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9/17/2013
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Apple's Free iWork Pressures Microsoft Office

Apple challenges Microsoft to release Office for the iPad by offering its iWork suite for free to new customers. How will Microsoft respond?

4. iWork for iOS could gnaw into Microsoft Office's PC business.

In an email, Gartner analyst Michael Silver said iWork "is mostly a consumer thing," but that "consumer choices bleed into the enterprise."

The implications stretch beyond tablets. Apple also produces iWork apps for OS X as well, and the company said at its Worldwide Developer Conference that new versions of both the mobile and desktops apps will be released later this year. If iWork becomes popular on iOS, it certainly can't hurt the popularity of iWork on MacBooks and iMacs.

But the bigger factor could be iWork for iCloud, which is currently in a free public beta. Apple hasn't confirmed whether the apps will remain free once iWork for iCloud officially launches, but the Web apps are nonetheless interesting because they're platform-agnostic. If a user begins working on a project on her iPad, she will be able to continue it seamlessly on a Windows PC, and vice versa. iWork will never replace Office in the enterprise, but that doesn't mean Office will continue to enjoy monopoly-level market share forever, especially among users who don't require the software's differentiating features.

5. iWork doesn't face a sure path to success.

Even if it's successful among iPad users, iWork won't necessarily rocket to tablet dominance. Johnson noted that factors such as iWork's mediocre compatibility with Office could be problematic; he said enterprises are "very clear" that such compatibility is essential.

It's also noteworthy that iWork apps have never been prohibitively expensive at $9.99 apiece. The apps' usage will certainly go up now that they're free, and with new versions coming, Apple might have compelling new features in store. But if iWork were going to silence demand for Office on the iPad, shouldn't it have already started to happen?

iWork additionally faces capable mobile competitors, such as QuickOffice Pro and OpenOffice, and Google is certainly advancing its own mobile productivity agenda with not only Android, but also Chromebooks. Windows tablets could also still rebound with faster, sleeker Windows 8.1 and Windows RT 8.1 models, many of which will come bundled with Microsoft Office, and some of which will cost less than iPads. And then there are emerging contenders such as Box, which just expanded its services to include cloud-based documentation creation. Free iWork downloads are an interesting addition to the fray, but with so many upstarts fighting to gain traction, don't be surprised if Office isn't dethroned any time soon.

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AustinIT
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AustinIT,
User Rank: Apprentice
9/20/2013 | 7:15:27 PM
re: Apple's Free iWork Pressures Microsoft Office
It's not hard to see why MS is keeping Office on Windows platforms only. If they capitulate and provide Office on non-Windows platforms, then the fear is they will completely gut the Devices half of their new business model. They (and their OEM partners) stand to completely lose demand for the hardware devices - and even the Windows client OS - that runs on them. That may happen anyway. If it does, and they still don't fork Office, they will have lost on both fronts.
melgross
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melgross,
User Rank: Ninja
9/19/2013 | 11:30:14 AM
re: Apple's Free iWork Pressures Microsoft Office
I understand Microsoft's problems, and why they are doing what they are doing. They believe that they have no choice. We need to remember that their blunders have left them with a highly unpopular Win Phone, and no place in the tablet market at all.

They needed to do something to reverse that. Despite Ballmer's public bluster, Microsoft knows they are in a lot of trouble here, as tablet sales continue to rapidly rise, and Windows PC sales continue to fall. It's now clear that tablet sales will move ahead of Windows PC sales by the end of this year.

So their three pronged strategy is to sell what appears to be the same OS everywhere, again. But it's not working. As Office has been an even stronger monopoly that Windows, they feel as though they can leverage that monopoly to sell what otherwise are products that people don't want to buy.

But Office isn't proving to be that resilient. People, including many in business, simply don't need Office's many obscure features. The poor value proposition of the Pro tablets isn't helping. Even a $100 price cut won't help that much.

Microsoft is in a tight corner, and it's very difficult to see how they get out of it as the paint is getting closer. When. So e people say that the world runs on Windows machines, that a very naive way of looking at things. What has been isn't always what will be. We can already see the shift happening.
melgross
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melgross,
User Rank: Ninja
9/19/2013 | 11:16:59 AM
re: Apple's Free iWork Pressures Microsoft Office
The problem for Microsoft is that people simply don't like the Modern UI. This is the major stumbling point. It's very simplistic, and it doesn't work the way people would like, or expect. Developers haven't followed along, and the fact that Microsoft finds it necessary to offer up to $100 thousand to developers for an app shows the major problems they are having in this space.

When the clumsiness of the Desktop on the Pro is taken into account, the tablet doesn't look like a positive choice for many people. And there doesn't seem to be any place for RT at all.
melgross
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melgross,
User Rank: Ninja
9/19/2013 | 11:11:35 AM
re: Apple's Free iWork Pressures Microsoft Office
That's mostly prejudice on your part. You don't want to believe that Microsoft can be supplemented in any way. But that is not true. 90% of the tablets in business are iPads. There must be a good reason for that,and it's not to play Angry Birds.
melgross
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melgross,
User Rank: Ninja
9/19/2013 | 11:08:46 AM
re: Apple's Free iWork Pressures Microsoft Office
iWork is already the most popular office software on tablets in the work environment. There have been reports of this already. Tim Cook confirmed this, and I'm inclined to believe his public statements.

We should remember the old statement about Office: 80% of the users use 20% of the features. Since not all workers use the exact same features, we could assume that iWork would need, realistically, somewhat over 50% of the features, if they were the right features, in order to compete for much work. Apple announced major updates to both the desktop and mobile suites for this fall. Along with the cloud version, which has gotten very good reviews in its beta, it's likely that Apple is finally getting serious about his. And iWork does have pretty good Office compatibility, it just doesn't have many of the more esoteric features.

We should understand that with iOS devices becoming the business standard, Apple has done very serious business oriented upgrades to the hardware and software year after year, including those involving security. They must be taken seriously in this space.

Those who continue to dismiss them because, as they want to believe, they are not Microsoft, are making a big mistake. It would do to remember that as the Microsoft friendly IDC estimated for the last quarter, Microsoft only shipped (not even sold) 300 thousand Surface tablets. That's both RT and Pro together. Obviously, Office isn't much of a selling point.
jasonscott
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jasonscott,
User Rank: Strategist
9/19/2013 | 12:55:05 AM
re: Apple's Free iWork Pressures Microsoft Office
I believe what you're missing is that Windows tablets still have a practically negligible share of the market, whereas iPads have a very significant -- if not dominant -- share, so it's Microsoft that is missing out on the bigger opportunity, at the moment, even if they were first to offer up Office for free on WinRT. Despite that, folks aren't clamoring to buy a Windows tablet just to get Office, but they are still favoring iPads ... and iWork may give them a polished suite of productivity tools that will be capable enough for general use.
Michael Endler
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Michael Endler,
User Rank: Author
9/18/2013 | 8:21:19 PM
re: Apple's Free iWork Pressures Microsoft Office
Lots of good points. I think iWork makes it more likely that Microsoft will release the iPad for free or at a competitive price, but Microsoft might still require an Office 365 subscription, or charge a desktop-style price. Office gives Microsoft a lot of leverage, and the company's leadership might still feel confident about their position. If Windows 8.1 tablets sell well, that confidence might be valid.

On that point, I actually think the new Windows tablets will surprise some people. Windows 8.1 is no revelation, but it's easier to use, and all of the core apps are improved. Intel's new chips are also much better, and device prices are coming down. I can see why Microsoft hasn't folded on Office for iPad just yet.

But if Apple manages to sell a ton of iPads this holiday season, Microsoft will continue to face pressure, even if Windows tablets sell decently. If Apple sells a ton of iPads and Windows tablets don't see a strong uptick, that pressure will grow exponentially, as Shane indicated.

But even then, you might have a point. I think Forrester's David Johnson is right when he says consumers will use what's available; if users are accustomed to iWork by the time Microsoft gets around to releasing Office for the iPad, a lot of would-be customers will be past the point of caring. Even so, it's easy to overestimate iWork's appeal.

As you point out, alternative such as OpenOffice have been around for a while, and people are still clamoring for Office on the iPad. I raised a similar point in the article when I asked why iWork hasn't already silenced demand for an iPad-optimized version for Office, given that Apple's apps have been both cheap and available for a long time. Apple has promised new versions, and browser-based versions open up a lot of possibility, but until people actually start using and loving iWork in greater numbers, everything is speculative.

Most businesses will also keep using Office for the foreseeable future; the Windows cash cow might be in some jeopardy, but Microsoft has grown Office 365 revenue at a fantastic rate. As you point out, many enterprise tablets are PC compliments, not replacements. Businesses that fit this use model will probably stick Office on iPads no matter how well iWork is received, just because Office will fit better into existing workflows, and support easier round-tripping between PCs, corporate repositories, etc. In this scenario, Microsoft will have conceded some consumer business to Apple by waiting so long-- but it will still have retained the billions it reaps from businesses. And given the post-PC landscape, maybe Microsoft is okay with that.

But as I alluded in the article, I don't think Apple is trying to topple Office; that's as close to an impossible task as you'll find, unless you're talking about a decade-spanning campaign. Rather, I think Apple is trying to fragment the productivity landscape. When PCs were at the their peak, Microsoft got used to Office dominating everything: consumer, business, everything. Microsoft would like Office to be the productivity standard for mobile and hybrid devices as well, at least within the enterprise, and with free iWork apps, Apple is trying to limit Microsoft's progress. As for PCs, I don't think Apple believes iWork for iCloud will replace Office on Windows machines; but the cloud-based version makes it a lot easier to pair an iPad as a companion device to a Windows machine.
Michael Endler
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Michael Endler,
User Rank: Author
9/18/2013 | 7:43:47 PM
re: Apple's Free iWork Pressures Microsoft Office
iWork is only free on iOS devices, but it's available on OS X and, once the cloud-based version is official, Windows. Also, once Windows 8.1 hits, Office will be free not only on RT tablets, but also on a variety of smaller Windows 8.1 devices (e.g. the Atom-based mini-tablets, which will actually run the full Win 8.1, not just RT, despite their small screens). But you've got a point; if Windows 8 tablets had been more successful, everyone would be talking about iWork as a reactionary move, rather than a proactive one.
GAProgrammer
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GAProgrammer,
User Rank: Ninja
9/18/2013 | 7:34:47 PM
re: Apple's Free iWork Pressures Microsoft Office
I completely disagree about the free statement...Microsoft Office runs on the computers that run the world. I think it's a bit short-sighted and fanboi-ish to say that now that APPLE is giving this away for free, that Microsoft has to. Last time I checked, most companies are not replacing PCs with tablets, but supplementing them. OpenOffice has been free for years, reads the MS versions, but hasn't really dented the Office marketplace. I have an iPad and love it, but won't buy another one. Why? No great productivity software and Android tablets give way more bang for the buck.

I think the move is a smart one by Apple, in that they now can say "See, we can do more than play Angry Birds!". While there are some productivity apps out there, the tablet and phone forms are just not idea for many day-to-day business operations.
SKDEV
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SKDEV,
User Rank: Apprentice
9/18/2013 | 7:15:10 PM
re: Apple's Free iWork Pressures Microsoft Office
Have I missed something here?

Office 2013 Student/Home already comes included on the Surface RT. Apple is now including iWork for IOS devices, i.e., the portable devices. So it appears that Apple has followed Microsoft's lead as opposed to driving Microsoft to do something.

Additional Info: iWork is only avail on IOS Devices, Office is only free on Windows RT.
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