Morgan Stanley analyst: Microsoft losing out on billions by not bringing Office to iPad


An image purported to be of Office running on an iPad leaked last year.

Last year it was rumored that Microsoft's been working on a version of Office for the iPad, but according to a new report it's losing out on bllions each year the product isn't on the market.

Morgan Stanley analyst Adam Holt claims that Microsoft is losing out on about $2.5 billion in revenue per year by not bringing the popular productivity suite. That's what he told Fortune, noting that if 1 million Surface with Windows RT tablets were sold then the company is a long ways from reaching much of the mobile market.

If Microsoft is able to reach a similar attach rate on the iPad that it has on Mac computers - about 30 percent - then it's capable of reaching that figure, Holt said. That's assuming the suite sells for $60 and Apple takes a 30 percent cut of the sales.

Office currently comes bundled with Windows RT tablets, though users with Windows 8 tablets, such as those with a Surface Pro, have to purchase a copy separately.

At an October event in the Czech Republic, Microsoft's Peter Bobek claimed Office would be coming to iOS and Android devices this March. Microsoft later released a statement neither confirming nor denying the plans.

In November, information leaked that an iPad app may launch in March followed by an Android app in May. According to that leak, the apps would only be able to view Office files unless used with an Office 365 subscription, which would also allow users to edit files.

Source: Fortune | Image via The Daily

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36 Comments

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I find it hard to be bothered to read the content of these silly stories any longer. In fact to keep these stories as quiet as possible I will not respond to anymore of this obvious MS bait.

To assume that the majority of those who use the iPad don't have a PC (or Mac) with Office on it is plain silly.

This is a vain attempt to pressure MS into thinking everyone assumes and expects this to happen. Everyone bar these few individuals knows this has no overall value or benefit to the long term future of MS and would be very damaging.

If anyone can't see this of the few selfishly motivated individuals then they need to take a look around.

MS DON'T TAKE THE BAIT!

Only those who would make money off of the MS stock tanking and the Apple stock rising along with those who only have tech interest in Apple's success and the fall of MS want this. There is absolutely no upside for MS. They may provide the web version of Office (Office 365) but that is it.

Just looking at all the users who spend $$ on the MS OS to mainly run office and losing both the OS and hardware sales to Apple and only to gain Office revenue for which most of those that need it already have it is silly.

Some people have said it on here already but MS would be comitting an act of utmost stupidity to release a full local version of Office for the competing platform.

In fact now is the time when MS wouldn't do this with their move into hardware.

Be ready for one of these silly stories popping up every few months. WSJ, The Verge ad a few others will keep putting out the fishing line.

Lets hope MS is not going to be a guppy and bite. That would be it for their consumer client side push - game set and match and the Enterprise client side would follow shortly thereafter.

False they are not. They would actually lose more money if they made Office of the iPad. Why? Because, in order to make Office work on the iPad, it would have to lose at least 50% of its capability. It would be nothing like how Office is on RT . It would be like how Office is on Windows Phone. Stripped down viewers with limited editing capability. Which means Microsoft would charge a very low amount of money, which means it would cost them more to redevelop it vs just not dealing with it at all.

You are expect an ANAL-YST who knows nothing about development of apps, to claim MS is losing millions by not making Office for the iPad. What makes you think Apple even wants Office fir the iPad? And since fans claim the iWorks suite is so much better than Office, why would they want Office?

No matter how cheap or expensive you put Office to iOS and Android marketplace, both will take a big cut from Microsoft's profit.

Plus, having Office on iPad will allow Apple to further penetrate the corporate environment. I think MS is just fine of offering Office online on such devices.

They expect people to make the right choice by NOT purchasing Apple related products, simple. It would make them billions in sales of their own platform.

Microsoft should never have any Office app on iOS or Android! The last thing they need is to help a competitor! Granted it could make them money in the short term, but that's it! You aren't going to see GarageBand on a Surface anytime soon, or any other Apple software for that matter.

Can't imagine it's billions, but absolutely, they need to do something about it. I bought Pages recently, it's beautiful.

This analysis doesn't take into account potential sales lost to Microsoft owns offerings (i.e. Surface and license to OEMs) had office been available for the iPad.

This is just a silly claim, after 6 years of selling apps on the Appstore, Apple has only managed to sell $8billion worth of apps so far which translates into 1.2billion a year for over 500k+ developers .. how can Microsoft alone make 2billion a year from just selling apps on iOS ?

It is a difficult call. On the one hand Office exclusivity is a big advantage for Windows RT and Windows 8.

On the other hand both iOS and Android are in the ascent, whilst Windows, relatively speaking is declining. Outside of the market where Windows is already dominant (on PCs) they don't show much sign of making significant inroads.

Microsoft can't be assured that Windows won't go down with or without Office. Office is a bigger source of revenue than Windows. The longer that Office doesn't exist on iOS or Android - the greater the opportunity for alternatives to Office to take root.

So the problem for Microsoft is simple. If they keep Office with Windows, they may ultimately end up losing the revenue of both products. On the other hand if they take Office to rivals' platforms they may deal a serious blow to Windows, but safeguard Office - protecting at least one of their cash cows at the expense of the other.

What office alternatives? There are no true alternatives?
LibreOffice has a decent Writer, but Words is still miles ahead.
Nothing comes close to Excel and Outlook.

They also intergrate neatly into a cooperate environment.

So, the problem is "simple" is it? Obviously you don't write software. If developing, marketing and supporting a true contender for Office is so simple, then why aren't there thousands of them? Google couldn't do it. They've been giving their "competitor" away free for nearly ten years and still haven't cracked the magic 1% barrier.

The cost of making an Office clone today is in the billions.

If they can sell apps in a way that apple doesn't get a cut then sure, but if that is possible all you'd be getting on the iPad is a limited touch version that will be tied to a office 365 subscription. So you get the full versions on your windows systems and limited mobile versions on your iPad as a secondary option as long as you have a subscription. No way I see them selling stand alone versions of the office apps on the iPad and android devices, they'll keep those for windows only.

Microsoft is SLOW!!! That's their problem. Windows 8 was released with HORRIBLE apps, and we STILL don't have very many updates to them!! They've fixed bugs, but they need to make something that is actually useful. I can't believe months after the Windows 8 release they still don't have anything out that's better.

If they released for iOS, the burning question would be: why the HELL would I want a Surface RT then? I'm not saying the Surface RT doesn't have its share of nice features, but Office is no doubt one of the big selling points here.

I have a feeling that 'billions' is a bit of an extreme estimate but they probably are losing money by not investing in mobile devices, as there are no truly feature packed office solutions on the mobile scene at the moment, especially with Android.

By not releasing Office for iPad, they prevent wholesale adoptions of that hardware profile to solve mobile problems. Why? Because they had the Surface in the pipeline, as well as they fundamentally want to support the PC platform.

I'm not saying this is right at all, but Microsoft has a less-than-subtle marriage to the PC platform, and will always push that agenda first.

And it's not even anti-competitive. They can't be required by law to build a whole new product for an entirely different platform.

What an inane article.

This is how the process works:

1. Windows 8 launched with Windows RT on October 26th.
2. Surface launched with Windows RT on October 26th. A selling point is that Office is included.
3. At the time of the launch of Surface RT, they were already working on an iOS version of Office (and perhaps even Android).
4. 1,000,000 sales of Surface RT was over 3 months, but only 2 months it was only available online on Microsoft's site or in Microsoft's very limited distribution channel of 30 stores.

So, it reasons to believe that they're expanding their distribution channel to multiple countries, more stores as well as opening more stores. They want Surface RT out there for a solid period of time before releasing Office for iOS or even Android to keep it a selling point.

We'll also probably see a limited functionality set for Office on iOS, Android, and maybe even Modern UI to further keep Office for Windows RT a better selling/more enticing proposition.

I still maintain that it would be foolish for Microsoft to assist Apple by releasing Office for the iPad. Morgan Stanley is focused on short term revenue rather than long term losses.

Every iPad sold is now a Windows RT device that is not sold. And, then, every copy of Microsoft Office sold on iOS or Android provides a reason to justify replacing a computer with those tablets.

Why would Microsoft want to solidify iOS as the premier environment by providing a complete business suite in the midst of their own tablet market's launch? Yes, there is significant short term money to gain, but the long term dilemma is obvious. It cannibalizes their own sales, and it allows Apple to get 30% of them, as well as giving Apple the opportunity to block updates whenever it proves convenient as they did with Google Maps in order to prop up their own software (like Pages, if they ever felt like becoming completely competitive [although I personally do like Pages]).

Without serious business applications, iPads are entertainment consumption devices with overrated productivity. With serious business applications, they become very true competition for Ultrabooks and they become the absolute go-to tablet.

Well they aren't "losing" money per say. Losing implies they lost money they had. They just aren't capitalizing on something that could make them Billions.

Also assuming there are 200 million people who would actually pay $60 for Office to use on an iPad. I really don't think so.

xendrome said,
This is exactly right, they aren't "losing" anything. Who writes this stuff

Nice to see that even Neowin's own forum staff is bringing up questions regarding the quality of front page articles.

warwagon said,
Well they aren't "losing" money per say. Losing implies they lost money they had. They just aren't capitalizing on something that could make them Billions.

Edited the title, thanks.

In economics, an opportunity cost is as valid as any loss (before anyone says, I said economics, not accounting.. but even then there's a gray line!)