Microsoft's CEO may come out swinging

Tue Mar 25, 2014 1:59pm EDT
 
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By Bill Rigby

SEATTLE (Reuters) - Satya Nadella, the Indian-born self-described cricket fanatic who took over as Microsoft Corp's chief executive last month, makes his public debut on Thursday and is expected to go on the offensive right away with some bold strokes.

When Nadella hosts his first major press conference this week, he's likely to describe - if not officially launch - versions of Word, Excel and PowerPoint designed for Apple Inc's iPad, looking to cash in on a market worth up to $7 billion a year, according to Wall Street analysts.

The technology behind the software is not ground-breaking, but the strategy is: It puts Office at the heart of the company's push to become a leading services company across a variety of platforms - possibly at the expense of Windows and its own Surface tablet.

That perceived willingness to break with the Windows tradition, which remains co-founder Bill Gates' most enduring legacy, has helped spur Microsoft shares to $40-plus levels not seen since the dotcom boom of 2000.

Wall Street is now guardedly optimistic on a company that, while still garnering billions of dollars in annual profit, risks gradual obsolescence in a mobile-powered tech industry.

"The fact that Nadella is going to pull the trigger (on Office) shows he's not just an insider that's going to continue the status quo. Right now, it's a blank sheet of paper," said Daniel Ives, an analyst at FBR Capital Markets.

Depending what Microsoft charges for Office on the iPad, and how many of the scores of millions - and rising - iPad users adopt it, it could rake in anywhere between $840 million to $6.7 billion a year in revenue, estimates Raimo Lenschow, an analyst at Barclays.

Rick Sherlund, an analyst at Nomura who has urged Microsoft to put its most lucrative franchise on the iPad for some time, welcomed the idea but was more cautious on the rewards. He estimates that an iPad Office would generate only $1 billion or so in new revenue a year, as many potential users will already have corporate licenses that can be converted to the new product.   Continued...

 
A variety of logos hover above the Microsoft booth on the opening day of the International Consumer Electronics Show (CES) in Las Vegas January 10, 2012. REUTERS/Rick Wilking