Microsoft's Jump Leads the Dow Jones Today Higher

Microsoft is leading the Dow Jones Industrial Average (DJINDICES: ^DJI  )  higher as the company's momentum from last week continues. As of 1:45 p.m. EDT, the Dow was up 130 points to 16,453. The S&P 500 (SNPINDEX: ^GSPC  ) was up 15 points to 1,872.

Microsoft is the top Dow stock today, up 2.9% to $41.347, on a day when 26 of 30 blue-chip stocks are positive. Microsoft last week launched iPad versions of its most popular Microsoft Office products, namely Word, Excel, PowerPoint, and OneNote, and made the iPhone and Android versions free. The apps quickly took the top spots in the Apple (NASDAQ: AAPL  ) App Store and have remained there all weekend.

Source: App Annie.

While basic versions of the apps are free, they only allow users to read file without making any changes. Full editing or file creation features will require users to pay for Office 365, which can run anywhere from $100 to $200 a year.

Some analysts worry that Microsoft's launch won't be successful, as cheaper versions of productivity software are available, including Google Docs, Open Office, and Libre Office. So far that doesn't seem to be the case, with App Annie data showing that Microsoft Word is currently the No. 7 top-grossing app in the App Store, while Microsoft Excel sits at No. 14.

While some claim this was a strategic move by the CEO, it was more of a necessity for Microsoft to stay competitive. Microsoft has historically been slow to develop versions of its productivity suite for other operating systems, preferring to lock customers into using Microsoft Windows. As customers' computing time has shifted solely from desktops to mobile devices, Microsoft's mobile devices have not kept up, Microsoft's Surface tablet has just a 2% market share. At the same time, with the proliferation of cheaper alternatives to Office and many companies now allowing their workers to bring their own devices, it's not enough to just sell to corporate IT departments anymore. As such, Office not being on iPad was a reason for companies to switch from Office to one of Microsoft's competitors.

This move is likely to be profitable, but not a game changer, for Microsoft. There there are an estimated 160 million iPads out there, and Apple gets a 30% cut of all app sales. Bernstein analyst Mark Moerdler estimated "that if 10 percent of the iPad install base were to subscribe to Office then this could add 15 million subscribers and generate $1.1 billion to $1.5 billion in consumer Office subscription revenue per year." However, it is hard to estimate what percentage of iPad owners don't already have Microsoft Office subscriptions, either through work or personally.


Read/Post Comments (0) | Recommend This Article (0)

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.

Be the first one to comment on this article.

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: 2897077, ~/Articles/ArticleHandler.aspx, 12/19/2014 9:33:01 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...


Advertisement