Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Will Anyone Pay for a Tablet Version of Microsoft Office?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Just a few years ago paying for Microsoft (NASDAQ: MSFT  ) Office was a required part of buying a computer.  Almost everyone who owned a PC (or a Mac) needed a word processor (Microsoft Word) and anyone using their computer for work likely needed Excel for spreadsheets, PowerPoint for presentations, and Outlook for email.

Yes, there have long been alternatives to Office but they tended to be used either by the cheap ("I write all my reports in Notepad") and the type of folks who know how to install Linux on an old PC ("I've been using OpenOffice since it was in beta"). The rise of the tablet however has helped an entire generation break the Office habit and Microsoft is finally poised to attempt to win them back.

What is Microsoft doing to win back Office market share?

Microsoft barely has a toehold in the tablet market and while its own Surface and some other Windows 8 tablets come pre-installed with Office, those running Google's  (NASDAQ: GOOGL  ) and Apple's (NASDAQ: AAPL  )  iOS do not. That has allowed millions of tablet users to learn that there are alternatives. The chart below shows just how few tablet users are on Windows-based devices.

To win these users back, Microsoft is going to start offering its online version of Office in an individual version dubbed Office 365 Personal for $69.99 a year. Office 365 offers all the Office programs and works on any device with an Internet connection.

"Coming this Spring, Office 365 Personal is a new, great option for people interested in using Office 365. It's designed for an individual, allows for one PC or Mac and one tablet to be connected to the service," the company wrote on its Office blog.

Microsoft also has a full-fledged version of Office ready for iPad and iPhones, Reuters reported, but has not announced a release date.

"We have some pretty exciting plans," John Case, the top Office marketing executive, told Reuters without giving any details. "Certainly, interest in Office on the iPad is extreme. When they [customers] want to do real work, they are going to want to use Office."

 What happened to Microsoft's Office monopoly?

Digs from Microsoft executives aside, people have found ways to "do real work" without using Office.

Back before tablets Windows ruled the operating system world and Microsoft had almost the entire market wrapped up. Since Windows came with your computer (and only the techiest of techies knew there were alternatives) it was easy for Microsoft's partners (the companies that actually made the PCs) to either pre-install Office and include it in the price of of the computer or have a trial addition loaded onto the desktop. Even the people who chose to use an Apple computer pretty much had to pay to install Office on it because it was the standard for doing business.  

That changed with the advent of the tablet -- a market Microsoft seemed to mostly ignore. In 2014 and 2015 Gartner reports that tablet sales will continue to grow while traditional PCs continue to fall.

Worldwide Device Shipments by Segment (Thousands of Units)

Device Type





PC (Desk-Based and Notebook)





Tablet (Ultramobile)





Mobile Phone





Other Ultramobiles 










"Users continue to move away from the traditional PC (notebooks and desk-based) as it becomes more of a shared content creation tool, while the greater flexibility of tablets, hybrids and lighter notebooks address users' increasingly different demands," said Gartner Research Director Ranjit Atwal.

How much money is Microsoft losing?

Office still has a lot of users and makes plenty of money for Microsoft. The product is part of the Microsoft Business Division, which includes Office, Exchange, SharePoint, Lync, Yammer, Microsoft Dynamics business solutions, and Office 365. That division brought in $24,738 million in 2013, $24,082 million in 2014, and $22,407 million in 2012, according to the company's 2013 annual report.  

Obviously those are hefty numbers. But by not serving the tablet market, Microsoft left a lot of money on the table.

According to one analyst, Reuters reported, Microsoft is giving up $2.5 billion a year in revenue by keeping Office off the iPad.

"Office is being disenfranchised on the hottest growth platforms," Nomura analyst Rick Sherlund wrote in a note to clients. "Maybe it is time to focus on Office independent of Windows."

Can Microsoft Office win users back?
Microsoft has lost some Office users and they are never coming back. The youngest generation of tablet users may not even know what they are missing -- they didn't begrudgingly find Office replacements once they got tablets, they had never used Office in the first place. It's hard to imagine that those users would pay for access to programs that do things they have found other free ways to do.

All is not lost for Microsoft as Office is still the standard program for business. While Google's free online apps can mimic Office and OpenOffice is a reasonable free software-based option, neither of those packages is a direct clone. There are countless people using Office at work or school that -- for a reasonable fee -- would be willing to install it on their tablets.

Still while $69.99 a year may not be high for a high-powered businessman, it seems a little rich for tablet users accustomed to paying a dollar or two for an app. To reach those users -- the bulk of the non-Office generation -- Microsoft will have to either lower the price or offer a free ad-supported version Office. 

The 2 words Bill Gates doesn't want you to hear...
There are few things that Bill Gates fears. Cloud computing is one of them. It's a radical shift in technology that has early investors getting filthy rich, and we want you to join them. That's why we are highlighting three companies that could make investors like you rich. You've likely only heard of one of them, so be sure to click here to watch this shocking video presentation!

Read/Post Comments (3) | Recommend This Article (2)

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 18, 2014, at 10:40 AM, tjc206 wrote:

    Easily another billion in the bank for Microsoft, and clearly the street agrees. Give us your money, sheep!

  • Report this Comment On March 18, 2014, at 10:53 AM, jesterisdead wrote:

    That is because every tablet user also has a real computer to do productivity work. Who is going to update a spreadsheet on a tablet?

    Tablets are a fad. The only reason they sell in volume now is because the market isn't saturated yet.

  • Report this Comment On March 19, 2014, at 10:51 AM, chilero wrote:

    The $69.99 a year version is for a single device. It is not really for the "tablet version". It is for the user that only needs office on one device. Likely aimed at students and singles.

    Most people with iPads also have a laptop or desktop. They will likely be buying or have already bought the Office 365 $99 subscription provided they need office and will likely be able to simply add the iPad as one of their devices.

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: 2879790, ~/Articles/ArticleHandler.aspx, 9/2/2015 12:45:11 AM

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...

Daniel B. Kline

Daniel B. Kline is an accomplished writer and editor who has worked for the Microsoft's Finance app and The Boston Globe, where he wrote for the paper and ran the business desk. His latest book "Worst Ideas Ever" (Skyhorse) can be purchased at bookstores everywhere.

Today's Market

updated 3 hours ago Sponsored by:
DOW 16,058.35 -469.68 -2.84%
S&P 500 1,913.85 -58.33 -2.96%
NASD 4,636.11 -140.40 -2.94%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/1/2015 4:00 PM
MSFT $41.82 Down -1.70 -3.91%
Microsoft CAPS Rating: ***
AAPL $107.72 Down -5.04 -4.47%
Apple CAPS Rating: ****
GOOGL $629.56 Down -18.26 -2.82%
Google (A shares) CAPS Rating: ****