February 16, 2013
Microsoft Turning Away From Billions Of iOS Dollars
Michael Harper for redOrbit.com — Your Universe Online
For years, rumors have flown about iOS versions of Microsoft´s Office software. Each time evidence appears which suggests Microsoft is getting close to releasing these apps, the Redmond company quickly denies them, just as they did last May.In December, All Things D claimed the reason these apps were being held up was because Microsoft wasn´t happy with paying the standard 30 percent owed to Apple when they sell an app through their app store. According to All Things D, Apple hadn´t just delayed Microsoft´s application, (as they´re sometimes accused of doing in situations with their rivals) they had completely denied the application to sell Office in the App Store.
While Microsoft may feel entitled to squabble over percentages, one analyst is saying they´re leaving billions of dollars in cash on the table to keep up this fight.
Morgan Stanley analyst Adam Holt is now saying Microsoft could potentially lose $2.5 billion for every year the Office apps aren´t in the App Store. What´s more, if sales of Microsoft-branded tablets don´t pick up, says Holt, the company may have no other choice than to cooperate with Apple to get these tablet-based apps in the hands of consumers.
“Office on iPad could be a several billion dollar opportunity,” writes Holt in his research note.
“While [Microsoft] has resisted offering a full version of Office for the iOS, the company may ultimately decide there is more upside with Office on iPads, particularly if Win tablets fall short of expectations.”
And, says Holt, if iOS sales could add billions of revenue each year and raise the price of the company´s stock, releasing an app for Android tablets would really push Microsoft over the top.
According to Holt´s calculations, Mac users are already accustomed to paying for Office, with 30 to 40 percent of these Apple fans purchasing the software suite compared to a 10 to 15 percent rate with Windows users.
While Microsoft is currently side stepping these issues with Apple by allowing access to their web apps, this solution isn´t beneficial to the users.
“[Microsoft´s] free Office web apps let users view, create and do some basic editing using Office apps that run in the Safari browser on the iPad (or on a browser in an Android tablet), but it does not offer all features, such as track changes,” said Holt.
“In our recent survey work, over 60% of respondents suggested Office was the most important feature to consider for a tablet and there is clearly demand for Office on the iPad.”
Although the math simply adds up for Holt, some aren´t so certain bringing Office to the iPad will be such a lucrative business for Microsoft.
According to Nancy Gohring, Holt´s numbers are based on the assumption that Microsoft could sell Office 365 to 30 percent of all iPad owners. While a lofty, yet not unattainable feat, Office 365 is a subscription-based service, says Gohring in her recent post in CITEWorld.com.
For $99 a year, Microsoft allows users to download the software to five machines. If the iPad counts against this number, these users will get to download the software at no additional charge.
“So even if the 30% attach rate is reasonable,” says Gohring, “that could reduce the revenue Microsoft would bring in with Office for iPad.”