The Internet went into a tizzy when Microsoft announced editing documents in Office for iOS and Android was going free for non-businesses. Remember when Microsoft finally made Windows Phone free for OEMs? We all thought, it was about time, by which we meant it was too late already. The fact that people are surprised by this particular move means it may not be too late.
It’s actually not that crazy of a move. A big portion of Office’s revenue comes from businesses, so there’s not much cannibalization at risk. Further, Microsoft was never been able to monetize Office on the web or on mobile.
People don’t get Office 365 just so they can edit documents on their iPads; they get Office 365 for the PC and iPad compatibility is just a bonus. Creating and editing Office documents on mobile remains a niche activity; and arguably one that average consumers aren’t currently willing to pay for.
Think of Office on mobile devices as an extension of Office on the web — something free for light users but not a replacement for heavy users, who still prefer PCs with large screens and keyboards to do work.
While the short-term costs are limited, the long-term benefits are critical. People are increasingly comfortable with Google Docs. Kids and students especially, which would be disastrous for Microsoft if they grow up all shunning Office. Microsoft must win this segment. Monetizing from businesses only works if Office remains the standard. Making Office free is one salvo to that objective.
The other salvo is Microsoft’s partnership with Dropbox. Now you can open and save Office documents directly from Dropbox. Anyone who weighs the costs and benefits of OneDrive vs. Dropbox would rationally choose OneDrive now that it has unlimited storage (unless there are individual factors to tilt it the other way). So for someone to stay with Dropbox means that customer will not likely ever move to OneDrive. If it’s not a market that Microsoft can win, they might as well ensure Office remains the productivity suite of choice for Dropbox loyalists.
Office Online’s greatest weakness is that it’s not easily discoverable to the average user, whereas Google Docs has Gmail as an entry point. So effectively, Microsoft recruited Dropbox as an additional entry point.
Making Office free on mobile and its partnership with Dropbox are all about hooking people up to Office.
“We’d like to dramatically increase the number of people trying Office,” John Case, corporate vice president of Office marketing at Microsoft, said about the new offering. “This is about widening the funnel.”
To feel safe though, Microsoft also has to win the email battle. I often open documents via email; if that’s with Gmail, I am more likely to open and edit with Google Docs than Office.
It'll be interesting to see what happens when tablets and laptops finally converge. The Surface is already doing that. Google is also jumping on board with the Nexus 9 and keyboard cover. Apple just might with the iPad Pro. Will free Office on a tablet with keyboard accessory render paid Office on a PC unnecessary?
Well, Microsoft’s free offer isn’t actually as generous as it sounds. Editing Word documents for free can only be done in portrait mode! This is fine for phones but is an annoying limitation for large tablets, which are usually in landscape. There are also other features only paying customers can use, so mobile Office is more freemium than free.
I’m guessing Microsoft will deal with the convergence problem when it arrives; for now, building a defensible moat around Office is the priority.