Office Is Coming to the iPad, but Microsoft's Stock Is Stuck in Neutral

Microsoft is bringing Office to the iPad, but the reasons aren't all that bullish for the company, which is why the stock is down today.

Mar 27, 2014 at 3:30PM
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Stock markets were mixed today on some conflicting economic data. The estimate of U.S. fourth  quarter growth was bumped up to 2.6% from 2.4% but an index of pending home sales fell for an eighth straight month to 93.9 in February from 94.7 a month earlier, the lowest reading since October  2011.

The mixed data didn't give bears or bulls much traction and near the end of trading the Dow Jones Industrial Average (DJINDICES:^DJI) was down 0.17%. Until earnings season begins again, the market may be a little directionless, so I wouldn't expect a lot of volatility in the next few weeks. 

Microsoft enters a new age
The big news on the Dow today was Microsoft's (NASDAQ:MSFT) new CEO Satya Nadella's first big product announcement. Today, he revealed that Microsoft Office is coming to Apple's (NASDAQ:AAPL) iPad, the most popular tablet in the world.

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Apple's iPad is a competitor to Microsoft's Surface but it will now carry Microsoft's Office suite of products.

Until now, Microsoft has kept Office on Windows devices and even watered down the software for the Mac. But it isn't as if Microsoft is going to give software away. Office for the iPad will require an Office 365 subscription if you want to create or modify documents, which isn't cheap at $99.99 per year.

Microsoft's move to the cloud is commendable, but its strategy is in contrast to Apple's, who gives away its productivity software on new devices. Cloud storage is also free from Apple.

That isn't to say that Apple will take a bite out of Microsoft Office's complete dominance of the work environment, but it highlights the different strategies and challenges the two companies face. Microsoft is a bit player in devices and has to make money on software like Office for iPad. Apple, on the other hand, makes its money on devices and offers software and services for free to its users.

Microsoft is almost forced to open up its software to other devices because the Surface and its smartphones only take a small market share. So, while Nadella's first announcement is probably the right move for the company, it shows the weak hand Microsoft is playing against rivals who offer software for free. That's the challenge Microsoft faces and it won't be an easy one to overcome.

Your cable company is scared, but you can get rich
The tablet battle has been won by Apple, but the next battleground is for your living room. Apple and Microsoft are both hoping to upend cable and 2014 will be a pivotal year in the battle. When cable falters, there are a small list of companies are poised to benefit. Click here for their names. 

Travis Hoium manages an account that owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and 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.

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