Office on the iPad?

Within the last 72 hours I’ve read two conflicting reports about Microsoft Office on the iPad:

1.            Techchrunch reports The Daily has captured an image of MS Office running on the iPad

2.            Forbes had a post stating “Office on the iPad – don’t hold your breath” quoting Nomura Research analyst Rick Sherlund who says this is not going to happen.

So what will Steve Ballmer do? This is the multi-billion dollar answer to the enterprise tablet war that is looming.

On one hand, Office is the second largest source of revenue for Microsoft. Ignoring the iPad represents significant licensing opportunity cost for Microsoft and invites one of two things: 1) a tablet office productivity suite to rival Microsoft, or 2) the mass conversion of legacy files (knowledge) to iPad compatible file formats.

On the other hand, Windows is the largest source of revenue for Microsoft. With an upcoming release, Windows 8, an Office for iPad release could jeopardize potential OS licenses for the eventual Microsoft tablet computers expected around the end of the year.

We’ve been debating this internally for the last several days – arguing the benefits of the tactics versus the strategies. When one looks at the OSI seven layer model, applications are at the top of the stack and that is where the maximum value is (for both the producer and the user).

I believe it makes perfect strategic sense for Ballmer to override the objections of the Windows team and release Office on the iPad. This will firmly entrench Office as the applications suite for the enterprise, will lend credence to 3-screen interoperability (smartphone, tablet, desktop/laptop), and will ultimately “commoditize” tablet computers, putting price pressure on Apple. Because Microsoft is not in the device business (yet), commoditization works in their favor — the Microsoft ecosystem will ultimately have the advantage.

It’s the right thing to do; the only question is: “will he or won’t he?”