is cute and all but don't you think it's been going on for a little too long now?

    Personally I'll get another iPad when they go back to being the best machines.

  • Report this Comment On February 16, 2014, at 5:44 PM, jscilla wrote:

    You, Rocco Pendola and Rick Munnarriz have the same MO ... making radical

    statements supported by evidence presented in a biased way while ignoring

    possible counter arguments. The net result, for me, are essentially worthless

    articles. I guess it fits in well with the vast amount of pure garbage/spam in the financial media.

  • Report this Comment On February 16, 2014, at 6:08 PM, Mega wrote:

    Drichter

    Surface has vastly underperformed. Microsoft has lost billions of dollars on it so far. ($900M inventory write down, plus undisclosed amounts of operating losses.)

  • Report this Comment On February 16, 2014, at 6:31 PM, stockanal45 wrote:

    This is what happens when there is no Steve Jobs and Bill Gates at the helm of their companies. Gates needs to quit being a little sissy and return to the "Evil genius who wants to rule the world" version so he can merge both companies, innovate new products and put Google out of business.

  • Report this Comment On February 16, 2014, at 8:58 PM, Drichter wrote:

    Mega

    That depends on how you're looking at it. They've lost money on the line, and yet made significant headway, especially recently with the new models.

    It's an investment in their ecosystem. And right out of the box they're better than iPads.

  • Report this Comment On February 16, 2014, at 10:04 PM, Virulina wrote:

    When my teen got an ipad2 a few years back I thought I'd like it better than I have when I use it now and again. I find my surface, purchased last year, to be a better tablet in terms of both hardware and operation... sound, multi-user accounts, processor, and it has office now, not next year. Maybe it's just my windows saturated neural pathways, but ios is just unintuitive for me, I can barely use my company issued iPhone after six months...

  • Report this Comment On February 17, 2014, at 12:26 PM, FoolishMotley wrote:

    One word - "security"

    iOS is not a secure platform

  • Report this Comment On February 17, 2014, at 1:47 PM, jameskil wrote:

    Hey ... Motley Fool ... can't you find any adults to write stuff for you?

    Nobody is perfect right out of the chute with any product let alone tablets ... the second round for Surface devices did much better, and, by the way, definitely out class the iPad. If your a four year old, iPad is not a bad device to own. And, for gods sake, cut the raw app count as a sign of viability. If you take all the "productivity" apps in the App Store and add them together, Microsoft need only counter by voicing the word "Office". And that's just for starters.

    IPAD IS NOTHING MORE THAN A GIANT CELL PHONE THAT CAN'T MAKE A CALL. Unless of course you install the Skype App (snicker) ...

  • Report this Comment On February 17, 2014, at 3:34 PM, FuzzySquirrel wrote:

    ...when I see an "article" is from the M Fool I quickly avoid it. For whatever reason I got suckered into this one and completely regret it. I promise not to read any more ...what exactly are these considered "articles", "opinions", "stories"? It's not much more than words on a page - I assume to generate traffic?

  • Report this Comment On March 13, 2014, at 3:19 PM, themover wrote:

    The never hired fulltime staff for the project since last year so doubt they ever cared. When you have devs parttime working on the thing and the oem's panicing cause nothing works right and when you contact redmond for help they say its your problem not ours. And when customers buy your product and cant ge teh drivers to work its a problem. Everything about msft is downgraded this year. When they announced they hired a foreigner to run the company they went from cool to most hated overnight. They top the list with walmart. They are the budget/value company that makes halfasz software after everyone eles has made it, they are the trend followers. They company failed the American people and should be looked down upon. They support profit at all costs, even if it means moving the industry out of the country elesewhere. When you look at the hush hush contracts that have been paid the last months, they are ALL going to India. Congrats for supporting the destruction of this country first hand. Your energy in this realm helps make us all go over the cliff faster; faster to a new beginning without them... BOYCOTT MICROSOFT NOW!

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2841656, ~/Articles/ArticleHandler.aspx, 8/29/2014 12:22:35 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement