Office iPad App Could Generate $2.5B: Analyst

An analyst believes Microsoft may be passing up $2.5 billion a year by refusing to make its Office software package available for Apple's iPad tablet computer. The Redmond, Washington-based firm is trying to use the software to make its own Surface tablet devices more desirable -- a strategy critics are calling short-sighted.

Part of the thinking at Microsoft seems to be that keeping Office off the iPad gives many customers who like to work on their devices a reason not to buy the Apple tablet. That makes them more likely to stick with Windows laptops or to try out Microsoft's own tablet, the recently-launched Surface.

Apple iPad Users Want Office

Morgan Stanley analyst Adam Holt has produced figures he says show this is a mistake. He notes that Apple users are willing to pay to get Office, with between 30 and 40 per cent of Mac users having done so at some point.

Using that ratio, Holt crunched the numbers to see what would happen if 30 per cent of iPad users were willing to pay $60 for Office. It works out to revenue of $2.5 billion, even after Apple has taken its commission. (Source: appleinsider.com)

Revenue For iPad Office Not Guaranteed

There are some limitations to these calculations, however: for one, Holt's 30 per cent figure may be an overestimate.

That's because Holt was looking at sales among all current owners of iPads, which includes many people who have the original iPad which has lower specifications and is more likely to experience freezes or crashes with software updates.

While original iPad owners may still be happy with their machines, they might be reluctant to drop $60 on Office unless they were certain it would work without glitches.

You'd also need to take into account that iPad users are less likely than their PC and Mac counterparts to use their device for business-related tasks, like creating Excel spreadsheets and PowerPoint presentations.

Even with those restrictions, Holt's figures still suggest Microsoft could make a lot of money with an iPad Office app. And so the new question becomes this: is Microsoft making enough money off the Surface to justify sacrificing all of that other revenue? (Source: allthingsd.com)