Microsoft Could be Making $2.5B in Annual Revenue from IOS Platform

Microsoft Kissing Off $2.5B in Annual Revenue from iPad Platform

Software tech giant Microsoft has enjoyed huge sales from its Office suite of software for the Excel, Word, and PowerPoint. For the year ending August 2013, Microsoft generated over $25 billion sales of their office products of which $16.4 billion was their profit. The total number of users of MS Office has topped one billion globally. However, next month marks the 4th anniversary of the release of the Apple iPad tablet and since that time over 200 million units have been sold.

IPad users are loyal and avid users of the tablet technology. Not one of them uses Microsoft Office on the iPad because the company has been reluctant to produce a version that can operate on the tablet. Some estimate that Microsoft loses $2.5 billion per year in sales by not producing a version of their word processor and spreadsheet that can operate on the Apple tablets.

That may change as rumor have it that the Redmond, Washington, software maker is ready to launch a version of Office that can run on both the iPhone and iPad. Whether the new CEO Satya Nadella decides to release the product is anyone’s guess, but one thing is certain: technology has not waited for Microsoft.

In a report 2013 report, Morgan Stanley analyst Adam Holt considered the question and concluded that while Office is a differentiator for Windows tablets, Microsoft’s decision is denying itself a big slug of high-margin revenue – $2.5 billion or more. And he adds that if Windows tablet sales remain slow, there could be a shift in policy in the June 2014 fiscal year.

“Office on iPad could be a several billion dollar opportunity,” Holt writes in his research note. “While MSFT has resisted offering a full version of Office for the iOS, the company may ultimately decide there is more upside with Office on iPads, particularly if Win tablets fall short of expectations. The Surface RT likely sold only 900,000-1 million units in calendar Q4, while OEMs have pulled back on tablet builds and it may be difficult for MSFT to reach much more than 10% tablet share in calendar 2013.”

According to Holt, the company could add $1.3 billion in revenue and profits of 8 cents a share in FY 2014 assuming a $60 ASP and 30% attach rate, while sales into the entire iPad base would raise the opportunity to $2.5 billion in revenue and 16 cents a share.

In the absence of a viable Office suit for iPhones and iPads, newbie Quip has emerged. It is a light weight word processor capable of creating beautiful documents and makes use of cloud technology. Quip has seen a rapid rise in the area of mobile computing in iPhones, iPads, and Android devices. If Microsoft doesn’t hurry, there may be no market left for them in mobile computing.

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Source:
http://www.theguardian.com/technology/2014/mar/14/microsoft-office-ipad