iWork needs to be a big update this year with Office 2011 coming out.
You may have your logic totally skewed here. Apple still needs Office for their corp/ent market. So why try to mess with Microsoft with a $99 WP/SS/DTPr solution that goes up against MS's $129 Office 2011? No matter how much money Apple makes from iWork, it's not worth the grief of not having Office for Mac.
Apple did paint themselves into a corner here: dropping all of the Claris apps to give MS a clear playspace thus making Office worthwhile; having to make some money back from Keynote as there was no way Steve would use PowerPoint; having to cover for the demise of AppleWorks with some basic Word Processing tool; having to make up for that by adding a basic spreadsheet...
Welcome to the world of hurt.
Keynote is demonstrably better than PowerPoint;
Pages is purer, UI wise, but can't do anything Word can't (and vice versa);
Numbers can't do even close to what Resolve could.
Up next, a database app to take on Access?
Damn, I guess someone forgot to close FileMaker. (I blame Oracle for not paying the $500,000 price Apple wanted for it.)
If iWork thrives, Office dies.
If Office dies, enterprise sales die.
Which effort would you put the bullet in the head of?