Microsoft (NASDAQ:MSFT) CEO Satya Nadella is at it again, making yet another bold and strategic shift as he leads the software giant into the mobile-first, cloud-first era. Under Steve Ballmer, Microsoft took a measured approach with mobile versions of Office for competing platforms: only Office 365 subscribers could unlock all of the features, with document creation and editing being the most crucial paid features.
The company has now announced that Office for Apple (NASDAQ:AAPL) iPhones and iPads are getting a major upgrade, removing the Office 365 subscription requirement to access these critical functions. On top of that, Microsoft is working on Office for Google (NASDAQ:GOOG)(NASDAQ:GOOGL) Android tablets.
The times are a'changing
Make no mistake, Microsoft is now adapting quickly to the mobile world, responding to competitive pressures from Apple and Google. At the same time, certain advanced editing features in the mobile Office apps still require an Office 365 subscription, the types of features that mobile enterprise users will need. But for the average consumer, lowering the hurdle to actually use the Office apps is absolutely the right call.
Apple has aggressively moved to give away its iWork productivity suite away on both its OS X and iOS platforms, while Google has long offered its cloud-based productivity apps for free to average consumers alongside enterprise offerings. Microsoft marketing exec John Case told The Wall Street Journal that the company is not giving in to competitive pressures, but rather wants to broaden its overall user base by offering the "best free solution."
Still, it seems naive to think that Microsoft's decision was independent of what its rivals are doing. That being said, it's of the most utmost importance for Microsoft to defend its most profitable business, particularly amid the secular transition to mobile platforms. While Microsoft recently changed its reporting structure, under the old product-based segments Office easily boasted the highest operating margins -- even higher than Windows.
Additionally, mobile is largely a complement to desktop usage when it comes to enterprise productivity, and Microsoft has not changed its desktop pricing or feature set. Microsoft's mobile strategy has come a long way, and it's putting up the numbers to show for it. Office 365 Home and Personal subscriptions now top 7 million.
Office's status as the gold standard of productivity software appears safe, while the transition to a subscription model is proceeding swimmingly.
Evan Niu, CFA owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), 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.