India-born Satya Nadella, who became the third CEO of Microsoft Corporation (NASDAQ:MSFT), will hold his first major public appearance on March 27. At the event, he is likely to announce the long-rumored Microsoft Office for iPad suite to cash in on a market worth up to $7 billion a year.
Experts feel that Nadella is the right person to lead Microsoft. The success of Microsoft over the next decade will be predicated on his ability to steer the company through its existential battle with Amazon and Google for the enterprise cloud crown, as well as finding a way to come from behind in key markets like mobile and data analytics.
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It is widely believed Nadella's 3/27 press conference in San Francisco will be "focused on the intersection of cloud and mobile computing" with the unveiling of Office on the iPad. This should have happened three years ago.
The iPad has been out for 4 years, Office is one of Microsoft's most strategically important products, and yet the decision makers at Microsoft have been unwilling thus far to see the marriage of the two.
UBS analyst Brent Thill noted that Microsoft's unwillingness to release Office on the iPad has meant Microsoft missing out on billions in revenue, and worse has enabled an entire ecosystem of startups like Evernote to thrive and steal customers.
The release of Office on the iPad was presumed to be a second half 2014 or even 2015 event under the strategic direction that Microsoft wanted time for Office to help sell the Windows-tablet ecosystem.
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If Microsoft does indeed pull the release date forward (at least versus expectations), it will be a positive sign that Microsoft may be more aggressive going forward supporting other platforms with its applications.
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Thill noted that Office on the iPad will likely be included as part of an Office 365 subscription which is its current pricing strategy for Office on the iPhone which it released last summer. An additional clue is that Microsoft recently announced an Office 365 Personal SKU for $6.99 a month or $69.99 per year which allows for one PC or Mac and one tablet to be connected to the service.
If Microsoft decide to charge, it could generate more than $3 billion per year in subscription revenue if you assume an 20 percent penetration on an iPad install base of 250 million units at $5 per month.
Investors and the Street alike expect Nadella to allocate more resources towards data analytics as this is a business new CEO Nadella understands and highly values. While Microsoft doesn't breakout absolute revenue or growth of this segment, this is a multi-billion dollar business that is growing at a much faster rate than both Oracle (NYSE:ORCL) and International Business Machines Corp. (NYSE:IBM). As per IDC, Microsoft just passed IBM on revenue share in the database market, with Oracle being the only vendor ahead of them.
Thill believes the story has evolved considerably, and Microsoft can scale with many solutions in the market versus the old story being a divisional solution.
Moreover, despite having its own strategy Microsoft is embracing Hadoop recognizing its industry momentum and recently signed a partnership with Hortonworks. The company wants to ensure Hadoop interoperability on Azure, Windows Server and is part of its business intelligence story.
Further, the market may also look for some color on the company's mobile strategy and how it plans to generate more developer support. Mobile will be one of the primary focus for Nadella. Microsoft likely would see an explosion of Windows Phone apps if Microsoft offered developers platform agnostic development tools enabling them to 'write-once, deploy anywhere' (Windows/iOS/Android).
Encouragingly, Nadella's product management experience, initially business applications, then online and finally cloud, have the common denominator that these were markets where Microsoft did not dominate and yet he excelled and navigated a promotion track to CEO.
There are several signs that it is not business as usual at the Windows software maker, and the change is for the good. The investors too hope so as the stock touched 13-year highs with the advent of Nadella-era.
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