Microsoft will make a killing when it launches Office apps for Apple's iPad and tablets powered by Google's Android mobile operating system.
That's been the consensus of most analysts, pundits and outside-Redmond observers since talk accelerated last year that Microsoft would unhitch Office from Windows and make the productivity suite, in some fashion or another, available on rival tablet platforms.
In January 2013, Bob O'Donnell, then an analyst with IDC, proclaimed, "The day they introduce Office for iOS and Android, they'll start printing money."
Others have come up with back-of-the-envelope estimates to bolster their contentions that Office will be a mother lode for Microsoft. Last March, Gerry Purdy, principal analyst at MobileTrax, said Microsoft could earn as much as $1.25 billion in the first year from sales of Office on the iPad and other tablets.
Wall Street hasn't been immune to that thinking, either. Last week, Heather Bellini, a Goldman Sachs analyst who covers software for the investment firm, touted Office's opportunities on the "billions of devices in people's hands," when she interviewed Tami Reller, Microsoft's head of marketing.
"At some point ... is that what's going to help you decide, [that you say], 'Hey you know what, maybe what we should do is, even if it impacts Windows in the near-term, the opportunity to reach, call it 5 billion, or 7 billion people on these devices, is a much greater opportunity for Office and these applications than maybe what we could lose?'" Bellini asked.
Bellini was only the latest in a long string of analysts, from the technology industry and Wall Street, who believe that Microsoft would unlock a massive treasure chest if it only offered Office on the iPad.
A lost opportunity?
Why has everyone assumed Microsoft will do Office for other tablet OSes? Why do they believe there's a Croesus-sized pile of money waiting for Microsoft to scoop up when it does?
More importantly, is there a chance that when Microsoft launches Office for the iPad, it will get a big yawn rather than pull in big bucks?
Some analysts think so.
"The expectation [that Microsoft will do Office on iPad] is realistic, but what if Microsoft ships Office [on iPad] and no one cares?" asked Michael Silver of Gartner. "That's more and more likely for every day they don't."
From Silver's perspective, Microsoft has already squandered an easy opportunity to make Office the de facto productivity software on tablets, just as it has long been on traditional PCs, where Office faces virtually no competition and has an especially fierce headlock on the corporate market.
"Microsoft risks relevancy the longer they refuse to play in the market," said Silver. "People have been getting used to the 'good enough' software that's out there for years now."
Citing a recent Gartner survey of enterprises on productivity software use, Silver said that sans Microsoft Office on the iPad, businesses have chosen a bewildering array of alternate apps. "Office-like products on tablets are all over the board," said Silver, "with at least 30 different products. So it's pretty fragmented."
Among the alternatives that may be "good enough," as Silver put it, for many: iWork, which Apple began giving away to owners of new iPads last year, and Google's Apps for Business, an inexpensive browser-based set of tools.
Neither are Microsoft Office, nor are the slew of other iOS and Android productivity apps, but then that's not the point. The longer Microsoft waits, the more entrenched those apps become, Silver argued, even if they're not perfect, even if they don't render documents with as much fidelity to the original as Microsoft's apps would presumably do.
It's not just about new customers
Ben Bajarin of Creative Strategies also wondered whether Office on the iPad would be an automatic hit. But he saw a failure to pull in billions, if that were to happen, as beside the point.
"Launching Office on the iPad, or for any other mobile platform, is not a new customer-acquisition strategy, but rather one that supports existing customers," said Bajarin in an interview today. "It's Microsoft's responsibility to let customers that have paid a lot to use Office ... use it on any platform."
Under that scenario, Microsoft's decision to develop Office on the iPad -- which Bajarin called "the standard tablet tool in the business world" -- was neutral-to-defensive. "It's somewhat defensive in that if they don't do Office for the iPad, there's a possibility that they'll lose existing customers," Bajarin said.
If Bajarin is right, Microsoft is not expecting to book large amounts of additional revenue. "Others see Microsoft as leaving money on the table without Office on the iPad," Bajarin noted. "But this is more about the opportunity to get their foot in the door on other platforms, then evolve not only Office, but their other services as well."
Microsoft, with its professed pivot to a "devices and services" strategy kicked off in 2012 by former CEO Steve Ballmer, must broaden the reach of its software -- some of which is delivered in service style -- and its actual services, almost every analyst believes. Office, as one of the company's strongest revenue pillars, has to be a part of that.
The innovator's dilemma
"They don't have the luxury of trying to drive their customers back to Windows any longer," Bajarin said of Microsoft. "If their solutions are on a platform that is becoming less dominant, they must offer their software on the platforms people are using, or risk customers going to alternatives."
"Microsoft is the poster child for the innovator's dilemma," said Silver, referring to the concept that companies with deep revenue streams from legacy products or services are hesitant to risk that revenue by adapting to changing circumstances.
Microsoft has been cast as in that corner because it has largely missed the shift to mobile computing with smartphones and tablets since the 2007 introduction of the iPhone and the 2010 launch of the iPad.
"They have to look at what's happening in the landscape," said Bajarin. "With their total share of operating systems declining, they're not participating in any of the upside. Windows doesn't materially exist in any growth area. As a software and services company, it's a foregone conclusion that Microsoft is no longer a platform company. It has to orient itself to support any platform."
Because Microsoft recognizes this -- even if it won't say so as publicly and plainly as Bajarin did -- it will launch Office, and then support it, even if an influx of dollars doesn't follow.
The worst scenario for Microsoft, Bajarin envisioned, would be that when large volume licensing contracts come due for renewal, companies begin to wonder why they're handing the Redmond, Wash. firm so much money when they can't get the software their workers want. "They can't be in that position when a general reevaluation of contracts comes up," Bajarin said.
Time to evolve
But while Office on the iPad may not significantly boost Microsoft's revenue, both Silver and Bajarin saw opportunity down the road.
"Microsoft has a real opportunity to come out with something that's innovative," Silver said of Office on touch devices like the iPad.
Bajarin agreed. "They clearly have an opportunity to make their Office better on touch," he said. "What's important is how this evolves. If they do it right, it could become part of a new-customer acquisition strategy, not one of maintenance of existing customers."
According to the analysts, timing is important, so the sooner Microsoft ships something for the iPad the better. But Microsoft has been close-mouthed about its roadmap -- Bajarin called the company "coy" -- only pledging last fall to do Office for Apple's tablet but not talking at all about a timetable.
Last week, Tami Reller sidestepped questions about Office on other platforms, stressing the word "thoughtful" to describe Microsoft's planning. When Computerworld dissected Reller's comments and concluded that Microsoft was hedging, others quickly countered. ZDNet's Mary Jo Foley, for example, a long-time Microsoft observer, cited anonymous sources who said that Microsoft might release Office on iPad in the first half of 2014, perhaps even before the touch-enabled version was available for Windows 8.1.
If that comes true, so much the better for Microsoft. But it shouldn't expect a windfall.
"Microsoft needs to decide what they want to do when they grow up," Silver said, sounding like he had lost patience. "It's more and more likely that people won't care about Office [on the iPad] with every day that they don't do it."
Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is email@example.com.
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