Microsoft (NASDAQ:MSFT) has finally launched its long-awaited Microsoft Office for iPad. There were rumors that the company had it ready for quite some time but the launch was delayed due to internal politics and conflicts - the delay was being welcomed by the small players like Quip as there was not enough competition for these businesses in the mobile office market. Microsoft has undergone some small but important changes in its Office program and the iPad Variant does not exactly look like the old one. Also, the company has made changes with respect to pricing.
Office for iPad
Microsoft has made some key changes in its traditional Office in order to cater to the iPad Market which makes it worth the wait. First, the app is a combination of three Office programs (Word, Excel and PowerPoint), which are the most used among the traditional Office. As Microsoft is entering this market after some delays. There were fears that the company might have to play catch up. However, it looks like Microsoft might be able to capture larger market share in less time than expected. The main reason is the improved features of the product - Office for iPad very smartly utilizes the extra space in tablet. The touch overcomes the need to use arrow keys repeatedly, giving it a user friendly interface.
In addition, this app can be used both in portrait and landscape mode depending on the user's requirements. Many features are the same as traditional Office. This would make the app familiar to old office users while giving them the ease of use and new features at the same time. Microsoft faced some troubles with Windows 8 when the company took out the start menu - some users adapted to the new look while some had trouble navigating through the change. The company has decided to keep things simple with Office so that the transition is easy for users.
In addition, the company has also taken a step forward in cloud storage. All the data which is updated in the Office iPad is automatically updated on cloud storage so that the same file could be accessed by the desktop or the tablet. This service has also been provided by one of the smaller competitors, Quip. We think Microsoft has a better chance of fighting for its market share now with all these features incorporated into its product.
Unlike the traditional Office license for longer term, Microsoft has made a clever move in the pricing of this app. The company has incorporated a subscription plan for $7 per month. Without the subscription, the app could still function as a document reader. However, in order the make any changes to it or create a new document, users need to subscribe. The company is also offering a student package for $80, which covers a four-year subscription.
The market for iPad has been growing rapidly and this year the number of iPad users is expected to increase well above 60 million. Considering the $7 subscription charge, this is a market worth over $5 billion in annual revenues. Of course, not all of the iPad users will subscribe to Office but the market still has considerable potential. The student package shows that Microsoft is inclined to cater to different segments of the market and would make adjustments as it moves forward with this app.
Microsoft has ignored this segment for quite some time now. However, we believe there is still a considerable potential in this market. The company will benefit from its position among desktop office users - most of the users would like to continue their work on the same app if they are working on the go. As a result, there will be a substantial increase in revenues for Microsoft from this segment.
The company has entered the market after months of waiting. However, it looks like the wait was worth it as the app is impressive and has the potential to capture a substantial share of the market. The tablet market itself is growing rapidly which would also benefit the company in this area. We have maintained a moderately bullish stance on Microsoft as we believe there is some hidden potential in the company and the direction of the leadership over the next twelve months will be key in pushing this stock up.
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Business relationship disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. IAEResearch is not a registered investment advisor or broker/dealer. This article was written by an analyst at IAEResearch and represents his/her personal opinion about the companies mentioned in the article. The article is for informational purposes only and it should not be taken as an investment advice. Investors are encouraged to conduct their own due diligence before making an investment decision. I am not receiving any compensation (other than from Seeking Alpha) for this article, and have no relationship with the companies mentioned in the article.