Microsoft CEO Unveils Office for IPad in Mobile-App Push

March 28 (Bloomberg) -- Motif Investing Co-Founder and CEO Hardeep Walia discusses his outlook for Microsoft on Bloomberg Television's "Bloomberg Surveillance." (Source: Bloomberg)

Microsoft Corp. Chief Executive Officer Satya Nadella said he will “hold nothing back” to get the company’s programs across all devices, in a clear departure from the software maker’s longtime focus on its Windows operating system.

At his first public speech since taking the CEO job last month, Nadella unveiled Office software for Apple Inc.’s iPad, the first time Microsoft is putting the popular productivity programs onto the tablet. Nadella also said the company’s goal is to get its Internet-based Office 365 service on any gadget, even if it reduces sales of Windows-based personal computers or other products.

“It’s not a tradeoff, because it’s about going where customers are going,” Nadella said after the company event in San Francisco. “It’s not about today’s share position based on today’s form factors, because in the full arc of time there will be many new platforms that will require Office, from small screens to large screens.”

Nadella is presiding over Microsoft’s shift to a more open approach. While former CEO Steve Ballmer kept more of a focus on Windows, including pushing the operating system onto smartphones, Nadella is indicating that he proactively wants to get Microsoft software onto Apple’s iOS and Google Inc.’s Android-based gadgets. Since Apple and Android devices dominate in mobile, Microsoft risks having its software locked out if it can’t sell its programs for those platforms.

New Sheriff

“There is a new sheriff in town,” Daniel Ives, an analyst at FBR Capital Markets & Co., wrote in a note about Nadella’s presentation. “We believe the Office for iPad was a major positive step in the right direction and signals a strategic change at Microsoft.” Ives has the equivalent of a hold on the stock.

Microsoft shares fell 1 percent to $39.36 at the close in New York.

Office for iPad, which now includes Word, PowerPoint and Excel, also heralds a new business model for the software, which has been a paid product. Now users will be able to view their Office documents for free on their iPad, though to edit or create documents they will need to pay $99 a year for a subscription to Office 365.

Last year, Microsoft released paid versions of Office apps for the iPhone, which required a subscription to Office 365. That product cost $99.99 a year for a home version that works on five devices and $69.99 for a version that works for just one computer and one tablet.

“We’re excited that Office is coming to iPad — now part of the more than 500,000 apps designed specifically for iPad,” said Trudy Muller, a spokeswoman for Apple.

Mobile, Cloud

On his first day as CEO, Nadella emphasized the Redmond, Washington-based company’s focus on devices and Web-based cloud services and said those priorities would “define Microsoft going forward.”

At the event today, Nadella reiterated that the intersection of mobile and cloud is the “most critical,” though he added that it was just “one aspect of our overall strategy.”

He also rolled out technology to enable developers to create what he called a “cloud for everyone on every device.”

Nadella said Windows remains “a massive agenda for us” and the company plans to innovate with the operating system. The CEO said Microsoft will unveil more of its strategy as soon as next week at its Build developer conference in San Francisco, where Windows will be front and center.

Bigger Opportunity

“Microsoft is in the process of migrating the lion’s share of its business to the cloud and subscription,” Mark Moerdler, an analyst at Sanford C. Bernstein & Co., wrote in a note to clients last week.

The iPad version of Office, a suite of software that includes Microsoft’s Word, Excel, Outlook and other programs, may add $1.1 billion to $1.5 billion in consumer Office subscription revenue a year, Moerdler said.

Microsoft is taking a risk by asking people to pay $99 a year to edit, rather than just look at, their documents, said Milind Gadekar, CEO of CloudOn Inc., which makes a free mobile application that lets users access and edit their Office documents on mobile devices.

“Consumers expect editing to be free,” he said. “You have to find other advanced features to charge for.”

Milind said that while Microsoft is becoming more open, its new strategy still requires Office 365 users to use its OneDrive online storage system, rather than popular alternatives such as Dropbox, Box.net and Evernote.

Productivity Programs

Still, consumers are spending more than twice as much time using mobile productivity apps than they did a year ago, according to research measuring usage between January and March by Flurry, a mobile analytics firm which tracked usage on both phones and tablets.

“Microsoft’s announcement of Office for iPad couldn’t be more timely,” the company said in a blog post. “In fact, it can define Microsoft and its newly appointed CEO’s tenure in the post-PC world.” The study included phones and tablets with both iOS and Android. “This growth rate eclipsed all other categories including Messaging, Games and News.”

Asked if selling Office on other devices would cause big changes in sales of Windows-based PCs, phones and tablets, Nadella said at the event, “I would leave it to Wall Street to do the analysis, but we are going after huge opportunities that are ahead of us.”

To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net; Peter Burrows in San Francisco at pburrows@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Reed Stevenson

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Source: Microsoft Corp. via Bloomberg

Satya Nadella, chief executive officer of Microsoft Corp., right, next to Bill Gates, co-founder of Microsoft Corp., at Microsoft's Studio D building in Seattle, Washington, in a handout photo made available to the media on Feb. 4, 2014.

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Source: Microsoft Corp. via Bloomberg

Satya Nadella, chief executive officer of Microsoft Corp., right, next to Bill Gates, co-founder of Microsoft Corp., at Microsoft's Studio D building in Seattle, Washington, in a handout photo made available to the media on Feb. 4, 2014. Close

Satya Nadella, chief executive officer of Microsoft Corp., right, next to Bill Gates, co-founder of Microsoft Corp.,... Read More

Source: Microsoft Corp. via Bloomberg

Satya Nadella, CEO of Microsoft Corp. Close

Satya Nadella, CEO of Microsoft Corp.

Photographer: David Paul Morris/Bloomberg

Microsoft Corp. Chief Executive Officer Satya Nadella speaks during an event in San Francisco on March 27, 2014. Close

Microsoft Corp. Chief Executive Officer Satya Nadella speaks during an event in San Francisco on March 27, 2014.

Photographer: David Paul Morris/Bloomberg

An Apple Inc. iPad displays the new Microsoft Corp. Office software during an event in San Francisco on March 27, 2014. Close

An Apple Inc. iPad displays the new Microsoft Corp. Office software during an event in San Francisco on March 27, 2014.

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