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Microsoft could be losing $2.5 billion by not releasing Office for iPad

by Doug Drinkwater

February 18 2013

Tensions between Apple and Microsoft may be the reason why Office for iPad remains unreleased, but one analyst says that the problem could be costing the latter up to $2.5 billion.

In a research note to investors, Morgan Stanley analyst Adam Holt spelled out just how big Office could be on iPad by saying that Microsoft can expect to generate $2.5 billion in lost revenues if it released the iOS app.

To offer some context to that figure, that amount is close to half what the Office suite pulls in today and - if recent reports are to be believed - would be enough for Microsoft to buy social networking site Pinterest or Eric Schmidt's stake in Google.

All of this would however be reliant on Microsoft getting the price right, but Holt believes that $60 would be attractive enough for almost a third of all iPad users (there are forecast to be around 200 million iPad users by 2014) to buy the software.

"The math is compelling, and may drive Microsoft to move Office," wrote Holt.

For all of this it is currently hard to see when any such Office app will be coming to market. The most reliable reports would suggest that Microsoft has already made the app and tested it, and it had at one point been suggested that it would launch in March.

However, a supposed row between Apple and Microsoft over app submission fees has not only delayed Microsoft updating the SkyDrive iOS app but also the launch of the Office mobile app, with Apple supposedly holding out for a 30% cut of Office 365 subscriptionssold through Office for iOS.

Microsoft CEO Steve Ballmer remained noncommittal on the issue when quizzed recently, although Microsoft CFO Peter Klein this week suggested at the Goldman Sachs Technology and Internet Conference that an Office app for the iPad could be coming sooner rather than later.

“We have a history of cross-platform delivery broadly in productivity, whether it’s Office on the Mac, or e-mail, communications, note-taking,” said Klein.

“And with our Web applications you can access Office documents, do some light editing on any device and on any browser. So there’s a lot of things that we’re already doing to meet that need. And we’ll continue to think about other things going forward.”

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