Microsoft’s Year of Change: Cloud, Mobile, Windows 10 and More

By Pedro Hernandez

Satya Nadella took the helm at Microsoft on Feb. 4, officially ending Steve Ballmer’s 14-year reign as the software giant’s chief executive. As only the third CEO after Ballmer, and legendary co-founder Bill Gates before him, Nadella had some big shoes to fill. So far, he’s presiding over a forward-looking product strategy and holding his own.

Nadella’s first major press event was held to announce the long-awaited release of native Office apps for Apple’s iPad (Word, Excel and PowerPoint) on March 27. It was an early sign that, under Nadella, it’s no longer business as usual at Microsoft.

Nadella has gained a reputation as a smart, thoughtful and humble tech executive, which made his comments on women’s pay at the Grace Hopper Conference in October all the more surprising. When asked to offer advice to women who may feel uncomfortable requesting a raise, he essentially told the audience to trust the system and let Karma sort things out. Calling his remarks “inarticulate,” he quickly backtracked. “I believe men and women should get equal pay for equal work,” he added.

Industry watchers need only look at Microsoft’s financial reports to realize that its efforts to draw enterprises to its cloud computing offerings are paying off. “I’m proud that our aggressive move to the cloud is paying off—our commercial cloud revenue doubled again this year to a $4.4 billion annual run rate,” announced CEO Satya Nadella in July. Also in 2014, Microsoft forged a partnership with Salesforce, enabling Office to interoperate with the popular business cloud software platform.

Microsoft is experiencing a rare show of industry-wide support as it battles a court order that forces the company to hand over Outlook.com emails stored in a data center in Ireland to the U.S. Department of Justice. After filing its latest appeal in the case, Microsoft’s top lawyer Brad Smith (pictured right), warned that if the U.S. government “reaches into data centers in other countries, we have to assume that other governments will follow.”

In a rare surprise, this year Microsoft released a bigger follow-up to the Surface Pro 2 instead of a mini tablet. It’s unlikely to outsell the iPad, but with the Surface Pro 3, Microsoft is staking its claim on mobile productivity and is carving out a comfortable niche by catering to enterprise IT departments, business professionals and consumers seeking the power of a full-fledged PC in a tablet form factor.

Microsoft ceded the living room to Sony in 2014. By August, the Japanese electronics giant announced that it had sold more than 10 million PlayStation 4 (PS4) consoles. Microsoft kept mum, admitting that it had shipped 5 million Xbox Ones by April 17. Things look to be turning around, however, after Microsoft released a cheaper version of the console (minus Kinect) and slashed prices aggressively for the holiday season. According to Microsoft, the Xbox One outsold the PS4 in November.

Unlike smartphones and tablets, Microsoft’s recent actions suggest that it isn’t going to let the wearables opportunity pass it by. The company’s Band health and fitness tracker is sold out until 2015. The company is also venturing into software development for wearables with simple apps for Android Wear, including a OneNote companion app.

Microsoft finally closed the book on the 12-year-old Windows XP operating system (OS) in April. At the time, Windows XP was the second most popular desktop OS after Windows 7 with over 26 percent of the desktop OS market, according to Web analytics firm Net Applications. Today, that figure has plummeted to 13 percent, enabling Windows 8.x (Windows 8 and 8.1) to pull ahead with more than 18 percent. Next up for a phase-out: Windows Server 2003.

Things look good for the Microsoft faithful when Windows 10 arrives in 2015. eWEEK’s Wayne Rash summed it up in the title to his recent tour of the OS, “Windows 10 Preview Shows What Windows 8 Should Have Looked Like.” Enough said.