More Evidence That Microsoft Corporation Needs Office for iPad

Microsoft can't wait anymore; the arguments for launching Office for iPad are too great.

Mar 23, 2014 at 12:00PM

Ever since Apple launched the iPad, the storyline of Microsoft's (NASDAQ:MSFT) Office for iPad has been impossible to bury. Even so, it has been four years since Steve Jobs unveiled Apple's tablet and Microsoft's dominant productivity suite still hasn't made it to iOS. But with productivity software competitors gaining traction in mobile, Microsoft finally appears to be ready to launch a version of Office for iPad.

Microsoft Store Tmf

Shares jumped about 4% on Tuesday when Reuters reported that new Microsoft CEO Satya Nadella would unveil Office for iPad on March 27. Judging by the rally in Microsoft's stock price that has sent shares to levels not reached since the boom in 2000, it is pretty clear that investors are excited about the software -- and for good reason.

Waiting is no longer an option
There are various estimates of just how much money Microsoft is losing by not having a version of Office for the iPad. While the estimates differ, they all seem to suggest that Microsoft is missing out on a significant opportunity.

One comes from Morgan Stanley analyst Adam Holt, who estimates that if the suite is priced at $60 for an annual subscription, about 30% of iPad users would buy the software. The end result? Apple could generate a whopping $2.5 billion in revenue annually -- and that's after the 30% App Store commission. Based on his claim that 30%-40% of Mac users install Office on their Apple computers, a 30% installation rate among iPad users sounds reasonable.

Taking Holt's estimate further, assuming 35% of this revenue hits the bottom line, Office for iPad could grow Microsoft's annual net income by about 4%. That's a significant gain for a cash cow like Microsoft.

But the move to launch Office for iPad would have significant intangible benefits, too. Particularly, it would give Office a competitive position in a space where productivity suite competitors are mounting. Both Google and Apple now offer versions of their productivity software for free. And beyond the big tech giants, there are hundreds of other productivity software alternatives in the App Store.

Microsoft Office

Microsoft Office for Mac. Source: Microsoft.

Further, Microsoft's launch of Office for iPad could send the long-awaited signal to investors that it is ready to take on a cross-platform approach. A recent comment from Microsoft's Thorsten Hubschen, who oversees Office in Germany, that the company is renewing its Office for Mac efforts also supports the idea that Microsoft is headed toward a cross-platform strategy.

A change of direction?
For Microsoft investors, a launch of a version of the productivity software for the world's most popular tablet should provide incremental confidence in the company's ability to shift its products to a mobile-dominated future. Further, the launch of Office for iPad signals that Microsoft is finally ready to make the important shift to a cross-platform software environment -- an imperative move that best happens sooner than later.

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Daniel Sparks owns shares of Apple. The Motley Fool recommends and owns shares of Apple and Google. It also owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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