Aron Ralston. You may not know the name, but you probably heard of his amazing story. Mountaineering by himself in Utah in 2003, his forearm and right hand became trapped for four days by a boulder that had slipped down on them. Finally out of water, he amputated his own hand with a multitool, to save his own life.
For months – long before last October’s SharePoint Conference where gossip and dreams of Office for the iPad were a common subject during analyst debate and questioning of Office executives, people have been asking me, “Will we ever see Office for the iPad? If so, when?”
A recent inquiry asked me, “It’s sort of a no-brainer, right?”
The answer is, unfortunately, “it depends on who you ask, and how you look at it.” I’ve been stating for more than a year that Microsoft needs to do something to better the experience of Office document editing on the iPad. Let’s dismiss the iPhone and Android completely for a second – those are totally different. Let’s just focus in on the iPad.
For 22 years, Office and Windows have done incredibly well as partners. Ironically though, people often forget that Office for the Mac predates Office for Windows by one year. It wasn’t always about Windows – but “better together” has made these two a strong buddy package. If we look at what Microsoft has to lose by building Office for the iPad, it’s easy to overlook what could happen – depending on the feature fidelity of Office on the iPad – to Windows, Office’s best friend for the last two decades.
On the converse side, by not shipping it, you can say “they’re walking away from revenue that could be tens or hundreds of millions of dollars.” That’s true too.
What does Microsoft have to lose by building Office for the iPad? What does Microsoft have to lose to not build Office for the iPad? Let’s break it down:
What does Microsoft lose by building Office for the iPad?
- Money. If you built Office for the iPad, there is no way you could charge the prices that Microsoft does for Office on the Mac or Windows. It would never sell. Office for the iPad would likely go for $29 (the amount that the iWork apps add up to on iOS), or maybe a little bit more – but definitely less than $50. Any less and Microsoft is burning money. Any more, and Microsoft won’t sell much – it’s pretty simple App Store economics.
- Depending on features, they could validate the iPad, and actually help drive iPad sales.
- Theoretically, it could hurt Windows sales – since Office is on another platform. The reality is that Office being on the Mac has never killed off Windows, either. This is a bit different, but still..
- In the same manner, it could hurt Office sales. If Microsoft does Office for the iPad – and my belief still is that they will – I believe quite strongly that it will not be anywhere near feature parity with Office on the Mac, let alone Office on Windows.
- Not building Office for iPad leaves space for competitors or alternatives. From Google Docs and Zoho, OnLive Desktop (which still results in some Microsoft revenue since OnLive is paying for both Office and Windows anyway), Apple’s own iWork apps on the iPad, QuickOffice Pro HD, Documents to Go Premium, and others.
- Done poorly, it could hurt the Office brand. No ill will intended, and even though I’m not a fan of OneNote on Windows either, I find OneNote on iOS simply underwhelming. It does a few things, none of them terrifically well, and it’s a pale shadow of OneNote on Windows.
- All sales have to go through the App Store, and Apple gets a 30% cut. No questions asked, no way around it. That means any one of the big numbers we look at below in the “what does Microsoft win by shipping it” list includes a gigantic bump to Apple’s own bottom line.
- Cedes SkyDrive by letting competitors own how Office documents are shuttled from device to device (iCloud or Dropbox, most likely).
- Shipped too early (during FY12, for example), it could risk Windows 8/Office 15 adoption.
So taking the other angle, what does Microsoft win by building Office for the iPad?
- Money – at least in distinct product revenue – costs to Windows and Office on other platforms would need to be taken into account to see what the net costs were across the company. If we assume 50M iPads in existence at the end of this year, and assume conservatively that only 20% (10M) of existing iPad consumers by the end of 2012 purchased the iPad version of Office, that’s $290M in sales. Less Apple’s 30% of $87M, net sales would be $203M. Not billion dollar businesses yet, but also not chicken feed. The question is, looking back at the previous list, how much money added in this column takes away money in the Office for Windows or Mac columns, and the Windows column itself?Shut down competitors. Done right, Office on the iPad will stun any competitor. Web-based, Remote Desktop-based, or native, Office on the iPad becomes “the standard”. This all depends on being done right – honestly with a much higher feature quality bar than current Office doc editors on the iPad.
- Actually helps retain Office and Windows strength – by reinforcing that, while Office is on the iPad, the best way to do most complex editing tasks is still in Office, and on Windows.
- Helps retain Microsoft’s leadership as the Office document editor, regardless of the platform. Not doing it leads to item 5 in the previous list – doing it leads to Microsoft continuing to control the Office document editor experience, the quality that “Office documents” have on the iPad, and how the iPad hooks in to the Microsoft Servers and the Office 365 online services.
- Lets Microsoft control the fidelity of how Office documents are edited on the iPad – determine what is a “good enough” feature bar, and perhaps ensure that the experience is best on Office for Windows, where competitors would be shooting directly at Office for Windows.
Can you think of other wins/losses I’ve missed? If so, put them in the comments and I’ll update the list accordingly.
I don’t think Office on the iPad is a “no-brainer”, necessarily. It’s quite a complex question if you consider both the short game and the long game.
On to some of my thoughts of what to expect:
Q: Will we see Office for the iPad?
A: My money has been on yes for quite some time, and I still suspect so.
Q: When would we see it?
A: Later rather than sooner would be my guess. Personally, I can’t see why a company who has been keeping information so close to the fold lately would ship Office for the iPad before this fall – say around, or maybe even after Office 15 and Windows 8 ship. A key tenet of avoiding the Osborne Effect – minimize showing your cards until you are ready to show them all.
Q: How much would it sell for?
A:I still think Microsoft will shoot for a price close to or matching iWork ($29). Maybe more – but too much more, and they’ll cede the market to more affordable competitors.
Q: Will Microsoft try to end-run the App Store 30% vig?
A: Not unless they engineer something custom with Apple. They’d be insane to think they could outrun Apple by trying to charge for the app outside of the App Store and not have sales of their apps shut down.
Q: Will Microsoft be on stage at Apple’s iPad vNext announcement?
A: My money says no. I can’t see why Apple would want to validate Office. It’s the iPad’s day in the sun. Could be wrong, so we’ll see – but that’s my guess.
Q: Will we see Office for the iPhone too? How about Android/Fire?
A: Frankly, I don’t care. The Office viewers on the iPhone are pretty good; and for short-form editing, the competitors on the iPhone are already good enough. The sales revenue from iPhones will be, I believe, significantly lower than the iPad version if both were supported, though there are admittedly significantly more iPhones in existence – higher number of devices could conceivably counter a lower percentage of attach (and possibly put that revenue figure above the $500M number I always felt Microsoft liked to have as a bottom-end validator of market). Android tablets other than the Fire have done horribly in the market, and the owners have show a tendency to buy apps sparingly. Would these people pay thirty bucks for Office? I doubt it – not in volume. While Office on the Fire could make sense, and might sell, if I were the product manager over these versions, I’d prioritize anything Android based just below the iPhone, and iPhone below the iPad. If you’re going to do it, focus on the iPad first – and get it out the door.
Q: What Apps will be in Office for the iPad?
A: We’ve already got OneNote. I’d expect the same collection as WOA gets, personally. So just like iWork, QuickOffice, and Documents to Go, you’d get a word processor, spreadsheet, and presentation tool. No more, no less. That said, Microsoft needs to put “Visio for iPad” development into Ludicrous Speed, or competitors like iDesk and TouchDraw (or even the insanely expensive OmniGraffle) could earn their way into a lead position over Visio, with their touch-based diagramming approaches.
Q: Will Office on the iPad have <insert variable>?
A: I doubt it. You look at what Office 15 on Windows 8 can do, and the (likely narrower) list of what Office 15 on WOA can do (losing some aspects of programmability, PowerPivot, etc) or even Office 2011 on the Mac, then Office on the iPad will be minimalist. Think “Office goes to Ikea”. Compromises will be made, and I’d bet that there’s a rather large feature delta between what Office 15 on WOA can do that Office for iPad won’t be able to do. If you compare OneNote on Windows to OneNote on the iPad, you should get some idea of what I’m saying here.
Q: Will it be the Office Web Apps shimmed on to the iPad?
A: Oh man, I hope not. Because unless the next version of the Web Apps are massively advanced over the current versions, that will hurt – and would honestly only drive native app competitors on iPad farther into the lead.
As I said – it’s not a no-brainer – hardly. Microsoft is stuck between a rock and a hard place. Time will tell what, if anything, they do to extricate themselves (and what it costs).
Update: As I halfheartedly expected, some of the feedback has been around OnLive Desktop. Like CloudOn which came earlier, it strives to shim Office 2010, hosted remotely on Windows, into the limited real estate on the iPad. Between the Ribbon, the Navigation Pane and the Review Pane, I present the following metaphor. Imagine a 4-year old child, hopped up on sugar, asked to sit quietly in a Pack-n-Play. It might work for a few minutes, but after a brief period, they’re going to want to break out. OnLive, CloudOn, and other hosted Microsoft Offerings are handy, but only if you:
- have a persistent, good Internet connection – frequently not the case when traveling!
- don’t mind the limited real-estate available for editing, limited further by the Office 2010 UX which was not designed with that display resolution in mind,
- are able to deal with the user-interface of Office which is not designed for touch (try using the Find | Replace functionality with your finger)
- don’t mind having no way to extract that document and manipulate it anywhere else on your iPad (sending to a SharePoint app such as Coaxion or SharePlus, for example)
- don’t mind storing your documents in the cloud on a service that’s free (if you’re not paying for a service, you’re not the customer, you’re the product)