The first hint of new thinking at Microsoft
Finally, some signs of life at Microsoft (MSFT). The stock hit a 52-week high Tuesday, with shares climbing to $39.90. Although it dipped to $39.27 Wednesday, that's still well up from under $28 a year ago.
The putative trigger for Tuesday's move was a Reuters report that new CEO Satya Nadella will announce Microsoft Office for the Apple iPad near the end of March. It would be a big move and, depending on the actual implementation, one that could give revenue a boost.
However, the power of the rumor isn't simply because Microsoft would be providing software for Apple's (AAPL) the popular tablet platform. Rather, investors are warming to the idea that Microsoft might finally be embarking on a new direction under Nadella.
Office for iPad would be big because Microsoft has generally worked to keep one of its chief revenue machines to its own Windows platforms. Its first take at a mobile Office was a lackluster and limited release that was really no better than a series of document readers. Microsoft made it clear that it wanted people to use Office on a Windows PC or, eventually, a Surface tablet.
It was the same sort of stubborn, willful strategic blindness that first caused the company under Bill Gates's leadership to ignore the Internet. But Gates realized relatively quickly the depth of mire he was about to direct the company into.
Its more recent effective denial of where mobile was going, which became more insistent even as competitors dwarfed Microsoft's previous efforts, didn't pass quickly. Once a leader in the category, Microsoft couldn't even hold on to also-ran status.
So, hearing that the company might actually stake out new ground under Nardella, who promised a "mobile first, cloud first" strategy, sparked hope that it might actually be true. A strong showing at the March 27 announcement event could drive hopes, and the stock price, even higher. (The irony is that given software development times, this effort probably started under former CEO Steve Ballmer.)
However, getting back into the mobile game will be anything but easy. People have been developing other work habits over multiple generations of tablets now. Microsoft will need to ensure full function, a touch-based interface that is intuitive to use, full integration with other versions of Office and, most difficult of all, an attractive pricing strategy.
To succeed, the cost of Office for the iPad will have to be reasonable, which will further undercut desktop revenue and begin to deflate a mainstay of Microsoft's financial strength. And yet, will people, or even corporations, pay hundreds to extend Office to an iPad? It seems unlikely.
If Nadella can pull it off, finding a balance to satisfy customers and investors at the same time will be an impressive trick.
Erik Sherman
Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.
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