"Because most of the revenue is on the business side, Microsoft thought, 'Why don't we just give away more features on the consumer side?'" Dawson said of the strategy switcheroo. "Previously, they were afraid to give away any kind of Office."
Miller pointed out that the value of consumer-grade productivity software has "essentially reached zero." Google Docs is free to use for consumers and Apple began giving away its iWork suite last year to any iOS or OS X device owner. To compete, Microsoft had to reduce Office as far toward "free" as it could stomach.
Thompson concurred. "This is powerful evidence that it is actually impossible to make money selling productivity software to consumers," Thompson wrote in his Stratechery subscription-only Daily Update of Friday. "If Microsoft couldn't manage, how can anyone else?"
Assuming Miller and Thompson are right, what does Microsoft get from giving away Office? The firm is a corporation, not a charity. What's the value in free?
"Because Microsoft wants to make Office the universal productivity app and its file format the universal format, so that it can perpetuate its business on the commercial side," said Dawson.
There's not only truth to what Dawson said, but it's a tenant of Microsoft's overall Office strategy. Microsoft hammers on the fact that only its Office apps and applications can reproduce the Office file format in high-quality fidelity. Putting Office in front of more people, theoretically at least, increases the Office lock-in.
Thompson echoed Dawson. "This new strategy is much more defensive in nature: Microsoft may not be able to drive new Office 365 subscribers, but ... they are immensely concerned about keeping people away from Google Docs, in particular," said Thompson. "Better to keep someone in the fold for free, with up-sell opportunities, then to incentivize them to try out your competitor."
Not everyone saw the strategic shift in negative terms. "This is not a desperation move, or one from a point of weakness," countered Patrick Moorhead, principal analyst with Moor Insights & Strategy. "This is their multi-platform strategy in a nutshell, not some reaction to a tactical threat. They're simply delivering on their strategy, which is all about mobility and the cloud."
But even Moorhead acknowledged that Microsoft hoped to prevent consumers from adopting Office alternatives. "They're trying to lower the number of people who look to a Google solution or something different," Moorhead said of the iPad apps' new rights.
And while Microsoft might have been pushed toward the decision — pushed just eight months after debuting it to much fanfare — the analysts' consensus was that it wasn't only necessary, but the smartest move possible under the circumstances.
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