Not too long ago, mobile workers viewed Microsoft Office as their productivity savior -- the one app that would break their last PC chains and make them true road warriors. Microsoft executives probably felt the same way, envisioning the day when Office would give the company a true presence on the “it” platform of the 21st century: Apple’s iOS.
As time went by, however, and Microsoft never released Office for iOS, mobile workers began to realize they could get by without the stalwart productivity suite. Cloud-based apps such as Google Docs and native alternatives such as Pages provided good-enough functionality, and at significantly lower costs.
Now, with its release date reportedly approaching, Office for iOS is no longer the highly anticipated killer app it once was. It may not be the mobile cash cow Microsoft expected it to be, either. And the company has no one to blame but itself.
The Office 365 conundrum
One of Microsoft’s goals is to use Office for iOS to drive Office 365 subscription sales. As reported by SearchConsumerization.com last month, the Office iOS app will be a glorified document viewer unless users unlock its editing capabilities through an Office 365 subscription, which costs at least $6 a month. Aside from its high price, this strategy will come back to bite Microsoft in two serious ways.
For starters, it mirrors Microsoft’s strategy around Windows 8 and Windows RT. Office for iOS has been ready to go for months, but the company has held it back. The theory is, if Windows 8 and Windows RT tablets are the only mobile devices with Office, they’ll fly off the shelves. But that hasn’t happened because, as mentioned above, Office is no longer the only game in town. If it didn’t drive Windows 8 and Windows RT sales, it won’t drive Office 365 subscriptions, either.
The other major problem shows either a tremendous lack of foresight by Microsoft or a total overplaying of its hand. AllThingsD reported this week that Microsoft is fighting with Apple over the 30% commission it takes on all in-app purchases (which would include Office 365 subscriptions purchased through the Office app).
How can Microsoft not have this issue sorted out by now? Apple’s commission on in-app purchases is not new. Microsoft execs should have considered it the second someone suggested tying Office for iOS to Office 365. Either they didn’t, which was a bad move, or they thought they could strong-arm Apple, which was an even worse move.
Microsoft has no leverage at all in this fight. If Steve Ballmer thinks protesters are going to march through the streets of Cupertino demanding that Apple cut its rates, he is sorely mistaken -- again, because Office doesn’t have the monopoly it once did. Sure, there will be some outcry, but it’s nothing Apple can’t handle.
Furthermore, Apple has a lot to lose by giving in to Microsoft. It would set a terrible precedent. Every other software company would demand the same treatment. The developer community would be up in arms. And Apple would feel pressure to cut its rates, which would cost some serious cash. All this for an app that today’s mobile workers can get along fine without.
If Office is to finally become a reality on iOS, Microsoft must make a choice: giving up on its cloud-based vision of the future with Office 365, or allowing its mortal enemy Apple to take 30% of the income from that vision. Neither option is appealing, especially given the promise that Office for iOS held just a few short years ago.