It seems that Microsoft is finally accepting the reality of Office’s market position on smartphones and tablets. To some degree, Office needs to compete with the free Google Docs and iWork, but for many customers, it’s also competing with the idea of simply not using office apps (or using them far less often).
This is a bold move, but I think it’s the right one: give it away for casual and independent use to protect (and hopefully grow) its ubiquity and relevance from further erosion, and make money from big-business users with big-business needs and big-business budgets.
It’ll be interesting to see if they go further with that strategy. Why not bring the same business model to Office for Windows and Mac?