Microsoft to release Outlook for Mac, but why?

We read today that Microsoft (MSFT) is finally releasing an Outlook email client for Mac, according to TUAW and others. It's about time. Microsoft has specifically fenced out Apple (AAPL) users by making it just hard enough to run the Microsoft Entourage mail client on corporate IT systems. But why the change of heart? I can hazard a few guesses.

First and foremost, this is probably a precursor to releasing Office for iPhone. Microsoft announced a deal with Nokia (NOK) to put Office on the Finnish cell giants devices, indicating that Redmond is in the mood to port Office to mobile handsets running alternative operating systems (BREW in the case of Nokia). A jump onto the iPhone would be a logical next step. But it would be a pointless move if there was no viable Outlook client for Mac.

Redmond finally understands that the Halo Effect is real and its going to have a big impact on PC market share. In his last quarterly earnings conference, Apple CFO Peter Oppenheimer disclosed that roughly 50 percent of Mac computers sold in the stores during the quarter were sold to customers who had never purchased a Mac before. That's more evidence of the Halo Effect.

It's unlikely that large corporations will up and move their IT systems over to Apple gear due to the demands of iPhone users. For smaller companies that represent future growth for Microsoft, compatibility with iPhone nation is paramount. Apple has much greater purchase with these smaller fries, particularly in the influential IT, Web development, and creative sets.

True, the iPhone has had bare bones compatibility with Microsoft Exchange for some time. That's different than being able to run a native app on an iPhone, as anyone who has struggled to integrate their daily routines on an iPhone into an Exchange server environment knows. Calendar syncing, anyone? Or Spotlight searching? Thought not.

This is also probably a part of Microsoft's nascent cloud computing strategy. Ray Ozzie and Steve Ballmer both fully understand it is much harder to sell a new customer than upsell an old one. So their mission at this point is not only to build out viable cloud-based productivity apps but also to grab as much remaining market share as possible with box-based hardware to make it easier to migrate them to the Microsoft cloud.

Redmond also probably sees an opportunity to pick up some market share among large corporate accounts that have a small but important contingent of Mac users. Most of these users have Office already on their desktop and giving them seamless email integration will make it easier to justify spending a few bucks more of the upgrade. These types of corporate lock-ins are the best because they represent nearly guaranteed revenue streams for the forseeable future.

Why? Larger companies with command-and-control IT departments will be the last ones to migrate fully to cloud-based applications. And when they do migrate, they will be far more likely to migrate to a Microsoft cloud offering. Old habits die hard so why not give them a reason to spend even more money? In fact, I'd say that Microsoft finally breaking down the productivity wall is a smart move but possibly too late to have as much of an impact as it would have hoped.

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