Microsoft CEO signals new course with Office for iPad

Microsoft Office General Manager Julia White speaks at a Microsoft event in San Francisco, California March 27, 2014. White introduced Microsoft Office for iPad and the Enterprise Mobility Suite, a set of cloud services. [Photo/Reuters]

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.

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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 US 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?"

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