Analyst: Microsoft leaves billions behind without Office for iPad

Two and a half billion dollars.

That’s how much Morgan Stanley’s Adam Holt estimates Microsoft may be leaving on the table by not offering a full version of its Office suite (Word, Excel, etc.) on Apple’s iPads.

Even for Microsoft, that’s a lot of money to ignore.

  • KvH

    Not as much as they’d lose if they didn’t have a justification for people to still buy Windows.

    As dumb as it is, IT depts driven by checklists think they need a full Office suite before doing more than piloting or special projects. These groups have iPads in house but are slowing deployment as laptop replacements until they can see if Surface with a full Office is sufficient to kill iPad projects.

    • rattyuk

      Problem is too little, too late. It’s not like no enterprise company was holding back on iPads for Office. There are plenty of ways of working with those kinds of files on the iPad. At this point I think the word Microsoft attached is probably a hinderance rather than a help.

    • JohnDoey

      No, you are wrong.

      2011: iOS sold 100 million, Windows 300 million

      2012: iOS sold 200 million, Windows 300 million

      2013: iOS is expected to sell 400 million, Windows 300 million

      2014: iOS is expected to sell 800 million, Windows 300 million

      The Windows market is static — the only people buying Windows are those that have already bought it. The iOS market on the other hand, doubles every year.

      I would bet you there will be a shareholder lawsuit over the lack of an iOS Microsoft Office within a couple of years. Microsoft Office predates Windows and has never, ever been Windows-only. Microsoft already has an Apple version of Office but it is Mac-only. Office is also a bigger business than Windows. There is no excuse for crippling it.

      What Apple has done with iOS devices is not artificially cripple them to boost up antique products. That enabled iOS to open up new users, new markets. Microsoft has done the opposite with Office. They are going to have the opposite result: Office will stay static or shrink while iPad doubles every year.

      • KvH

        I was wrong about what? I said IT departments in companies are slowing down iPad pilot projects to see if Surface can live up to it’s hype of all Windows software running on a tablet. I didn’t say it would work. I know this happens because I work for such a company and used to be in the IT department here.

        The sales numbers don’t prove me wrong, corporations have been to slow to roll-out but they are being forced to mainly by users. Windows 8 is die-hard microsoft preferring IT departments last stance against being rolled over by iOS tablets in the workplace. If you look at Apple’s statements on enterprise adoption they are usually stated as “X number of Fortune 500 (or 1000) companies are deploying or piloting iPads”. They don’t break down how many of each are going on.

        Technically my employer is in the deploying category but i know there is no planned roll-out, it’s handled on an as-needed basis for particular use cases, and it isn’t widely known. iPads are not allowed to connect to the Company VPN. The office has to pay a huge (> than the cost of the iPad) yearly license fee to connect the iPad to Exchange. Not exactly an IT group that’s pushing change.

        Microsoft has been making the classic mistake on cannibalization. They didn’t want to cannibalize Windows so their tablet implementations have been very weak. Now if they release iOS Office they risk cannibalizing their own OS even faster than it currently is. So they hold off making 2 billion on iOS Office in order to keep from losing 10 billion in Windows sales. I’m sure there will be a class action lawsuit. They may even win. But if Micrsoft introduces iOS Office before Windows 8 is proven to not be an absolute hit in Tablet markets (it won’t be) i’ll be very surprised. I figure Microsoft will give it ’til 2014. Then release iOS Office while working on Windows 9 and hoping to recover lost ground.

  • Thats where I felt Apple is missing out. They have iWork, but they haven’t done much to it!

    • BC2009

      Despite that, iWork has a much better touch interface than Office for Windows 8.

      I had dreams of a beautiful touch interface for Office when I first saw Metro, but now that I have seen it released I don’t believe I would want to author documents in a touch-based Microsoft Office.

    • JohnDoey

      No, that is not true. Pages/Numbers/Keynote have had regular and consistent updates over the past few years and have gained many new features, and had many features dramatically improved. All of the import/export features are dramatically better. Track Changes support is dramatically better. In 2009 the apps were Mac-only, then came to iPad in 2010 and iPhone in 2011. Those are giant updates, especially when the iOS apps cost only $10 each.

      Your mistake is you are looking for an “iWork ’13” — that is not coming because that was just a way to ship one DVD instead of 3. The apps are available in App Store and Mac App Store now.

      Your other mistake is you are thinking that they weren’t updated because a giant ribbon or some other gimmick hasn’t shown up. Apple iterates without destroying what they have already built, without requiring massive user retraining or loss of productivity. As a user, you are not supposed to notice the updates. They are not supposed to get in the way of your work. When you export an ePub (for example) and it works perfectly instead of working 98%, you just benefited from te updates without even knowing it. When you import a giant, complicated Word document and edit while tracking changes, you just benefited from Pages updates.

      I did freelance I-T consulting at many offices — I never once met a user who knew how to use Microsoft Office. Since I work mainly in publishing, I know that Styles are the single most basic word processing feature. I’ve been asking Microsoft Office users for years if they know how to do Styles in Word and they never, ever do. These are people who have been using Word daily for 10 years. Microsoft Office looks like a 747 dashboard — the 5 trees the user needs are hidden in a forest of stuff they don’t need. What users were asking for is a simpler, more straightforward office suite. People who adopt the Apple tools are often overjoyed to find out they can use them immediately at a higher level than the Microsoft tools try used for years already. It’s as if their vision was bad and they got their first set of glasses.

      • yummyyummyfly

        Very well written. Loved your trees analogy.

      • I format occasional in-house training documents for a client in Word using columns, tables, Styles, text wrap, etc. Perhaps I’m part of a very small minority. Except insofar as I really hate using Word for that purpose, whether it’s version 2008 or 2011.

    • yummyyummyfly

      The silence on touch-based iWork for the last couple of years is telling. They may be gearing up for a game-changing release. If it’s at a game-changing price, it’s game-over for Office.

  • rj

    I very seriously doubt anywhere near 30% of iPad buyers would pay nearly $85 for a copy of Office.

    • JohnDoey

      You are right, $85 is way too much. However, over the next 5 years, a $30 Microsoft Office for iPad could generate new revenue than an $85 version for Windows because there will be exponentially more iPads than Windows PC’s.

      In other words, they have $85 x 500,000 users today on Windows, but could have $30 x 2 billion in just a few years on iPad.

      Plus, the $30 iPad Microsoft Office could have the basic feature set that everyone needs (similar to Apple’s tools) and also have 20 in-app purchases for $5 each, one or 2 of which would appeal to every user. They have ways to make more revenues than the retail price.

      • rj

        I’m having a little trouble with your numbers.

        Only 500,000 users of Office for Windows? That can’t possibly be right.

        2 billion Office for iPad sales? There are a little over 100 million iPads sold to date, and somewhat fewer potential Office for iPad sales (I suspect the number of multiple iPads for one Apple ID situations is non-trivial). iPad sales can’t double forever – there are only about 7 billion people on earth, so 2 billion sales means 1 in 4 (man, woman and child) is going to buy Office for iPad.

        At $30 retail (which would still make it pretty much the most expensive thing in the App Store), Microsoft would get $21/copy.

        The App Store is inflexible, and not really well-suited to the way Microsoft does business. I think most of Microsoft’s Office revenue is derived from bulk corporate subscription agreements that provide annual income. AFAIK, this is not possible in the App Store. And I doubt they want to turn 30% of their revenue over to Apple.

        One way around the App Store: a touch-optimized mobile web version of Office that can be sold via subscription. I wouldn’t be surprised to see Microsoft take this route.

        • normm

          He meant 500 million users of office, which is a widely quoted number. You’re about right on iPad sales to date, but they sold 23 million last quarter, so it’s ramping up quickly — much faster than iPhone ramped. Since it’s more than doubling every year, 2 billion iPads is plausibly only three or four years away. As to how many would buy office, that’s a very different question. If I guessed none, I think I’d be closer than John!

  • JohnDoey

    It gets worse for Microsoft because iOS device sales double every year. So if it is $2.5 billion right now, it will be $5 billion a year from now, and $10 billion by early 2015, at which time the iOS installed base will be larger than the Windows installed base.

  • yummyyummyfly

    IMHO, Apple is going to do to MS office what iPad did to the PC. They need to make their current touch-based iWork offerings way, way stronger, and then simply port them to the Mac. It will be game-over for Office. As long as there is no credible touch-based Office alternative, the field is wide open for disruption. MS is going to lose this like it lost the touch-tablet with their bizarre Frankenstein monster of a Surface.

    • JohnDoey

      The Mac already has Pages, Keynote, and Numbers. As well as iMovie and iPhoto and GarageBand. Under the mouse/touch interface they are the same apps, same as iOS and Mac OS both sit on top of xnu/Darwin. So what you said is basically that the Mac should drop mouse and adopt touch. I agree with that, but the Mac app platform will still likely remain separate because developers and producers need access to the Unix layer, kernel drivers, and other features that are specifically locked down for security and stability on iOS. You can’t run arbitrary code on iOS and that is a feature — you CAN run arbitrary code on Mac OS and that is also a feature. Going forward, your average Google employee who is on a Mac today needs a different system than your average consumer, who is either on iOS today or moving to it.

      • yummyyummyfly

        To borrow a phrase from (yuck) the Windows team, iWork needs to go “touch-first”. Anything touch-first can always be used with a mouse+cursor. But not vice versa.

  • Dantv

    Know who else is leaving big money on the table??? NINTENDO!