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Surface RT $900M pounding renews calls for Office on iPad

Strategy of withholding Office from iPad and Android tablets 'isn't working,' says analyst

July 23, 2013 06:46 AM ET

Computerworld - Armed with a $900 million argument, an analyst raised the Office-on-iPad banner, saying that the flop of the Surface RT gives Microsoft a chance to make billions in lemonade from its lemon.

" 'Protecting' Windows RT by keeping Office off of Apple's iPad and Android tablets isn't working," said J.P. Gownder, a principal analyst at Cambridge, Mass.-based Forrester Research, in a recent blog. "It's instead creating risk for Office as users find other ways of getting things done."

Gownder tied last week's $900 million write-down of the Surface RT by Microsoft to a renewed call for the company to sell its ubiquitous productivity suite on rivals' tablets.

"The biggest asset Windows RT has is actually based on an app that Microsoft hasn't released -- Office for Apple's iPad," Gownder wrote, referring to the operating system that powers the Surface RT. Windows RT bundles Office Home & Student 2013 RT, which includes touch-based versions of Excel, OneNote, PowerPoint and Word that run in a special "desktop" mode.

Outlook will join that roster this fall when Microsoft ships Windows 8.1 for RT.

Gownder's unsolicited advice to Microsoft wasn't out of the blue; a horde of analysts and pundits have called on the Redmond, Wash., software company to pull the trigger on Office for tablets powered by Apple's iOS or Google's Android.

But last week's $900 million write-down, which Microsoft said was to cover steep discounts and excess inventory, was the proof that the software giant's Windows RT/Surface RT pitch had fallen on deaf ears.

In turn, that made Microsoft's presumed strategy of withholding Office from other tablet platforms indefensible.

But Gownder, like other analysts before him, also pointed out that Microsoft may have already missed an opportunity. "Microsoft's problem [is that] workers and consumers are already exceptionally productive with their tablets. [And] there's a hidden danger of holding out on Office for iPad and Android tablets -- competitors tend to fill the gap and users establish different habits," Gownder said.

He cited examples, including Apple's iWork -- which Apple will take to the Web later this year -- Google's Quickoffice, Evernote and other mobile apps that users have taken up in the absence of Office.

Gownder contended that Microsoft could recoup its Surface RT losses, and make more besides, if it offered Office on iPad. "If 10% of the 140 million iPad owners bought Office for $99.99, Microsoft would earn $1.4 billion in top line revenue, or $500 million more than the Windows RT write-down last quarter," he said.

Gownder may have based his math on the $100 annual subscription price for Office 365 Home Premium, the consumer-grade Office rent-not-buy plan. Assuming Microsoft does deliver Office for the iPad and Android tablets, it will most likely follow the same strategy it used last month for Office Mobile on the iPhone, requiring a valid Office 365 account to run the app.



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