Microsoft unveils Office for iPad
In a significant break from a longstanding Microsoft tradition of creating services primarily for its own platforms first, the company has announced Office for iPad, its suite of productivity apps that have been optimised for touch and for use on Apple's market-dominating tablet.
The apps are free if users only want to view and present documents, spreadsheets and slides.
But users who want to create and edit documents will have to have a subscription to Office 365, Microsoft's cloud version of its market-dominating productivity suite. ("Cloud" refers to services and data that live on remote servers and can be accessed by users online.)
The Office for iPad apps come free for Office 365 subscribers.
The announcement, made at a news briefing in San Francisco, was new Microsoft CEO Satya Nadella's first official media event since taking over last month from former CEO Steve Ballmer.
Nadella called the announcement an example of the "magical coming-together of the cloud and mobile."
The Office for iPad launch also marks Nadella's first big move toward realising his "mobile first, cloud first" vision for the company - a vision that includes the recognition that Microsoft has to be far more open to other platforms, with services designed to run on or work seamlessly with rival companies' operating systems and services.
Making Office available for rival Apple's iPad marks a significant shift away from Microsoft's practice in the past few decades of centering its offerings on Windows. (A notable exception early on in Microsoft's history was, ironically, Office for Mac, which Microsoft offered at a time when it was trying to expand its own user base.)
The thinking for years at Microsoft was that its products and services - including cash cow Office - all had to bolster and protect its core Windows franchise, which is still the dominant operating system used on PCs worldwide.
But at a time when PC sales are declining yearly and mobile devices have become pervasive, Microsoft's presence and relevance in computing has been declining. The overwhelming majority of the world's smartphones and tablets run on Google's Android or Apple's iOS operating systems, rather than Microsoft's Windows, Windows RT or Windows Phone platforms.
At the media briefing, Nadella said Windows is still "a massive agenda for us. We will innovate."
At the same time, he said, "we are absolutely committed" to making the company's applications run well cross-platform.
"It is about being able to excel everywhere our customers are," Nadella said. "What motivates us is to make sure that we build the great experiences that span the digital life and digital work of our customers, both individually and as organisations. And that's what you can count on us doing, both with Windows as well as other platforms."
Microsoft has been wrestling with the dilemma of whether to offer its marquee productivity suite on competing platforms - thereby gaining more users and revenue for Office - or to keep Office primarily for its own platforms, thereby protecting Windows but possibly losing scores of potential Office users who would turn to alternative productivity apps.
Some on the Office team have reportedly been working on a version of Office for iPad for years now, and Microsoft presumably could have launched such an offering years ago. But others at Microsoft still held that a touch-optimised Office for tablets should be launched on a Microsoft device and platform first.
Launching Office on the iPad was "something that Microsoft really needed to do," said Al Gillen, an analyst with research firm IDC. "I'm not sure it would've happened with Steve Ballmer at the helm."
"This was not a technology challenge for Microsoft," Gillen said. "This was a marketing decision. It could've happened long before now. But it didn't."
Microsoft's initial response to the rapid rise of mobile was to try to extend its dominance in the PC market into the mobile market with Windows 8, an operating system that Microsoft touted as being optimised for both touch-based mobile devices and mouse-and-keyboard desktops and laptops.
Instead, many users found Windows 8 jarring, with two markedly different ways of interacting with the operating system: one the traditional desktop interface and the other a new tile-based design that worked well with touch.
That strategy into the mobile world "has not worked," said David Cearley, an analyst with research firm Gartner.
Thursday's announcement from Microsoft, "I view as the first major statement in the market from Satya on what his mobile-first, cloud-first agenda really means," Cearley said.
"The changes that Microsoft put in place last year, even under Ballmer, started recognising that Microsoft was playing in a more heterogeneous world where they had to consider other platforms and other environments and other vendors in this new age of personal computing," Cearley said.
Nadella's announcement Thursday is "a much more aggressive embracing of mobile in a Microsoft and non-Microsoft world," he said. "That, combined with this delivery of an Apple version of (a touch-optimised Office) before a Microsoft version reinforces the notion that Microsoft will be looking at a more heterogeneous and comprehensive model in the future."
But even as Microsoft makes this shift toward launching a major product for a rival company's platform, Gillen predicts that there may still be internal resistance from some in the company.
Launching Office for iPad might be good for Microsoft's overall company revenue but bad for some divisions or products.
"What happens to Surface 2 if this is wildly successful on the iPad and customers no longer feel like they have to buy a Microsoft device to get a good Office experience on a tablet?" Gillen said.
"And what does that mean for Windows RT?" he continued, referring to the less-powerful version of Windows 8 that's designed for tablets running on battery-saving ARM chips.
Windows RT tablets, which come with a version of Office already installed, have not sold well.
If Office on iPad is successful, "it could potentially be fatal" for Windows RT, Gillen said. "To the extent that Office goes on some device other than a Windows device, in the end, that's a sale of a Windows client license that didn't happen."
Also a question at this point is whether Microsoft was wise in requiring Office for iPad users to have an Office 365 subscription.
Subscriptions vary in price, according to version, but the Home Premium version (to be renamed "Office 365 Home" soon) - the one many consumers use that allows for use on five PCs or Macs, plus up to five tablets - costs about US$100 a year or US$10 a month.
Microsoft also recently announced a version called Office 365 Personal that allows for connections to one PC or Mac and one tablet. That version, coming sometime this spring, will be priced at about US$70 a year or US$7 a month.
Requiring an Office 365 subscription to edit Office documents may "be a non-starter for a lot of people," Gillen said. "IPad customers have been taught to expect apps that cost US$1 or US$2, with really expensive ones at US$15 to US$20. Microsoft's coming along and expecting US$100-plus per year. For many consumers, I think that would be a price point that is unrealistic."
For those consumer and business customers, though, who have already subscribed to Office 365, which allows for the service to be used on multiple devices, "it's a no-brainer," Gillen said.
Still, even though Office 365 is doing well and gaining a lot of traction, "there are a lot of businesses that don't have Office 365," said Gartner's Cearley.
Most people are still using a traditional, non-subscription version of Office installed on their PCs.
"What Microsoft is trying to do is get those people to shift to the subscription model," Cearley said. "It remains to be seen whether people will buy it."
The company also announced new or updated services for corporations' IT departments including Enterprise Mobility Suite, a set of cloud services to help businesses manage corporate data and services on employees' mobile devices; and the upcoming availability of cloud-based access and identity management service Microsoft Azure Active Directory Premium.