Forty percent of 300 million tablets equals 120 million tablets; at $50 net a pop, 120 million copies of Office would generate $6 billion a year for Microsoft.
That's not chickenfeed for the Redmond, Wash. developer, even for its Business division -- the one responsible for Office -- which has been the company's top revenue generator every quarter since 2010's second. In the fourth quarter of 2012, the most recently reported by Microsoft, the Business group brought in $5.7 billion. For the 2012 fiscal year, which ended June 29, 2012, the division's sales totaled $24 billion.
The biggest fly in Purdy's ointment isn't the decision between Office on iOS and Android launching separately or as part of Office 365, but the tussle between the Windows and Business groups. The former is responsible for the Surface line of tablets, including the Surface RT, which comes with a pared-down version of Office.
Would Microsoft strip the Surface RT of one of its prime selling points, that it's the only tablet able to run Office?
Other analysts have said "Yes," and Purdy is in their camp.
"Its similar to the decision they made to do Office on the Mac," Purdy argued today. "Microsoft asked itself, 'Do we want to help the competition?' and that was when most of the money was in operating systems."
Microsoft did create Office 98 Macintosh Edition as part of larger deal under which the former bought $150 million of Apple stock, and the two companies struck a five-year patent cross-licensing agreement and put to rest lingering issues from Apple's 1988 copyright infringement litigation that accused Microsoft of stealing its graphical user interface.
Combine the money to be made from selling Office to iPad and Android tablet owners with the precedent of Office 98 on the Mac, Purdy argued, and it's a clear call for Microsoft.
Purdy wasn't the first analyst to pose significant revenue to Microsoft from a tablet edition of Office.
Last month, Morgan Stanley's Adam Holt estimated Microsoft was losing out on $2.5 billion per year by not making the move. Holt took heat for his estimate, including from Computerworld blogger Preston Gralla, who believed that Microsoft was far more likely to boost Office 365 subscriptions by leveraging Office on iOS and Android.
"It's still a fluid environment through at least 2015," countered Purdy. "About then it starts to get blurry, the lines between tablets and notebooks."
In other words, he believes there's an opportunity now, and for several years, for Microsoft to sell Office outright to tablet owners. It could later, of course, decide to stuff the suite into Office 365.
How soon could Office for iOS and Android appear? Previous speculation -- going back years, actually -- had most recently claimed that Microsoft would launch a mobile suite in late February or early March, dates that have already come and went.
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