After iPad, Will Microsoft Corporation Bring Office to Android Before Windows?

Microsoft launched Office for iPad earlier this year, but Android might be next in line to receive the gold standard of productivity software suites.

Evan Niu
Evan Niu, CFA
Jun 4, 2014 at 9:00PM
Technology and Telecom

Excel for iPad. Source: Microsoft

One of Microsoft (NASDAQ:MSFT) CEO Satya Nadella's first orders as business when he took the reins was to officially launch Office for iPad.

In embracing Apple's platform first, Nadella was conceding that it needed to gain maximum exposure as fast as possible and targeting iOS first was the the right call since Apple enjoys the highest market share of installed tablets. He confirmed this thinking just last week at Re/code's Code Conference. Will Google (NASDAQ:GOOG)(NASDAQ:GOOGL) Android be next in line to get Office?

According to ZDNet's Mary Jo Foley, the answer is "yes." Notably, that means that iOS and Android would be getting the touch-first versions of Office before Microsoft's own Windows 8. Microsoft knows that it's coming from behind in tablets, and is rightly deciding to swallow its pride and is prioritizing the platforms with the largest user bases to which it can pitch Office 365. Much like on iPad, you can expect that Office for Android's full potential will only be unlocked with a paying subscription.

Additionally, Microsoft already has touch-compatible versions of Office for Windows 8. Touch-first is a better experience for tablets than touch-compatible, but Microsoft still has a workable alternative that it can lean on. That's especially true since most Windows 8 devices still work best with a keyboard and mouse anyway (especially Microsoft's own Surface lineup), while iOS and Android are very much touch-first devices.

Mostly a reactive response to Google Apps for Business, Office 365 continues to gain traction. On the last conference call, CFO Amy Hood noted that Office 365 is now at an annual run rate of $2.5 billion. Office 365 Home added almost 1 million new customers in the first quarter, and total subscribers now total 4.4 million. For a subscription service that was launched just tree years ago, that ain't bad. Especially since Microsoft's business model is fundamentally changing.

Office 365 is one of Microsoft's pillars to making Windows 8 free on low-cost devices that retail for $250 or less, with Bing being the other key element. As opposed to the traditional licensing fee of around $50 that Microsoft used to charge for Windows, Microsoft can recoup that lost revenue with search advertising and Office 365 subscriptions. With PC replacement cycles getting longer and longer, that $50 translates into less and less annual revenue for the company as it gets spread out over a longer period of time.

That's why it's so important to really drive Office 365's value proposition, which includes cross-platform support on as many devices as possible. It may seem counterintuitive at first to give iOS and Android priority over Windows, but it makes plenty of strategic sense. Windows can wait.