The tech world was aflutter earlier this week as Microsoft announced that (a mere four years after the launch of the iPad) they were releasing Office (specifically Word, Excel and Powerpoint) as native, touch optimized apps on the iPad. I have read a broad array of coverage on this development and none of it explored the broader implications of the move, which I happen to think are a way more important development that the arrival of new productivity tools on the iPad.
First and foremost, the arrival of Office on the iPad heralds the beginning of a major partnership between Apple and Microsoft. How so? Well, Microsoft is selling access to edit documents on the iPad (the individual apps are free to use as document viewers) as in app purchases. That means Apple gets 30% of the revenue. What Microsoft is selling though is not just full access to Office on the iPad. They’re selling Office 365 memberships which also include a license for full Office on five computers and five tablets. Please stop and think about that for a second. Apple will be getting a 30% cut of most new Office 365 licenses going forward. That is an absolutely huge win for Apple and a huge concession by Microsoft.
Next there is the issue of Microsoft’s Surface line of tablets. Ask not for whom the bell tolls, it tolls for Surface. Full versions of Office represented the major differentiator that Surface tablets had over any other tablet. Sure, the iPad version of office is not “full” but initial reviews say it’s damn good. In any case, what Surface users (and Windows 8 users in general) have been clamoring for is a touch optimized version of Office. The iPad has it. The Surface line doesn’t. Microsoft chose to develop the touch optimized version of Office for the iPad because they know that’s where the hardware market is. Microsoft will overhaul Office for Windows 8 eventually but it won’t be for the benefit of Surface users as much as it will be for touchscreen laptops. All this means Microsoft will focus on getting their 70% of the license fees for Office on the iPad (which I expect will be a substantial amount of money) and cut their losses on the Surface.
Google got a swift kick in the chops on this deal. I’ll bet that this side effect of bringing Office to the iPad was very much intended on the part of Apple and Microsoft. Whatever gains Google has made with the combination of their Chromebooks and Google Drive (which encompasses free productivity software and cloud storage) Office on the iPad will stem the tide. Why? Because as attractive as it is for someone to have a really basic, inexpensive computer that offers collaborative productivity software, it will be even more attractive to have an iPad with Office, which includes collaboration features and cloud storage via Microsoft’s recently rebranded (formerly SkyDrive) OneDrive. I say this because I use Google Drive and know that while it has improved in recent years it still doesn’t match up to the Microsoft Office suite. For this reason I think that many tech buyers who are thinking of Chromebooks will think twice and look to buy an iPad/keyboard combination because they will now be able to access the most important Office features (like change tracking) that will work even if people are viewing or editing documents using Office on Windows. And that leads me to the next point.
I think that iPad keyboard/case manufacturers will see a huge bump in sales following this development. Simply put, anyone who thinks they’re going to be productive with Office on the iPad without an external keyboard is delusional. I use a Zagg brand keyboard case with my iPad Air and for many uses it replaces a laptop. Yes, mobile keyboards have come a long way. The model I have even has backlighting for the keyboard. I think that people will rush to this product class in droves once they start playing with Office on the iPad.
Finally I think that this is a pivotal moment for the concept of the cloud as it pertains to cross platform applications. Now everyone that matters is there. For years Microsoft fought to stay within their own walls and they got hammered by companies like Evernote who trumped Microsoft’s OneNote by supporting the browser, Android, iOS, Mac and Windows while Microsoft dragged their feet. Microsoft is on all those platforms now with OneNote after releasing an app for Mac this month. By relinquishing their last major single platform application and releasing Office for the iPad Microsoft shows that they now get it. Of course there are always going to be exceptions to the cross-platform rule (I doubt we’ll see Office for Android tablets or Final Cut Pro for Windows anytime soon) but at the very least applications will need to be on more than one platform if they hope to gain wide adoption. Mr. Ballmer tore down that wall! Which leads me to my final point.
As Office for iPad was announced I saw lots of stories that praised new Microsoft CEO Satya Nadella and marginalized former CEO Steve Ballmer. “Ballmer would’t pull the trigger on Office for iPad,” they say. While I have no doubt that Steve Ballmer should take the blame for Microsoft’s failed tablet strategy with the Surface I think he was also the leader responsible for most of the behind the scenes strategy work on Office for iPad. After all, Nadella took over the helm at Microsoft less than two months ago. Do you think the iPad apps and deal with Apple came together in that short time frame? What I think happened is that Microsoft worked on Office for iPad as a hedging strategy. Late last year Ballmer probably realized that Office wasn’t going to make the Surface a success so he decided to pull the trigger on Office for iPad. I think he worked the timing of the announcement so that Nadella could put an early feather in his cap and establish the changing of the guard as more than just symbolic. All in all I think this was a classy move by Ballmer.
As with all big news it will only be big news until the next big news comes along, and I expect that will be shortly. Beyond the brief timeframe of excitement it will be interesting to see how Google responds and how Microsoft’s new approach leads to further innovation in cloud-backed mobile productivity applications.