Microsoft’s chief executive, Satya Nadella, and the general manager of Microsoft Office, Julia White, announced the new Office app for iPad, part of an effort to expand to other devices. Publish Date March 27, 2014. Image Credit: Robert Galbraith/Reuters
Owners of Apple’s tablet will be able to use Word, Excel, PowerPoint and other popular productivity tools — but they still may not want to.
By NICK WINGFIELD, New York Times
SAN FRANCISCO — One of the most lucrative software franchises in history, Microsoft Office, has finally come to the most influential computing device of the last few years, the iPad.
Microsoft introduced the long-awaited suite of applications, which includes Word, PowerPoint and Excel, at an event here Thursday, where the company’s new chief executive, Satya Nadella, committed to making the software work on all major computing devices, including those made by its competitors. Microsoft plans to create Office apps for tablet computers running Google’s Android operating system, too.
To some, the move is a refreshing sign of a new Microsoft, one slowly unshackling itself from an era when its major decisions were made in deference to Windows, Microsoft’s operating system. But skeptics wonder if Microsoft has waited too long, giving people who use iPads, especially business professionals, years to get used to life without it and giving an opening to start-ups and Apple’s competing products.
Microsoft’s decision to bring Office to the Apple device comes after years of development and debate inside the company as it mulled the implications for its own efforts to make a tablet computer.
In his first public event as Microsoft’s chief executive, Mr. Nadella, who noted that it was his 52nd day as the company’s leader, provided a stark contrast to Steven A. Ballmer, his predecessor, who was known for his fiery sermons in praise of Windows. Mr. Nadella struck a more humble tone and acknowledged that Microsoft must make its applications and services available wherever its customers want to use them, which these days is often on non-Microsoft devices.
“What motivates us is the reality of our customers,” he said.
Timothy D. Cook, Apple’s chief executive, and Mr. Nadella even engaged in a friendly exchange on Twitter, with Mr. Cook welcoming Office to the iPad and Mr. Nadella saying he was “excited to bring the magic of @Office to iPad customers.”
Critics say Microsoft waited far too long to bring office to the iPad, nearly 200 million of which have been sold. Until now, customers have relied on products from other companies, like Evernote, Quip, Smartsheet and Haiku Deck and Apple’s own iWorks suite.
It used to bother David A. Levine, the chief investment officer of Artivest, a financial services start-up in New York, that he could take his iPad to conferences, but could not use Microsoft Word on the device. Instead, he would jot down ideas in the bare-bones note-taking app that comes with the iPad and copy all of the text over to Word on his computer.
Since last year, his company has done all of its word processing in Quip, an app that works on iPads, smartphones and computers through a web browser. The software lets employees work together on a document and see changes others are making in real time, on whatever devices they happen to be using.
“I don’t miss Word at all,” Mr. Levine said.
Microsoft said that its Office iPad apps would be free to people who want to use them in read-only mode. But to create files on the iPad, users will have to pay an annual subscription fee for Office 365, the name for the latest version of Office. It costs $100 a year for consumers.
The new Office product will test whether one of the great successes of the PC era can thrive in the age of mobile devices. Over the last decade, Office has generated about $180 billion in revenue for Microsoft, according to estimates by Nomura Securities. Its growth over that period tracked the ascent of the PC business, in which Microsoft remains an influential player through Windows, the dominant operating system for PCs.
For years, whenever someone bought a new PC for their home or business, they usually bought Office to go with it.
PCs aren’t selling as they used to, though. IPads and other tablets have become attractive substitutes for many PC functions. Last year, global shipments of PCs fell 10 percent from the year before, while tablet sales grew 68 percent, according to the research firm Gartner.
During the holiday quarter, Microsoft said, Office revenue from businesses rose 10 percent while consumer revenue fell 24 percent, partly because the company now sells Office as a subscription, which affects its accounting. While Microsoft no longer reveals how much total revenue it gets from the product, its business division reported nearly $25 billion for the fiscal year that ended June 30; 90 percent of the division’s revenue was from Office.
Rick Sherlund, an analyst with Nomura Securities, said he believed that over the next year or so Microsoft could add about $1 billion of additional revenue from Office for the iPad and other devices that don’t run Windows. While it would take more than that to make a big difference for a company of Microsoft’s size, he said investors believed that Microsoft was showing a greater willingness to create products for other companies’ devices.
Microsoft has created software for other devices for years. It made Word for the Macintosh in the mid-1980s, and more recently released iPhone apps for its Bing search engine and other services. It offered an iPad version of OneNote, a note-taking application in the Office suite, more than two years ago.
But the iPad and other tablets represent a bigger potential threat to Windows than the Mac. For more than two years, Microsoft has had prototypes of Office apps for the iPad working inside the company, according to several people briefed on the products, who asked to remain anonymous discussing the internal development process.
But the company didn’t push forward with the apps. That was partly because it saw the availability of Office for Windows devices, including Microsoft’s own Surface family of tablets, as a way to differentiate its operating system. It turned out that Office didn’t help much with sales of Surface, which first came out in late 2012.
To Brad Silverberg, a venture capitalist in Seattle with Fuel Capital and a former senior Microsoft executive, the company’s hesitation in bringing Office to the iPad is reminiscent of the early 1990s, when the makers of WordPerfect and Lotus 1-2-3, successful word-processing and spreadsheet applications, balked at making Windows versions of their products.
At the time, Mr. Silverberg said, he begged the companies to move faster to bring the products to Windows, but they didn’t want to see Microsoft’s software succeed. Microsoft exploited their hesitation.
“It gave Microsoft a huge opening to establish the Office franchise,” Mr. Silverberg said. “Microsoft is in danger of doing the same kind of thing now.”
