Wednesday, June 18, 2014

Corporate Strategy 101: Microsoft Needs to Get with iCloud Drive
Joe El Rady

Strategically, Microsoft should support Apple’s handoff/continuity features, as well iCloud Drive. When Microsoft launched Office for iPad, they included two “hooks” to drive their cloud business. However, driving cloud storage comprises a tactic rather than a strategy since commodified cloud storage comprises a feature rather than a product. The strategic “hook” for Microsoft involved increasing their recurring SaaS revenues and reinforcing their ecosystem: in order to edit documents, users need to subscribe to Office 365; and, in order to open, store, and save documents, users must use OneDrive. Clearly, Microsoft understands the short and medium term imperative strategic business path of focusing on cloud services (the long term future may not include the Cloud, but rather data portability on small devices that serve as personal servers, I will discuss that in a future post) as well as the requisite immediate tactic of dislodging DropBox and the Google ecosystem, including Google Drive, Google Docs, Gmail, Calendar, Contacts, and of course, Android. While an intense, scorched earth, zero sum fight against DropBox and Google provides Microsoft with the best strategic plan to fight the ecosystem war, such a strategy against Apple and its iCloud Drive provides no such benefit. In fact, the benefits of embracing iCloud Drive and allowing it as a second storage option for Office for iOS greatly outweighs the cost.

First, Microsoft must realize that serious Apple users will not switch their cloud storage to OneDrive. Any attempt at compelling them by using Office for iOS as bait will only backfire as serious Apple users will likely switch to iWork. Those Apple users who have switched or will switch to OneDrive, are likely only iOS users and not Mac users, receive corporate/enterprise OneDrive storage, or use the free version of OneDrive to store only those documents they need to edit on iOS. Regardless, Microsoft must realize that serious Apple users will leave Google Drive and Dropbox in favor of iCloud Drive. Any nudge by Microsoft in offering iCloud Drive as an Office for iOS storage option will tip many fence-sitters to the Apple side. In this zero-sum game, Microsoft benefits greatly from de-populating Google and Dropbox.

Second, Microsoft must realize that the truly indispensable Excel is only indispensable to advanced business users while the average Word and lackluster PowerPoint are easily replaced by Pages and Keynote— with the exception of enterprise users. In order to guard the revenue generating fortress of Office, Microsoft needs to ensure that Mac users do not defect to iWork. Giving Mac users the ability to open the Office documents from their Macs on their iOS devices through iCloud Drive would stem defection while also providing Microsoft with incremental recurring Office 365 revenue.