Office for the iPhone means a half-victory for Microsoft's freethinkers

Microsoft's sudden, surprise release of Office for the iPhone is a victory for those in the company who recognize the company's future doesn't lie in turf wars and in-fighting, but instead in releasing the best products for the widest audience. But the victory is only a partial one.

Office, which is available for iOS now, is officially called Office Mobile for Office 365 subscribers. You can only use it if you're a subscriber to Office 365 -- and if you are a subscriber, it's free.

There's long been a debate about whether Microsoft would release Office for iOS. Those who favored Microsoft's old style, protecting turf, and using the blunt force of a massive installed base to barge their way into new markets, did not favor releasing versions for the iPhone and iPads. The reason was simple: Windows Phone and Windows tablets can run Office, while iPhones and iPads can't, therefore no Office version should be released for iOS, as a way to help boost Windows Phone and Windows tablets.

Others argued the opposite: That Windows is no longer the center of Microsoft, that revenue from the Office division outstrips Office, and that Microsoft should free its divisions compete as best they could, even if it meant impinging on the turf of another Microsoft division.

Although rumors of Office for iOS have been rife for quite some time, the possibility of Office being released for iOS have faded recently. Microsoft has been blanketing the airwaves with ads showing a wimpy iPad only able to play chopsticks, while a muscular Windows 8 tablet gets real work done using Office.

Analysts have urged Microsoft to release an iOS version of Office. Morgan Stanley analyst Adam Holt earlier this year said that Microsoft could get an additional $2.5 billion in Office revenue by releasing Office for iOS. And this spring, Gerry Purdy, principal of MobileTrax, said that Microsoft could gain get an additional $1.25 billion in revenue in the first year Microsoft releases iOS and Android versions of Office, and $6 billion in annual revenue by 2017.

I've pointed out that those numbers are wildly inflated, because they assume that Microsoft would sell standalone versions of Office for iOS, but I believed Microsoft would instead tie the iOS version to an Office 365 subscription. That's exactly what Microsoft has done.

So the release of Office for iOS has taken almost everyone by surprise. It's a victory for those who recognize that Windows is not Microsoft's future, and that turf wars needed to end if the company is going to succeed in the future.

But it's only a halfway victory. The iOS version of Office is optimized for the iPhone. Although it will run on the iPad, it will only run iPhone-sized. That means that in essence, it's useless for the iPad.

That shows that Microsoft is still using Office as a way to compete against the iPad. That shouldn't be a surprise. Recently Bill Gates criticized the iPad and said that Windows 8 tablets will succeed because they're built to use Office. He told CNBC:

"It's going to be harder and harder to distinguish products, whether they are tablets or PCs. With Windows 8, Microsoft is trying to gain share in what has been dominated by the iPad type device. A lot of those users are frustrated. They can't type. They can't create documents. They don't have Office there. So we are providing them something with the benefits they have seen that have made that a big category without giving up what they expect in a PC."

So it certainly seems as if a release of Office built for the iPad is a long time away, if it ever gets released. Only when that happens will the freethinkers at Microsoft win.

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