Office and the iPad Pro: It's just business, stupid

Microsoft's not treating Apple's impending iPad Pro any differently than its own Surface 2-in-1s

Office 2016 mac

Microsoft will require owners of Apple's not-sold-until-November iPad Pro to pay for almost all functionality in its Office suite, a point neither Microsoft nor Apple bothered to highlight this month when the latter invited the former to share stage time at the tablet's introduction.

But that's not news.

Microsoft is simply sticking with a formula it crafted almost a year ago and has echoed since: It would field one version of a touch-centric, made-for-mobile Office but divvy up customers into two pools, each getting a different mix of free from the freemium business model they shared.

Potential iPad Pro customers can be excused for being confused. Office on the iPad Air 2, Apple's latest 9.7-in. tablet, is free for most document creation and editing chores when used by consumers. And the list of the not-free features is small and, not surprisingly, slanted toward business users. The overall impression, then, is the Office is free when the messenger is a consumer, or the target audience of the report is consumer.

But Office is not free. Not by a long shot. And therein lies Microsoft's motivation for the two pools.

While Microsoft seems glad to give away Office Mobile to consumers -- with some exceptions -- its revenue model requires that it make money from business workers. That's easiest to see, and understand, when one realizes that the difference between what's available to one pool but not the other is that the two are identified not as free/not-free, but as non-commercial and commercial.

By Microsoft's current licensing, any use of any feature of any Office Mobile app on any device -- whether smartphone, tablet or 2-in-1 -- for a business purpose requires an Office 365 subscription, specifically a small business- or enterprise-grade plan. Want to edit a work-related document in Word Mobile? Office 365 is required. Want to view a work-related spreadsheet in Excel Mobile? Office 365 again. Show a PowerPoint Mobile slide on the job? Ditto.

The EULA (end-user licensing agreement) makes that clear. "Word, Excel, PowerPoint and OneNote are licensed for your personal, non-commercial use, unless you have commercial use rights under a separate agreement" (Emphasis added.)

The "separate agreement" mentioned in the license is an eligible Office 365 subscription: Office 365 Business ($8.25 per user per month), Office 365 Business Premium ($12.50), Office 365 ProPlus ($12) or Office 365 Enterprise E3 ($20).

Consumers, of course, get most Office Mobile functionality free, and all features when they subscribe to Office 365 Personal ($70 annually or $7 monthly) or Office 365 Personal ($100 a year, $10 a month). But business users, or more accurately those who use the apps for anything but personal, non-commercial, work? They pay, always, to be legal.

What's apparently miffed people -- read consumers -- is that Office Mobile on larger devices isn't free for them.

Microsoft's used screen size to separate what it considers consumer-grade tablets from those it believes are suited for business, with the break-point at 10.1-in. It first used that dividing line last November, then reiterated it this spring and summer, most recently when it launched Office for Windows 10, the four-app Office Mobile suite designed for Windows 10 tablets, 2-in-1s and touch notebooks (and later this year, Windows 10 Mobile-powered smartphones).

Under Microsoft's Office Mobile EULA, all commercial use of Office Mobile, including Office for Windows 10, requires an Office 365 business-grade subscription.

The confusion among consumers comes from the licensing of Office Mobile on devices with screens larger than 10.1-in. For those devices -- which includes Microsoft's own Surface Pro 3 and Surface 3 -- consumers get little for free: Essentially only viewing documents. What Microsoft dubs as "core editing" isn't available for free to consumers on larger-screened hardware.

That's because Microsoft classifies devices with displays 10.1-in. and larger as business systems, no matter who buys them or for what purpose.

Like Microsoft's 12-in. Surface Pro 3 and 10.8-in. Surface 3, Apple's upcoming iPad Pro -- screen size, 12.9-in. -- is, in Microsoft's mind, a business device. That may not be Apple's explicit pitch, but it was certainly implied by having Microsoft's top Office executive, Kirk Koenigsbauer, come on stage this month to demo Office on the larger iPad. (The last time Microsoft was a part of an Apple event was 18 years earlier, when then-CEO Bill Gates appeared via satellite to, wouldn't you know it, introduce Office, that time for the Mac.)

A business device, as Microsoft sees it, requires Office 365, the linchpin of its Office revenue model. The Surface Pro 3 -- and the impending next-generation 2-in-1 -- is a business device. So is the Surface 3, as far as Microsoft and Office are concerned. As is the iPad Pro.

The one bone Microsoft will toss consumers with larger tablets, 2-in-1s and touch notebooks is a pre-installed copy of Office Mobile, notably the Windows 10 app editions, on new hardware. In July, Microsoft said that it would bundle the Office Mobile apps with some new Windows 10 machines, then followed through on that with a free one-year Office 365 Personal subscription on new Surface 3 purchases.

The inclusion of Office 365 Personal on the Surface 3 -- and if Microsoft extended the same offer to buyers of the new Surface Pro 4 -- allows consumers to run Office Mobile on the larger screens, at least for the one-year free subscription's stretch.

That lets Microsoft give its Surface clan an edge over Apple's iPad Pro, for it certainly will not bundle the Office Mobile apps or an Office 365 subscription with its rival's 2-in-1, not without making Apple pony up. Which, with its own iWork app trio free for the getting, Apple won't.

Even bundling, though, only affects consumers; businesses won't get the same deal. Bottom line: Consumers may get a free Office ride, of sorts. But businesses? No way.

Copyright © 2015 IDG Communications, Inc.

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