I’m not really sure of what Microsoft’s trying to accomplish here. What they think is their bargain power. They’re arriving on the iPad after years of delay, and the Office being absent in the App Store only matters to who really wants Office for the iPad. There are plenty of alternatives.
If Microsoft keeps up with this, it will only get worse for them. They have lost relevance in every single market they operate in, and seems that Office is the last pillar standing. Shouldn’t be long before people figure out that they don’t need it any more than they needed the rest of Microsoft’s stuff. And that’s a hard one to come back from.