It's still not official, but the evidence that Microsoft is bringing Office to the iPad and iPhone is growing in abundance. At this point, it seems to be an inevitability that Redmond will release Office apps for iOS in some form in early 2013, with Android apps following soon after.
In so doing, the company stands a good chance of cementing the role of the iPad as a business tool, eroding the advantages of Windows Phone 8 and undermining the entire value proposition of Windows RT. It will also hole Microsoft's argument that the iPad is "just" for content consumption below the waterline. The upside of Office on iOS? That's harder to fathom.
According to the Verge, Office for iOS will ship as a set of free apps (Word, PowerPoint, and Excel—OneNote is already available for iOS) that will allow viewing of their respective document types. Limited creation and editing will be enabled through purchase of an Office 365 subscription.
Should this come to pass, Microsoft will not just be banging a nail into the coffin of Windows RT and, by extension, its Surface tablet. It'll be digging the grave, tossing in the body, and then unloading a few tons of concrete into the hole to ensure that there's no risk of reanimation.
Making the unique... less unique
Windows RT's unique selling point is that it comes with Word, PowerPoint, Excel, and OneNote. It offers (almost) full fidelity reproduction and editing of Office documents. To achieve this, Microsoft has been forced to make enormous compromises: the Office apps in Windows RT offer only minimal concessions to touch-based usability. They remain apps that are essentially keyboard and mouse-centric, and accordingly, Microsoft has made its keyboard and touchpad accessory for Surface a core part of the product's branding and marketing.
On Windows Phone, likewise, the integrated Office support is one of the features that Microsoft touts as a key advantage over the competition. Windows Phone's Office support is a lot more rudimentary than that of Windows RT, enabling partial viewing and on-the-go editing of Office documents, but the application is reasonably attuned to the limitations imposed by the smartphone form factor.
There's a large class of users that don't care about Office at all. There are a number of users who care about Office so much that the version in Windows RT, or any potential version for iOS, will never be good enough. But there are also a bunch of users somewhere in between; people writing essays for their homework in Word, people balancing their checkbooks or running their home business in Excel, office workers making the finishing touches to a presentation in PowerPoint—for whom Office for iPad (or Office for Windows RT) might be more than enough—and who might well decide to forego a PC purchase entirely if their tablet can do the job.
In creating Office for iOS, Microsoft is one-upping its own platforms. On the iPad, Microsoft can't rely on the presence of keyboard accessories as crutches to make up for user interface inadequacies. As such, we can be confident that Office on iPad will be "touch native" in a way that Office 2013 isn't. While users of Windows will be forced to use mouse-oriented software even if they merely want to read documents, iPad users will be able to revel in the luxury of an application that's built for, and designed around, touch navigation.
It's highly unlikely that Office on iPad will offer full-featured editing to Office 365-enabled users, but conversely, it's all but guaranteed that the editing capabilities that it does support will be entirely comfortable for touch users.
This means that Microsoft will be doing for iOS something that it's refused to do for its very own platform: offering a proper touch-enabled version of Office. Indeed, Microsoft will be doing what we advocated it do for Windows: create full fidelity viewers with limited, fully touch-capable editors.
Windows Phone's situation is not quite the same. That operating system already has proper touch versions of Office, so Microsoft will not be enabling competing platforms in quite the same way as it is in the tablet space. Nonetheless, Windows Phone's Office support is a unique selling point—one that will be eliminated if Microsoft offers Office for iOS and Android.
Granted, in both of these cases the Microsoft products will retain an edge. Windows RT and Surface will still have the near-full Office if you want it, and neither Windows RT nor Windows Phone require an Office 365 subscription to enable any functionality. If you need everything that Office can do, Windows is your only option. But if you just need a bit of what Office can do, you'll be able to look elsewhere.
Providing Office on iOS and Android does more than just diminish Microsoft's own competitive advantage; it also negates some of Microsoft's marketing tactics against those platforms, by bolstering the credibility of iOS and Android as productive business tools.
The positioning of the iPad as a pure consumption device has never entirely rung true—there are various apps that allow document creation and editing, among other things, on the platform. Nonetheless, when talking about the decisions that went into the design of the Surface tablet, former President of Windows and Windows Live Steven Sinofsky nonetheless positioned the iPad as a device designed predominantly for consumption of media; Surface, in contrast, with Office and its keyboard covers, was a much more rounded device that had first class support for traditional productivity applications.
We see this reflected in much of the marketing material around Surface. The first thing mentioned in this 90 second Surface promo video? Surface is for "your way of working." You can "do more" with Surface, and that means you can use it to "create" and use it for business.
That whole marketing angle evaporates if you can say exactly the same thing of an iPad. It means that you no longer need a PC for work; your creation and business can be performed on the iPad.
Office for Mac isn't the same
Microsoft producing Office for a competing platform is not unprecedented. Office has an OS X version, after all. One might argue that Office for OS X is harmless, and that Office for iOS will equally be harmless. But there are important differences between the two.
Windows is dissimilar from OS X in some ways that are extremely important to the enterprise. Windows, with Active Directory domains, Group Policies, and the System Center suite, is extremely easy to centrally manage and control. Microsoft makes sure to support old Windows versions with security fixes available for a decade or more after the original release. Windows networking remains reliable even when using different versions of the operating system. To a significant degree, the business world depends on these capabilities.
OS X is much weaker in this regard. Yes, it can authenticate against an Active Directory domain, but it doesn't integrate neatly with Windows-based management tools. It can access Windows fileshares, as long as you're willing to overlook things not quite working correctly all the time. Apple will offer security updates for the previous version of the operating system, but you're out of luck if you want any assistance for a ten-year-old OS X version. Even a five-year-old one is on shaky ground.
Microsoft can afford to support Office on OS X—and by all accounts make a healthy profit from doing so—because Apple is steadfastly unwilling to make OS X a suitable platform for use on the corporate desktop. Windows doesn't need Office as its unique selling point in the fight against OS X. As long as Apple's happy for OS X to be little more than a consumer play, Office on OS X doesn't threaten Windows.
The world of mobile devices is a very different place. Not only is Windows not a major player in this space, it's also not best of breed in this space. Sure, an iPad can't join a Windows domain. But nor can a Windows RT tablet such as Surface. The most common system used to secure and manage tablets and smartphones is Microsoft's ActiveSync, but this is not only supported by iOS, it's actually better-supported under iOS than it is Windows Phone: iOS provides richer, finer-grained support for ActiveSync policies than Microsoft's own platform.
Apple may be happy to carve out a small niche on the desktop, but it's not doing so in the mobile space, and that difference justifies a different approach. Against the mobile competition, Windows needs every advantage Microsoft can give it.
Why do it?
The dangers of producing Office for iOS and Android are significant. The Windows PC stands a good chance of being marginalized: even its role on the corporate desktop could decline as the iPad grows in capabilities. Office remains an important product, especially for business users, and at the moment, it's a big plus that Windows offers and other platforms can't match. Offering Office on iOS can only hurt Windows.
That might still be worth doing if it helped Microsoft's other big cash cow; Office itself. Microsoft would certainly sell a few Office 365 subscriptions off the back of Office for iOS, though it's hard to gauge just how many it would sell.
It is the case that Office has some competition on these mobile platforms. In the absence of Office for iOS, a number of competing products have materialized. Apple's iWork apps are the best known, but there are others, such as Bytesquare and (Google-owned) Quickoffice. All offer some degree of Office compatibility, all are out-and-out touch applications, all cost a handful of dollars. iWork, at $9.99 per app, is the most expensive.
None of these apps offer full fidelity support for Office documents, and none of them can do everything that Office can do, but for many users they may well be good enough. So there are certainly threats to Office. But it's hard to believe that any of these threats are as big as the threat to Windows and the PC. Office is still the gold standard for office productivity. Shipping Office for iOS to boost Office, at the expense of Windows and Windows Phone, is backwards.
Will Apple save Microsoft from itself?
In spite of these risks, the rumors and leaks are hard to ignore. It seems that Microsoft really does want to produce an Office for iOS. If Apple has its way, however, there's a chance Microsoft might never ship it.
Per AllThingsD, Apple has just rejected Microsoft's latest update to its SkyDrive app for iOS. Why? Because the updated SkyDrive app sells subscriptions to buy more storage, and Microsoft doesn't give Apple a 30 percent cut of those sales or use Apple's purchasing infrastructure. That's against the rules of Apple's App Store, and AllThingsD reports that Apple's refusing to back down and give Microsoft a concession.
According to sources speaking to AllThingsD, Microsoft's concern isn't SkyDrive per se, but Office 365. The Office apps, like the SkyDrive update, will offer the ability to purchase an Office 365 subscription, and it's this revenue that Microsoft doesn't want to give up.
Apple takes a hard line against apps offering alternative routes to in-app purchases. Apps using the Dropbox SDK were once rejected after Dropbox inadvertently left a link on its pages that allowed the purchase of more storage. A similar approach would leave Microsoft with no ability at all to offer Office 365 upsells from within its Office for iOS apps.
Take away the ability to flog Office 365 subscriptions from the apps, you take away much of the point of Office for iOS. Microsoft could change its strategy and make Office a straightforward paid app, but this runs contrary to the company's broader goal, which is converting all Office users to subscribers. It's also not clear that the iOS App Store would sustain up-front pricing at a level that would make up for the damage done to Windows. Windows licenses are estimated to net Microsoft about $35, Windows RT licenses around $85. If iOS Office were to price match the iWork apps ($30 for the set, of which Microsoft would receive $21) it'd still fall a long way short of the lost Windows revenue, let alone Windows RT. Every user defecting from Windows and Office to iPad and Office would represent lost revenue for Redmond.
Another option would be to remove the editing capabilities entirely, and leave the Office apps as free viewers. Doing this would not only preserve the advantages of Windows RT and Windows Phone, but might also take some of the wind out of the Office competitors' sails, as anyone wanting to view Office documents would probably pick Microsoft's apps in preference to third-party options.
Apple has no particular reason to back down and cut Microsoft a deal. It's not as if the iPad is suffering on the market; it certainly doesn't need Office. The best thing for Redmond is Cupertino sticking to its guns. But if it does relent, it'll free Microsoft to press ahead with its dangerously destructive plans. Microsoft may want to get its own way on the App Store. It should hope it doesn't.
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