I think its the idea of yearly payment for far more than a comparable offerings that cost $10, or are totally free.
MS is year(s) late with this, and while power users will want it, for the majority of others, they have moved onto something that fulfills their need without the expense.
I am not really sure if Microsoft is really late on this. Software takes time to be developed and ported. I have not yet tested Office for iPad, and I have no idea on how much effort Microsoft put on it.
But look at the alternatives.
iWork for iPad was released shortly after the release of the 1st gen iPad. But, first, it was an Apple release, so it was in development much earlier than the release of the iPad itself. Second, it was a lesser office suite than its Mac counterpart. Feature parity was only achieved in 2013, and only because Apple stripped iWork for Mac of some features. It's definitely not very inspiring, especially considering that iWork is an Apple product.
Neither LibreOffice nor OpenOffice were ever ported to the iPad. Not even Android (which is Linux-based) got a LibreOffice or OpenOffice version yet.
Yes, there are office suites for the iPad. But they not very polished and lack features compared to the full Microsoft Office.
The iPad does not have lots of complex applications. Most iPad apps are simple pieces of software, which is something that takes less time to be released.
Microsoft may be late in the sense that it should have launched an Office app for the iPad before. But, compared to the alternatives, it is not really late to release full-featured software.