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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?

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In addition to debuting new iPhones last week, Apple also announced that people who buy new iOS devices will be able to download the company's iWork mobile productivity suite for free.

The move is a potentially big deal; Microsoft's refusal to release an iPad-optimized version of Office has drawn ire from a number of analysts and shareholders who feel the company could reap billions with such a release. Microsoft has instead attempted to position Office as one of Windows 8 and Windows RT tablets' differentiating features. With iWork now filling a role that might have been filled by Office, Microsoft's options might be shrinking.

Indeed, the iPad is still the top individual tablet line both among consumers and in the enterprise. Research firm IDC projects tablet shipments will exceed PC shipments this quarter, and Apple's new iPads, expected later this fall, will almost certainly be a huge success. Given this context, will Apple's free iWork force Microsoft's hand? Here are five factors to consider.

1. Many tablet users are interested in basic productivity. iWork caters to this interest.

PCs remain the preferred option for heavy-duty productivity, with tablets praised more for their content-consumption capabilities. Still, many tablet users want to do more than surf the Web, read email, watch videos and share photos on social media. A recent Forrester study found that almost two-thirds of knowledge workers want to use keyboards with their tablets, for example, which suggests a need for legitimate word-processing and project-creation capabilities. By offering iWork for free, Apple has only made the iPad that much more suitable for such demands.

[ Releasing bad software updates doesn't help Microsoft's case. See Microsoft Nukes Buggy Office 2013 Update. ]

Granted, Apple has left iPad keyboards mostly to third-party companies such as Logitech. But users haven't seemed deterred. As Forrester analyst David Johnson noted in an interview, "A lot of people are using keyboards on their iPads."

2. iWork could hurt Windows tablet sales.

Given the aforementioned Forrester study, it's curious that keyboard-centric Windows tablets such as the Surface Pro and Surface RT have sold so poorly. Windows 8.1 and Windows RT 8.1 tablet could still help Microsoft turn things around, but analysts expect iPads to hold their ground.

Even before the iWork announcement, experts were confident in the iPad line's continued popularity. In a July study, Gartner analyst Mark Cotner concluded Windows tablets will not displace iPads in the enterprise. He noted that users prefer the iOS experience, that iOS can be more productive in a multi-device workflow than some IT managers realize, and that employees will continue to bring their iPads into the office, even if corporate-owned Windows tablets are deployed.

A recent Forrester survey, meanwhile, found that 44% of enterprise tablet users prefer iOS, compared to only 14% who prefer Windows 8. These results are a dramatic shift from a similar Forrester study conducted with a different group of respondents last year, just before Windows 8 launched. In that report, almost one-third of participants were interested in a Windows tablet, with only 26% opting for iOS.

With iWork added to this strong base, the Pad will only grow more attractive, according to Gartner analyst Carolina Milanesi. In an email, she said iWork should further enable iOS devices to integrate into the enterprise and could persuade users that they don't need Office for everyday productivity.

3. iWork pressures Microsoft not only to release Office for the iPad, but also to price it competitively.

According to ZDnet, Microsoft might wait until late 2014 to release Office for the iPad. With iWork now in the equation, such a timeline might not be tenable. Forrester analyst David Johnson said iWork could be a "disruptor" because "with so many iPads out there, and with iWork on each, people are going to get used to it."

Milanesi said iWork should influence not only when Microsoft releases an iPad-optimized Office suite, but also how the products are priced. If the versions of Office for the iPhone and Android-based smartphones are any indication, this pressure could throw a wrench into Microsoft's plans. Users need an Office 365 subscription to use those apps, but due to iWork, the same tactic might not work for an iPad release.

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User Rank: Apprentice
9/18/2013 | 6:49:15 PM
re: Apple's Free iWork Pressures Microsoft Office
I'm old enough that I can remember waiting back in 1984 to get my hands on my first Mac. One of the things that made the Mac so cool was that MacWrite was built in.
Now, I'm a somewhat fallen-away member of the Mac religion. It wasn't so much that I lost my faith, it was that I didn't have much choice; I was working in settings where all the technology was Windows and Office, and even for a device for my home I kind of needed something that I could do work from work on.
One of the things MS did right in that era was publish a version of Office for the Mac, which of course "borrowed" many of the concepts of the Mac and MacWrite. And so eventually MacWrite went away. Yes, of course it's dumb that MS wouldn't do something similar now for the iPad; people like me want Office, and a watered-down version is fine, if the documents can be uploaded back to the mothership desktop PC. But if iWork can talk to Office that's almost as good, so MS is playing with fire here.
What's interesting here also is how Apple has come full circle, by bundling iWork with the device in the same way they did with MacWrite almost 30 years ago. The buzz word in technology these days is "disruptive," and these guys are doing things that are intentionally disruptive to each other, although of course in a way that benefits the consumer--although we may need to wait for some shake-out before we achieve that full benefit.
Michael Endler
Michael Endler,
User Rank: Author
9/18/2013 | 5:41:19 PM
re: Apple's Free iWork Pressures Microsoft Office
In response to some stories several months back, some commentators defended Microsoft's decision to withhold Office from iPads. The first three responses to this story are all pretty critical of the strategy, though. Does anyone think Microsoft is making the right moves with its Office mobile strategy?
C. Moya
C. Moya,
User Rank: Apprentice
9/18/2013 | 5:32:52 PM
re: Apple's Free iWork Pressures Microsoft Office
Mindshare. Microsoft understood the importance of this when Bill Gates was at the helm. Having Office on the iPad keeps "Microsoft" and their tools at the tip of everybody's mind. Microsoft used to understand this (MS had their hands in wildly incompatible computers back in the day, Apple, IBM, Commodore, all of them), but the growing hegemony of Windows spoiled them.
Cara Latham
Cara Latham,
User Rank: Apprentice
9/18/2013 | 4:30:45 PM
re: Apple's Free iWork Pressures Microsoft Office
As an Apple user, this is probably the only thing I thought was missing from the iPad experience. I don't see why Microsoft is being so stingy. One of the missing features in any tablet is its ability to be productive on the go, and by solving the lack of Microsoft Office availability on the iPad, the already best-selling (and best tablet out there) will continue to beat the competition. Bad move by Microsoft.
Shane M. O'Neill
Shane M. O'Neill,
User Rank: Author
9/18/2013 | 3:14:19 PM
re: Apple's Free iWork Pressures Microsoft Office
Good analysis here that covers all scenarios. I don't see how MS can keep Office on Windows devices only much longer. Free iWork on iOS only tightens the screws and is destined to expand iWork usage. If Windows 8.1 devices are a bust, MS will have to set the Office suite free. Too many alternatives out there to keep it in the Windows prison. Maybe it will be the new CEO's first big move to establish himself.
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