Microsoft's productivity tools remain the industry standard, with more than a billion users spending almost $25 billion on them last fiscal year. But Office revenues are driven primarily by corporate officers who buy for large workforces - and more than half of America's employees use a mobile device daily to supplement their work.
The rapid rise of apps such as Quip, Haiku Deck, Prezi, Paper, Smartsheet, Good and Evernote, not to mention Google Apps, is nibbling away at the Office franchise. That is particularly true among mid-sized and smaller companies, which tend to be more frugal and less dependent on legacy Office documents or spreadsheets.
Ian Ray, a network administrator at Cypress Grove Chevre Inc, a cheese maker based in Arcata, California, has most of his 35-member workforce using web-friendly apps on iPads and Google Chromebooks.
"We use Google for email, Google Docs tied to that, Expensify for expense reports, Lucidchart for doing flow charts, and Smartsheet for organizing projects," Ray said.
After more than two decades, Microsoft has in recent years eased some Office functions into the mobile arena, mostly accessibly via web browser. The company has yet to release a touchscreen-optimized version of the full Office suite including Word, PowerPoint and Excel - not even for the Windows 8 operating system.
One reason for the delay appears to be internal politics. The powerful Windows group and the younger but more profitable Office group have a patchy history of collaboration.
When then-Windows boss Steven Sinofsky unveiled the touch-friendly Windows 8 and the Surface tablet in late 2012, many industry insiders remarked on the absence of a tailor-made Office suite, which was shepherded by Kurt DelBene at the time.
Both Sinofsky and DelBene left their jobs within months. Former Microsoft CEO Steve Ballmer has vowed to override divisions with his 'One Microsoft' overhaul launched last summer, now in Nadella's hands.
But divisions remain. Some in the Windows camp want to make sure Office remains primarily a Windows experience, which should help sales of the Surface. Others in the Office camp, however, want to reach customers on as many platforms as possible.
"We will bring these apps to Windows devices and also other devices like the iPad in ways that meet our customers' needs and in ways that make sense economically for Microsoft," the company said in a recent statement.
According to research firm Ovum, 57 percent of all employees use a personal smartphone or tablet to access corporate data, while 70 percent of tablet owners use their personal tablets at work at some point.
Companies are increasingly allowing employees to work on their personal devices - a trend the IT industry has dubbed "bring your own device" or BYOD.
That is the true danger for Microsoft, said Adam Tratt, a former Office executive who is now chief executive of Seattle-based Haiku Deck, an iPad-based presentation app.
"Microsoft rose to dominance in an age when the CIO (chief information officer) really held the keys to IT decision making," said Tratt. "Over the past five years, BYOD has really eroded the level of control that many CIOs have."
Although they are not as fully fleshed out as Office, younger challengers have been built from the ground up in an era defined by mobile devices and cloud computing.
Text files in Quip, for instance, are not formatted in virtual 8.5- by 11-inch pieces of paper - instead, they automatically zoom to fit any tablet screen. Revisions in a file can be made and viewed, in real time, by collaborators without sending email attachments back and forth.
"We don't have Word's 30 years of features built into it," said Bret Taylor, Quip's co-founder. "But we're much better at collaboration and much better at mobile."
© Thomson Reuters 2014