video Finance Videos

Microsoft makes big bet on Apple's iPad

Thursday, March 27, 2014 - 02:46

March 27 - New CEO Satya Nadella's unveiling of Microsoft Office for iPad signals a change in the company's strategy and acknowledgement of past missteps. Lily Jamali reports.

▲ Hide Transcript

▶ View Transcript

Microsoft is placing its bets on the iPad. In his first press appearance, Microsoft's newly-minted CEO Satya Nadella shared the news that the company was bringing its popular "Office" suite to Apple's tablet. SOUNDBITE: SATYA NADELLA, CEO, MICROSOFT (ENGLISH) SAYING: "Our commitment going forward is to drive Office 365 everywhere - that means across the web. Across all phones, across all tablets, across PCs." A Microsoft employee demo-ed how Office for iPad works. Users can download it as a free app. But to create or edit in applications like Word, Excel and Powerpoint, users will need to purchase a subscription from Microsoft. Analyst Patrick Moorhead says the company's strategy is spot on: SOUNDBITE: PATRICK MOORHEAD, PRESIDENT, MOOR INSIGHTS & STRATEGY (ENGLISH) SAYING: "The interesting thing here is that you can't actually buy Office 365 off of the iPad. What you can do is you can engage and sign up if you have an Office 365 application. So it's not actually transacting business inside of the iTunes store which is a pretty smart move for Microsoft." Among analysts, expected revenues range from between just less than a billion dollars a year to as much as nearly seven billion dollas. Sources tell Reuters this "touch-first" version had been ready for years - but that Microsoft didn't want to hurt its legacy Windows operating system. Professor J.P. Eggers of New York University's Stern School of Business says Thursday's announcement could be its death knell: SOUNDBITE: J.P. EGGERS, PROFESSOR, NYU STERN SCHOOL OF BUSINESS (ENGLISH) SAYING: "In some ways it's actually getting rid of the old. The piece that was the legacy business - the biggest legacy for the company - and going and saying look, it's back to what the firm has done well for a long time, which is the Office suite. But it's kind of saying we're going to favor one of the children of the company as opposed to the other, as opposed to trying to keep them together as they've been doing for the last 20-something years." He also expects the deal will deal a big blow to Microsoft's tablet: the Surface, which has suffered poor sales. This, even as Microsoft's purchase of Nokia's devices and services business has yet to close. SOUNDBITE: J.P. EGGERS, PROFESSOR, NYU STERN SCHOOL OF BUSINESS (ENGLISH) SAYING: "Based on what we saw today and what we've been seeing, you have to think that Nadella would want to undo the deal with Nokia if they could - that there's just no good reason to go down that path - because that really was a strong push to try and have a real space in the actual physical operating system for the mobile platform." Eggers say he'll likely have to accept that transaction - headed up by Nadella's predecessor Steve Ballmer - as a sunk cost. But his willingness to refine the company's strategy could mean large dividends ahead.