Office is a major money maker for Microsoft, more so than Windows. In the quarter that ended June 30, when the company was still organized by product divisions, Microsoft Business Division (MBD), the unit responsible for Office, generated $7.2 billion in revenue, or 36.3% of the company's total.
The Windows group, meanwhile, produced $4.4 billion in revenue, or 22.2% of the total for the quarter. Sales of the Surface tablets, which generated just $853 million from October 2012 to June 2013, were included in the Windows division's earnings.
Microsoft's corporate reorganization, which Ballmer announced last month and until he suddenly announced his retirement last week was to execute, doesn't give any clues as to whether the company would backtrack from its no-Office-on-iPad decision.
"There was no indication that the company was willing to change its long-standing philosophy of protecting its children," IDC analyst Al Gillen wrote of the reorganization in a Friday note restricted to clients.
Whether Ballmer's departure makes a difference in the Office debate within Microsoft is also hard to determine, Gownder acknowledged. Like other analysts trying to predict Microsoft's next moves, he said it may not be resolved until a new CEO is in place.
"This really gets to the philosophical decision that the board has to make, about what kind of person they're going to put in," said Gownder. A new CEO from outside the ranks may be more likely to disrupt the current strategy, and let Office loose, he said.
But Gownder and others argued that Microsoft doesn't have time to waste, and thus no time to wait until a new CEO is appointed: Office alternatives are available and each day Microsoft delays offering the suite on iOS and Android, the stronger those become and the less important Office will be to users.
In lieu of a new CEO, Gownder said, the board could call the shot. "I think the board would have to be involved," said Gownder of any decision to offer Office on iOS and Android. "It would have to be a strategic decision."
Microsoft's board of directors is already under pressure to do just that. In April, activist investor Jeffrey Ubben, the CEO of ValueAct Capital, took a $2 billion stake in Microsoft and began agitating for a seat on the company's board. At an investor conference, Ubben said Microsoft should make Office more widely available on non-Windows platforms.
Some reports have linked Ballmer's retirement to the board's attempts to fend off Ubben.
The board, however, may resist and stick to Ballmer's strategy of bolstering Windows with Office. "Unless Windows is fixed, offering Office on iPad will increase [the iPad's] adoption in the enterprise, and that is something Microsoft does not want to contribute to," noted Hilwa in his Tuesday email. "There is definitely brinkmanship being played here, but my point is that it is probably wiser in the long run to ship products as they become available, and move forward fast."
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