Office 2008 for Mac: Positive for Both Apple and Microsoft

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Includes: AAPL, MSFT
by: SoundView Technology Group

By Kris Tuttle

Kris Tuttle submits: All eyes will be on Steve Jobs at MacWorld where he’s expected to announce a MacBook Slim, new music and video offerings and who knows what else.

Probably lost in the shuffle will be the Microsoft (NASDAQ:MSFT) release of Office 2008 for Mac on the same day. For those who don’t know, Mac OS is currently restricted to Office 2004 which is a major problem for business users because many important Excel features only work on Office 2007 or later versions. We still have to test the features but expect them to work and possibly reduce the need to have Windows computers in the shop for certain applications.

Walt Mossberg over at the WSJ recently gave Office 2008 for Mac OS a pretty good review and notes that it’s a solid update for a user population that is badly in need of one.

Why is this important?

1. This helps Apple (NASDAQ:AAPL) more in non-Apple environments. Although Office 2008 on the Mac won’t support key enterprise software like Outlook, it becomes a more capable computing citizen in corporate environments.

2. Provides an important source of application revenue for Microsoft on the Mac. It’s probably only a few hundred million dollars of opportunity but it’s certainly an incremental positive.

Longer term the question still remains as to how aggressive Microsoft might get with an "embrace and extend" strategy vis a vis Mac OS. It may make more sense because as Microsoft grows their server side software business and holds on to Office leadership, it might be financially attractive to integrate Mac OS clients.

All in all we see the Office 2008 release for Mac as a fairly positive event for both Apple and Microsoft. We continue to recommend Microsoft strongly due to low valuation and improving fundamentals.

Disclosure: Research 2.0 has a long position in MSFT.