Apple sees chance to compete with Office on the Web

Apple tries another Internet angle -- Web-based productivity apps -- after bust

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Gottheil said Apple would not look at iWork for iCloud as a revenue generator, not a direct one anyway, since the competition, Google Docs and Microsoft's Office Web Apps, are free. If Apple, as Gottheil expected, offers iWork for iCloud free of charge, the revenue opportunity would be in sales of its devices, as iCloud is pitched as a side benefit of owning an iPhone, iPad or Mac.

So why is Apple bothering, especially after many of its online efforts have been busts, like the little-used Ping, a social network add-on to iTunes, and MobileMe, whose 2008 debut was a disaster? Gottheil, who has regularly criticized Apple for poorly executed online initiatives or failures to keep up with rivals in Internet services, said it could be a defensive-offense strategy.

"All of the platforms, Apple, Google, Microsoft, are in constant conflict. They're all trying to build their own on-ramps [to customers] while putting road blocks on [rivals']," Gottheil said.

In other words, if Microsoft touts Office Web Apps as the solution for iPad owners who want productivity tools -- something that the company's CEO Steve Ballmer did last year -- iWork for iCloud could be seen as Apple's tit-for-tat response, trying both to hold on to its own customers and to entice some of the opposition's.

There are other ways of reading the tea leaves. With Microsoft's hesitation to pull the trigger on native Office apps for the iPad, perhaps Apple saw an opening to further lock its customers -- Gottheil described it as "putting road blocks on your own off-ramp" -- into its own ecosystem before Microsoft made its move.

But it was Microsoft's mixed feelings about its online apps that Gottheil made central to his argument that, notwithstanding the seemingly insurmountable odds of denting its Office business, iWork for iCloud was a legitimate threat to Microsoft.

"Microsoft seems very ambivalent about Office on the Web," Gottheil said, pointing out that the company has done little to publicize Office Web Apps or that they're free to use. The ambivalence should not be a shock, since Microsoft loses an Office sale for every customer who realizes they can get by with the limited-function, limited-feature online versions of Word, Excel and PowerPoint.

But with PC sales lagging, tablets more than taking up the slack, and Microsoft's mobile strategy just getting off the ground, Apple has an opportunity. It can bang the drum about a free iWork for iCloud without risking much, since sales of iWork on OS X and iOS are a puny fraction of its revenue. Microsoft may hesitate to follow simply because Office provides such a big chunk of total revenue, 31% in the first quarter.

"Microsoft has to be worried about Office, not its enterprise [customers] but those who just buy it to be able to read Office file formats and create small documents," said Gottheil. "iWork for iCloud is a threat there," he maintained.

Rosner also said that Apple would update the native OS X and iOS iWork apps -- the desktop versions were last refreshed in 2009 -- this fall.

This article, Microsoft's ambivalence about Office on the Web gives Apple shot with iWork on iCloud, was originally published at

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

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Copyright © 2013 IDG Communications, Inc.

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