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Show Me the Money
So how does Holt get to the $2.5 billion? Holt figures attaching Office to new iPad units for the fiscal year 2014 could add $1.3 billion in revenue. That number supposes 30 percent of iPad users would install Office on their iPad. If every iPad user opted to install Office, that number rises to $2.5 billion. Android sales could add even more to the total.
As Holt sees it, Office exclusivity on Windows tablets is important, but the iPad opportunity may be larger. He points out that Microsoft actually sees a three to four times higher paid Office installation rate on Macs (30 percent to 40 percent) than Windows machines (10 percent to 15 percent).
"Our conversations lead us to believe MSFT will price for value with Office on the iOS and net 30 percent to Apple (which can be negotiated), MSFT may get $50 to 70+//Office unit. If MSFT got 30% attach in one yr. at $60/unit on the ~200M base it is $2.5B in rev. -- more than the total amount of software rev. We forecast for MSFT (Office + Windows) from 11% tablet share in FY14," he wrote. "The math is compelling and may drive MSFT to move Office."