But office apps aren't enterprise computing anymore. Word processing is the most basic stuff of all. And the industry is moving towards free software with paid hardware and services, at least in the consumer space. Nowadays every OS platform has to provide the ability to share and create documents out of the box, just as it needs to have a free browser bundled with it. The competition right now is between Pages versus WordPad.
That's nice if you wanted to buy cloud storage for the whole family anyway. But since 5GB of free iCloud storage is enough for most people, they will feel differently. And if you need more, you can buy it from Apple. But if you need less, you can't reduce your bill with Microsoft.
iWork updates are also free and the price doesn't suck. If you cancel your payment with Microsoft, you will lose everything. Where is the benefit?
Just because its free also doesn't make it worse. And free software is important, because it justifies higher hardware prices. Once you bought their hardware, you start using more of their services, think iTunes.