Office for iPhone is Dead on Arrival

Microsoft has finally released Office for iPhone (no iPad version) and it requires an Office 365 subscription ($99 per year). I am going to assume 2 things:

  1. It is a completely bug free app.
  2. It is on par with iWork and Google Drive for iPhone in terms of functionality.

Are a lot of business customers still very entrenched in being a Microsoft organization (Exchange, Microsoft Server, etc)? Yes, that is absolutely correct. My question is that how many of those folks are also paying for Office 365? I would have assumed that customers paying for Microsoft's Software Assurance (keeps customers up to date on all Microsoft products) would automatically have access, but it seems those programs are separate. So we have the most loyal (and probably largest) customers not even having access to an iPhone only app unless they have this extra service that isn't connected to anything they have internally right now?

Over on the Google Apps side, the app is free and you just login with your Google (or Google Apps) account. On the iWork side, the app functions perfectly without syncing, but it also has iCloud built in. I recognize that this might not be comparing apples to apples. Microsoft has a legacy customer base with on premise products and is also trying to build its cloud services portfolio. They really have 2 distinct subsets of customers: cloud customers and on premise customers. Unless I am missing something, on premise customers have no path to using Office for iPhone without paying an extra subscription fee. The 365 customer base will love the addition, but I have got to imagine that is an extremely small number compared to the on premise customers. This also eliminates schools from using it (assuming an iPad version is coming) unless they are a 365 school. I think they would have been much better off by charging a nominal purchase fee for the app. I think if a standalone (with optional syncing options) universal version was released for $24.99, they would have sold a lot of copies. While Microsoft does offer an IAP for $99 per year (the cost of the 365 subscription), there is no way use Apple's Volume Purchase Program with IAP. Can you imagine if the iPhone only supported Exchange mail/calendars/contacts if you were using Exchange 365?

Update: Another failure (hopefully a bug) by Microsoft with this app.