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Microsoft CEO signals new course with Office for iPad

Microsoft Makes Big Bet on Apple's iPad


(Reuters) - Microsoft Corp's new Chief Executive Officer, Satya Nadella, finally unveiled Office for Apple Inc's iPad in a polished debut that set him apart from his energetic predecessor while signaling his plans to make mobile apps the top priority at the world's largest software company.

At a news conference Thursday, executives demonstrated a new "touch-first" version of Office crafted for the iPad, available for download as a free app, though a subscription is needed to let users create or edit documents rather than just read them.

Significantly, they did not demonstrate any software on Windows machines, telegraphing a departure from former Chief Executive Steve Ballmer's focus on the personal computer operating software and its own devices.

"Their absence speaks volumes," said Daniel Ives, an analyst at FBR Capital Markets. "Nadella's a cloud-centric guy; he's going to focus on what's been successful, and where the future's going. Windows 8 thus far has been extremely underwhelming."

Nadella kicked off the presentation with a fluid, low-key introduction to Microsoft's approach to the new mobile, cloud-centric world of computing, in his first public appearance since taking the helm 52 days ago.

Dressed in a black polo shirt and dark jeans, the 46-year-old computer scientist threw in some geek humor and lines of poetry from T.S. Eliot, marking a change in style from his energetic predecessor Steve Ballmer. His lack of references to Windows indicated a deeper strategic shift.

Nadella gave no indication of when Microsoft would release "touch-first" versions of Office apps for Windows 8, the latest version of the operating software, which he acknowledged had fallen behind in the mobile era.

"The Windows strategy, there's no change, except we want to be known as the innovative company that's coming from behind in some categories," Nadella told reporters in an ad hoc question and answer session after the presentation, another sign of new openness at the company.

"If you look at the story of Windows, we lead in some, we have fallen behind in some. We're grounded in that reality," he said. "What we need to be is a challenger there and be able to show what we're capable of doing in these new form factors."

Apart from the absence of any Windows devices, the Surface, one of Ballmer's prized concepts, was conspicuously missing from a show floor at the event that included Google Inc Android tablets from Samsung and Acer as well as the iPad. Nadella did not mention the poor-selling tablet at all in conversations with reporters.

OFFICE, AT LAST

The Office apps are free to download from Apple's app store, but to create new documents, users will need a subscription to Microsoft's existing cloud-based service called Office 365.

Microsoft's Office 365 Home Premium, designed for home consumers, costs $100 a year. For businesses it costs $60 or more per year, depending on features.

Apple gets its standard 30 percent cut of new Office 365 Home subscriptions sold through its app store, but no share of existing Office 365 revenue or multiple subscriptions bought by companies. That is analogous to the way Apple treats magazine subscriptions.

"Welcome to the #iPad and @AppStore!" Apple Chief Executive Officer Tim Cook tweeted after the announcement. "Thanks @tim_cook, excited to bring the magic of @Office to iPad customers," Nadella tweeted back.

Analysts have estimated that Microsoft could rake in anywhere from $840 million to $6.7 billion a year in revenue from iPad-native Office, although some fear it may have moved too late to grab the attention of many.

Easy to use, touch-friendly work apps like Haiku Deck, Quip, Smartsheet and Evernote, not to mention Google Apps, have quickly gained a following among younger users who have never worked with Office applications, or relish the change.

Sources have said an iPad-friendly version of Office - which encompasses such popular applications as Word, Excel and PowerPoint - had been ready for years, but the Redmond, Washington-based company had been reluctant to compromise its signature PC operating system. At the time, the sources could not speak because they were not authorized to talk to the press.

However, Microsoft's own efforts to produce a touch-friendly operating system capable of challenging the iPad have floundered, with poor sales of its Surface tablet, and a general lack of interest from third party hardware makers in making tablets running Windows 8.

Nadella's willingness to break with the Windows tradition, which remains co-founder Bill Gates' most enduring legacy, helped spur Microsoft shares to $40-plus levels not seen since the dotcom boom of 2000.

Wall Street is now guardedly optimistic on a company that, while still garnering billions of dollars in annual profit, risks gradual obsolescence in a mobile-powered tech industry.

To some investors, steering a new course for such a massive entity - Microsoft is the second-largest U.S. tech company by market value - is a daunting task. Before Nadella's appointment, some investors had hoped for an outsider open to change to take the reins.

But bold moves with Office, and signifying a renewed drive to conquer the mobile arena and 'cloud' computing after years of shackling its best products to PC-centric Windows, are seen as a promising start.

"He talks the talk," said Ives at FBR, referring to Nadella. "Now the big question is, will he walk the walk?"

(Reporting by Gerry Shih and Bill Rigby in Seattle; Editing by Bernard Orr and Richard Chang)

Join the discussion

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ecotoneco March 28 2014 at 10:49 AM

So make it for the Android. I will never use the high priced Apple products when the Androids are so much better in many ways...and a lot cheaper.

I use cheap programs on the Android already that let me read, edit, and create all the Office files I want.

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1 reply
Sekinu2 ecotoneco March 28 2014 at 2:41 PM

Ton of better option then using the pay every year new office 365 cloud crap. This is just Microsoft trying to be like apple and rape its users. The cloud is garbage so if this is his dream then Microsoft put the final nail in its death spiral coffin.

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ecotoneco March 28 2014 at 10:57 AM

Who cares. Android had better and cheaper devices and there are already many cheap programs that will view, create and edit any office programs (other than ACCESS), and I use one of them. AND, I don't have to have internet access to run them.

Microsoft blew it way back when they dropped Windows Mobile 6.x and left all the programs that used that OS behind. Now they are struggling to survive. If they were smart, they would create a program that easily converted all the old programs to their new devices. I guess they are just not smart enough to do that. Bye Bye Window Mobile 7 & 8.

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rkdbjd March 28 2014 at 11:42 AM

Needs a free trial period prior to purchasing subscription.

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1 reply
M rkdbjd March 29 2014 at 12:20 AM

And do you seriously think that will be any guarantee of uninterrupted access to the *in the cloud* apps and data? How about different versions and *upgrades*, and their effect on YOUR results?

You know how cell phones don't work everywhere? Do you suppose you will be able to RELIABLY transport programs (office, apps, etc.) and/or your data in those areas? NOT LIKELY!

And that doesn't even address hackers and data security...

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Sekinu2 March 28 2014 at 2:36 PM

I understand the move as they need the influx of cash from the apple users, but he really needs to address a new version of windows and get away from the modern tiled format and if he trys to move everything to the god awful cloud then Microsoft is in for more issues. I will not upgrade to office 365 as its a huge rip off. I buy my program and use it as i wish. The cloud idea is just a way for a company to continuely rap you. I use my windows office 201 on all my computers and I bought it up front and do not need any cloud. The cloud has show to be a fail due to security and dsilike from most of the public. A new liked windows 9 better xbox development less cloud integration more game play less social app tie in, and maybe a microsoft laptop computer line with real harddrives and disc drives for a realistic price.

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1 reply
M Sekinu2 March 28 2014 at 10:51 PM

And just WHEN will people realize how ALL their data **in the cloud** and using cloud apps truly exposes all that information to hackers...

At least one student had a unique reason he could not present his book report... his downloaded copy of a classic book, complete with (so he thought) legal download to his pad device, complete with all his bookmarks and annotations was suddenly GONE! Well, he still had his bookmarks and annotations, but the entire book was abruptly missing from his device and could not find it again to download it before his class.

In fact, there was an issue with the "public domain" status of the book which had been sold to the kid. There was apparently documentation presented to the service to cease and desist selling copies of the book, and they used a *concealed* feature of the service and device to remove it from ALL devices that had downloaded the book.

Imagine, if you will, what would happen to your data, your documents, and your presentations when (not if) there is a disruption in the cloud apps that are NOT present on your devices. This is also in addition to paying a licensing fee INDEFINITELY to keep use of the things you created using those apps.
You will also have little input to having version changes to the cloud apps, and NO recourse to use the apps that made your presentaions, documents, and analysis of your data, including, and especially if there became a need to audit the results.

This cloud apps have MANY problems just waiting... and speaking of paying indefinitely to use the cloud apps, what if your payment is *fumbled* by, or in, the payment path, and you temporarily lose access to the apps... would your presentation consist of a statement that your bank improperly bounced a payment to Microsoft, so your presentation was temporarily unavailable?

Good luck recovering from that!
Not your fault? You have a letter of apology from your bank? Would any of that matter to alost account?

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simon645 March 28 2014 at 11:52 AM

MS dropping support for XP is outrageous. I hate Windows 7 and 8 is worse. Users like me are now stuck. What are my options? Go out and buy a new computer? I guess the BILLIONS they have made is not enough. This is the place where the government should step in and stop MS. Perhaps someone should sue them in a class action suit for all the XP users who are now screwed.

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2 replies
Sekinu2 simon645 March 28 2014 at 2:38 PM

Windows 7 really is just like windows xp. I switched from xp to vista then back to xp then to windows 7. I set it to have the classic shell and its real hard to tell its not a faster version of xp. Windows 8 though yeah thats just garbage.

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M simon645 March 28 2014 at 11:50 PM

There was an article a few days ago pointing out the overwhelming majority of ATM (teller machines) in the USA have Windows XP as their internal operating system. The article listed only ONE company's ATM as using a proprietary operating system, (i.e. their own).

Granted, until hackers find a way into them, there probably will not be a big rush to upgrade all those machines...

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Jere March 28 2014 at 1:00 PM

As an older male (85 years) who has used MS Office for many years and has recently acquired an iPad, this is a welcome move. I now use Office365 on my desktop and will be happy when that is available for the iPad.

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1 reply
M Jere March 28 2014 at 11:40 PM

I sincerely hope you have backup plans for WHEN (not IF, but WHEN), the cloud app(s) is unavailable, temporarily, or a version change makes the app unusable with your data, and the app has to be *fixed* over as much as a six week, (yes WEEKS), typical software high priority fix and quality testing. Of course you will have no access to your data if that requires use of a cloud app during that time period, or MUCH longer if YOUR problem is not a top priority issue.
HINT: you will NOT be able to fire up your old computer to get your data, document, or presentation BECAUSE you will never have a copy of the app on your tablet or iPad. And if the results of a spreadsheet change when a new version of EXCEL is released? What do you do then? The real question is which analysis is/was right?
(So much for keeping hard copies of the results.)

People that cannot imagine what might go wrong that would HURT them, are lacking in imagination. How about if your payment to use the *in the cloud* app(s) gets misdirected along the payment path, or delayed, or improperly *bounced*, causing you to lose use of the *in the cloud* app(s) until YOU can resolve the problem?
(Unless you have had a bank error cause you a problem, (well, maybe identity theft too), you cannot even begin to imagine what the financial community WILL do to you... )

Remember the phone *meltdown* on the east coast? That was caused by a new software feature requested by the phone carrier, before the complete six week testing period was finished, and the carrier signed written permission to install the new feature after just three weeks of the testing cycle, (i.e. only half of the test cases had been verified), so, DO NOT think nothing *bad* will ever happen...

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adika3z March 28 2014 at 1:18 PM

DONT DONT let american computers to ussr russia use it.
not good idea.
only american can make it computers and dont send to ussr russia.
BAN BAN now

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simplexguy March 28 2014 at 11:46 AM

Seriously?!? Microsoft screws those of us who have invested in their POS Windows 8 OS by releasing an Office "viewer" app for the iPad. Then they are going to try to "rent" the actual program to create or edit Word, Excel, and PowerPoint for $100 a year! Can someone please try to explain this to me?

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2 replies
Sekinu2 simplexguy March 28 2014 at 2:39 PM

Well if you bought a surface tablet your first mistake was that as its gabage lol. Second do not use office 365 as its the rape software charging to use it by the year. Stick to like office 2010 its a buy and done no stupid cloud garbage or forced payment every year.

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M simplexguy March 29 2014 at 12:11 AM

Well, in simple terms,
the Recording Artists and the Motion Picture people have been unsuccessfully trying for decades to get paid every time their movies or music is played. They are (still!!) trying to get legislation enacted to prohibit reselling stores like Half-Price Books, Hastings, and heck, even pawn shops from reselling THEIR intellectual property! (Namely movies and music, and add software and games to the list as well, GameStop).

Now Microsoft has come up with an *ENFORCEABLE* way for them to get paid for as long as you *MIGHT* use their intellectual property (office, app, etc.), and leave you without a way to recover any value, (resell your media copy of the software and documentation).

Leave a difficult task to the nerds, and they will show up the *bug guys* and their lawyers...

Incidently, YOUR results are subject to whatever version is avalable *in the cloud* when you use it. Your older documents, presentations, and spreadsheets are subject to issues when versions change, and you will only be able to "keep" hard copies of the results before the versions change. Then what will you do if the spreadsheet results change with a new version? Which one, if either, is actually right?
And, HOW would you prove it without access to the old version?


Then there *could be* some issue with your payment getting properly credited, each time, so you will have uninterrupted access to the *in the cloud* apps and data.

I guess there IS a sucker born every day.

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