Apple Targets Microsoft Office With Free Apps; Apple Exploits Microsoft Hesitation on Office

October 22, 2013

Apple Targets Microsoft Office With Free Apps

By BRIAN X. CHEN

SAN FRANCISCO — At an event meant to feature its latest iPad tablet computing devices, Apple on Tuesday took aim at one of the biggest and seemingly unassailable businesses of its rival Microsoft, its Office software for tasks like word processing and spreadsheets. Apple said iWork, a set of applications for Macs, iPads and iPhones that essentially duplicates what Microsoft’s Office offers customers, would be free to anyone who bought a new Macintosh computer or mobile device from Apple. Each Apple app used to cost $10 apiece.  The latest version of the Macintosh operating system, Mavericks, will also be free.The pricing maneuver was perhaps the lone surprise at an Apple new media event here at the Yerba Buena Center for the Arts. As expected, Apple souped up its iPads with faster processors and zippier Internet connections.

The company upgraded its iPad Mini, the smaller tablet, with a higher-resolution, 7.9-inch display. The full-size iPad, with a 9.7-inch screen, was renamed the iPad Air, because it has a slimmer design and has lost some weight. The smaller iPad starts at $400 and the bigger iPad will cost $500. Both will ship in November.

“This is our biggest leap forward ever in a full-sized iPad,” said Philip W. Schiller, senior vice president for marketing at Apple.

With its free software offering, Apple is capitalizing on strong growth in tablet computing sales and Microsoft’s reluctance to offer Office for the iPad.

Tablets are devouring the PC market, which has long been Microsoft’s playing ground. About 120 million tablets were shipped in 2012, nearly seven times as many as in 2010, when the first Apple iPad was released, according to Gartner, a market research company. IDC, another research company, predicts that sales of tablets will surpass those of PCs in the fourth quarter of this year and on an annual basis in 2015.

So far, Microsoft has had little success in that growing market. Its attempts to sell tablets have been failures, and Windows 8, which it has marketed as a software system for tablets and PCs, has gotten a chilly reception. What’s more, Microsoft still charges $120 for people who want to upgrade from the older Windows 7 system to Windows 8.

That shift to mobile devices and low-cost software is why Microsoft is trying to shift from being a traditional software company into one that sells Internet services and devices, said Ross Rubin, an independent consumer technology analyst for Reticle Research. The company could reduce the upfront price for its software and charge people more over time for the services through subscriptions. And with the release on Tuesday of Microsoft’s new Surface tablets, the company is more aggressively marketing the online services available for it, like SkyDrive, a service for storing files on the Internet.

Microsoft’s chief executive, Steven A. Ballmer, said recently that the company would bring a version of Office to the iPad and other touch devices, but the company has not said when that will be. It sells an annual subscription to Office 365 on other devices for $100 a year.

Asked about Apple’s decision to give away its iWork apps, Heather Knox, a spokeswoman for Microsoft Office, said in a statement that a Web-based version of Office was the best free alternative to Microsoft’s traditional Office applications. “They extend the Office experience you know and love with anytime, anywhere online editing and collaboration,” Ms. Knox said.

The new iPad Mini also gained a high-resolution Retina display. The new tablet costs $400 — $70 more than the previous iPad Mini. But Apple said it would continue selling the older iPad Mini without a Retina display for $300.

The iPad Air is about 20 percent thinner than the previous iPad and weighs one pound, down from 1.4 pounds. Both new iPads will include new chips, called A7 and M7, which Apple introduced last month in its latest high-end iPhone. The A7 is a faster processor with a new architecture that makes it better at multitasking. The M7 is dedicated to sensing movement, which could allow for new capabilities in software or games that incorporate motion, like a car racing game.

The iPads have an improved antenna system for faster Wi-Fi connections. They will come in white and silver and in black and gray, similar to the colors of the iPhone 5S (though the iPads will not come in white and gold like the iPhone). The iPad Air goes on sale on Nov. 1, but the new Mini will ship later in November.

The new iPads do not include the fingerprint sensor technology, TouchID, that Apple introduced in the iPhone 5S. Analysts say that may be because parts are in limited supply, as the iPhone 5S is selling so quickly.

The Mac computers have taken the back seat of Apple’s business, but the company also released upgrades for some of its Mac hardware on Tuesday. The MacBook Pro notebooks with Retina displays are now thinner and faster, with better battery life. The 13-inch version will cost $1,300, down $300 from its original price, and the 15-inch model will cost $2,000, down $200 from the original price.

Apple also said the high-end Mac desktop computer, the Mac Pro, which was introduced in June, will begin shipping in December, for $3,000.

Apple is No. 1 in the tablet market with about a 32 percent share, according to IDC. But the company faces fierce competition from companies like Amazon, Samsung Electronics and Google, whose tablets undercut the iPad in price. Samsung, the No. 2 tablet maker, is quickly gaining traction, with 18 percent of the market in the second quarter, compared with 7.6 percent in the period a year earlier, according to IDC.

Smartphones are still more popular than tablets: Gartner predicts manufacturers will ship one billion smartphones and 184 million tablets this year.

But Carolina Milanesi, an analyst for Gartner, said she expected smaller tablets to continue gaining in popularity as the smartphone market becomes saturated.

“We expect this holiday season to be all about smaller tablets as even the long-term holiday favorite — the smartphone — loses its appeal,” Ms. Milanesi said.

 

OCTOBER 22, 2013, 4:49 PM

Apple Exploits Microsoft Hesitation on Office

By NICK WINGFIELD

Updated, 5:04 p.m. | To reflect recent Microsoft remarks on iPad version of Office and a comment on Apple’s moves.

Microsoft may want to bring its Office applications to the iPad sooner rather than later.

On Tuesday, Apple made its own rival suite of productivity apps, iWork, free to anyone who buys new Mac computers and the company’s mobile devices, including iPads. IWork has been around for years, but it hasn’t inflicted much apparent damage on Office, one of the most resilient products at Microsoft.

But without the $9.99 fee that Apple charges for each of the three iWork applications — Pages, a word processor; Numbers, a spreadsheet app; and Keynote, a presentation app — that could change. The apps are free to people who buy new hardware from Apple, but not to the huge numbers of people who already own Apple devices. People who already have iWork can upgrade their apps free, too. (Technically, people who bought iOS 7 devices Sept. 1 or later, or a Mac on Oct. 1 or later, will also qualify.)

Microsoft sells an annual subscription to Office 365 for $100 a year.

Microsoft began working on an iPad version of Office some time ago — but for reasons that remain unclear, the company has not released it. Recently, Steve Ballmer, Microsoft’s chief executive, confirmed that the company is working on Office for the iPad, but it didn’t say when it will release the product.

The company might want to give its Surface tablets an advantage since those devices come with copies of Office. New versions of the Surface tablets went on sale today.

The more difficult question for Microsoft is whether it can stomach sharing 30 percent of the sales of Office apps for iPad with Apple. That is the standard cut Apple takes for software sold through its App Store.

Asked about Apple’s decision to give away its iWork apps, Heather Knox, a senior director for Microsoft Office, said in a statement that a Web-based version of Office is the best free alternative to Microsoft’s traditional Office applications. “They extend the Office experience you know and love with anytime, anywhere online editing and collaboration,” Ms. Knox said.

Apple also took aim at the fees that Microsoft charges people who upgrade from one major release of Windows to another. Apple said existing Mac users can upgrade to the new version of the operating system, Mavericks, for free, waiving the $20 to $30 fee it has charged for such upgrades in the past.

Microsoft charges $120 for people who want to upgrade Windows 7 PCs to Windows 8.1, the latest version of the operating system. The upgrade is free if they have Windows 8 on their systems.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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