New CEO Satya Nadella comes out swinging on ‘cloud first, mobile first’ strategy
As expected, Microsoft CEO Satya Nadella today hosted a press conference where the company unveiled Office for iPad, breaking with its past practice of protecting Windows by first launching software on its own operating system.
CEO Satya Nadella expounded on Microsoft’s ‘cloud first, mobile first’ strategy today as his company unveiled Office for iPad as proof of its new platform-agnosticism.
Three all-touch core apps — Word, Excel and PowerPoint — have been seeded to Apple’s App Store and are available now.
The sales model for the new apps is different than past Microsoft efforts. The Office apps can be used by anyone free of charge to view documents and present slideshows. But to create new content or documents, or edit existing ones, customers must have an active subscription to Office 365.
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Microsoft labeled it a “freemium” business model, the term used for free apps that generate revenue by in-app purchases.
Today’s announcement put an end to years of speculation about whether, and if so when, the company would trash its strategy of linking the suite with Windows in an effort to bolster the latter’s chances on tablets. It also reversed the path that ex-CEO Steve Ballmer laid out last October, when for the first time he acknowledged an edition for the iPad but said it would appear only after a true touch-enabled version had launched for Windows tablets.
It also marked the first time in memory that Microsoft dealt a major product to an OS rival of its own Windows.
“Microsoft is giving users what they want,” Carolina Milanesi, strategic insight director of Kantar Worldpanel ComTech, said in an interview, referring to long-made customer demands that they be able to run Office on any of the devices they owned, even those running a Windows rival OS. “The connection to Office 365 was also interesting in that this puts users within Microsoft’s ecosystem at some point.”
Prior to today, Microsoft had released minimalist editions of Office, dubbed “Office Mobile,” for the iPhone and Android smartphones in June and July 2013, respectively. Originally, the iPhone and Android Office Mobile apps required an Office 365 subscription; as of today, they were turned into free apps for home use, although an Office 365 plan is still needed for commercial use.
Talk of Office on the iPad first heated up in December 2011, when the now-defunct The Daily reported Microsoft was working on the suite, and added that the software would be priced at $10 per app. Two months later, the same publication claimed it had seen a prototype and that Office was only weeks from release.
That talk continued, on and off, for more than two years, but Microsoft stuck to its Windows-first strategy. Analysts who dissected Microsoft’s moves believed that the company refused to support the iPad in the hope that Office would jumpstart sales of Windows-powered tablets.
Office’s tie with Windows had been fiercely debated inside Microsoft, but until today, operating system-first advocates had won out. But slowing sales of Windows PCs — last year, the personal computer industry contracted by about 10% — and the continued struggles gaining meaningful ground in tablets pointed out the folly of that strategy, outsiders argued.
Some went so far as to call Windows-first a flop.
Microsoft has long hewed to that strategy: The desktop version of Office has always debuted on Windows, for example, with a refresh for Apple’s OS X arriving months or even more than a year later.
Microsoft today added free Word, Excel and PowerPoint apps for the iPad to the existing OneNote.
On his first day on the job, however, Nadella hinted at change when he said Microsoft’s mission was to be “cloud first, mobile first,” a signal, said analysts, that he understood the importance of pushing the company’s software and services onto as many platforms as possible.
Nadella elaborated on that today, saying that the “cloud first, mobile first” strategy will “drive everything we talk about today, and going forward. We will empower people to be productive and do more on all their devices. We will provide the applications and services that empower every user — that’s Job One.”
Like Office Mobile on iOS and Android, Office for iPad was tied to Microsoft’s software-by-subscription Office 365.
Although the new Word, Excel and PowerPoint apps can be used free of charge to view documents and spreadsheets, and present PowerPoint slideshows, they allow document creation and editing only if the user has an active Office 365 subscription. Those subscriptions range from the consumer-grade $70-per-year Office 365 Personal to a blizzard of business plans starting at $150 per user per year and climbing to $264 per user per year.
Moorhead applauded the licensing model. “It’s very simple. Unlike pages of requirements that I’m used to seeing from Microsoft to use their products, if you have Office 365, you can use Office for iPad. That’s it,” Moorhead said.
He also thought that the freemium approach to Office for iPad is the right move. “They’ve just pretty much guaranteed that if you’re presenting on an iPad you will be using their apps,” said Moorhead of PowerPoint.
Moorhead cited the fidelity claims made by Julie White, a general manager for the Office technical marketing team, who spent about half the event’s time demonstrating Office for iPad and other software, as another huge advantage for Microsoft. “They’re saying 100% document compatibility [with Office on other platforms], so you won’t have to convert a presentation to a PDF,” Moorhead added.
Document fidelity issues have plagued Office competitors for decades, and even the best of today’s alternatives cannot always display the exact formatting of an Office-generated document, spreadsheet or presentation.
Both Milanesi and Moorhead were also impressed by the strategy that Nadella outlined, which went beyond the immediate launch of Office for iPad.
“I think [Satya Nadella] did a great job today,” said Milanesi. “For the first time I actually see a strategy [emphasis in original].
“Clearly there’s more to come,” Milanesi said. “It was almost as if Office on iPad was not really that important, but they just wanted to get [its release] out of way so they could show that there’s more they bring to the plate.”
That “more” Milanesi referred to included talk by Nadella and White of new enterprise-grade, multiple-device management software, the Microsoft Enterprise Mobility Suite (EMS).
“With the management suite and Office 365 and single sign-on for developers, Microsoft is really doing something that others cannot do,” Milanesi said. “They made it clear that Microsoft wants to be [enterprises’] key partner going forward.”
Moorhead strongly agreed. “The extension of the devices and services strategy to pull together these disparate technologies, including mobile, managing those devices, authenticating users for services, is something Microsoft can win with. It’s a good strategy,” Moorhead said.
“This was the proof point of delivering on the devices and services strategy,” Moorhead concluded. “And that strategy is definitely paying off.”
Office for iPad can be downloaded from Apple’s App Store. The three apps range in size from 215MB (for PowerPoint) to 259MB (for Word), and require iOS 7 or later.
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