The other shoe hasn’t dropped though: how many people have signed up for Office 365, which is required to create or edit Office documents on the iPad. At $99 per year, it’s fairly certain that Microsoft hasn’t seen anything like 12 million subscriptions, even with free giveaways at Microsoft retail stores, or the discounted license of $79 on Amazon.
As some are saying on the Microsoft tweet, how many have deleted the app from sticker shock?
The reality is that Satya Nadella, the new CEO, has accepted the new terms of the competition around office apps in general and Microsoft Office in specific. He’s started by dropping the price of the apps — for use in viewing and presenting Office documents on the iPad — to zero. He’s now running an experiment to figure out the following:
- How many will download the app? The answer so far is 12 million in the first week, and we could project some ongoing trail with tens of millions more downloads in the coming weeks and months so long as there isn’t some backlash.
- How many will convert to Office 365 subscribers at current rates? The Microsofties are looking closely at those numbers, that only they can know. I’m betting the number is low overall. Corporate buyers might step up in large numbers, but I bet they are running some experiments forst, too. I will suggest that as fewer than 5% have converted. Certainly if the numbers were huge, Microsoft would be crowing about it.
- What is the best price point for the capability to edit and create Office docs on the iPad? It’s definitely less than $79/year. The value of being able to keep to the Office app formats — instead of converting to Apple or Google docs — is high, but mostly for big businesses, and those folks will pay for integration with Yammer, Sharepoint and other Microsoft niceties, like collaboration inside of documents.
My bet is that they will go to a zero price version, one that involves an integration with OneDrive with a minimum storage, and then users would need to pay for additional storage, or for Office 365 integration. The collaborative editing of documents, and other functionality will be partitioned in increasingly higher per month or per year bundles.
But — bottom line — I bet the low conversion in all but large and super large companies will give Nadella the proof he needs to justify releasing a new free Office for iPad tier, one integrated only with OneDrive, and costing the starting prices of zero.