Microsoft Hits Business Highs in 2016 with Cloud Services, Windows 10

Cloud computing services and its enterprise software portfolio have enabled Microsoft to achieve a level of success in 2016 it hasn’t seen since the late 1990s.

One of this year’s biggest tech acquisitions was Microsoft’s $26 billion bid for LinkedIn, the business- and career-focused social network. Despite prolonged regulatory scrutiny and Salesforce.com causing a bit of a stir, the deal closed earlier this month, bringing LinkedIn’s more than 400 million members into a tighter orbit around Microsoft.

The cloud is doing more than lifting Microsoft’s earnings. It’s also helping to revitalize its image. Once viewed as chained to Windows and its Office productivity application suite in a declining PC market, Microsoft is using its Azure cloud computing ecosystem to make early bets on artificial intelligence, the internet of things and blockchain, some of the most buzzworthy and cutting-edge technologies shaping the future of enterprise IT.

In the legal arena, Microsoft scored a major victory for itself and the cloud provider community at large in the so-called Ireland Email Case. The company prevailed in court against the U.S. government’s attempts to get its hands on emails stored on an overseas server, sparking a fierce debate about digital privacy and data residency in the age of globe-spanning clouds.

Last year, Microsoft CEO Satya Nadella uttered the words that would have been blasphemous when Bill Gates and Steve Ballmer ran the company. “Microsoft loves Linux,” he told attendees at a 2015 cloud summit. Fast forward a year, and not only is Linux a pillar of the Azure virtual machine ecosystem, but the company also is readying its SQL Server database software for the open-source operating system.

Microsoft is blurring the lines between enterprise resource planning and customer relationship management software with its new Dynamics 365 cloud platform. Businesses can tailor Dynamics 365 to their business needs with function-specific apps, such as sales, marketing and field services management, that share a common data model to promote automation and collaboration. Office 365 integration and embedded analytics are icing on the cake.

Apple Mac has long been considered the hardware of choice for creative professionals. This fall Microsoft unveiled the Surface Studio, a sleek, all-in-one PC with a touch-screen that supports the Surface Pen stylus. The Surface Studio pairs with the new Surface Dial screen controller, which allows the artist to pick brushes, select colors and zoom in and out of canvases with a twist of the innovative controller.

Microsoft wasn’t successful on all fronts. The company quietly pulled the plug on its Band fitness tracker this year. The once-promising entry into the wearables was simply overshadowed by the Apple Watch and Fitbit’s stranglehold on the market for health-monitoring devices.

In terms of Windows phones from Microsoft, last year’s Lumia 950 and 950XL are holding the fort. Rumors are swirling about an upcoming Surface phone, but in the meantime, the Windows smartphone ecosystem is perilously close to disappearing from the market.

It was a big year for Microsoft’s sprawling developer community. Following its acquisition of Xamarin, the company announced it was open-sourcing Xamarin’s software development kit and including the mobile app-friendly developer tool as part of Visual Studio at no cost. Last month, the company released a preview version of the long-awaited Visual Studio for Mac based on Xamarin.

Microsoft wants to usher in an era of conversational computing where instead of filling out web forms, users can book travel, check account balances, order goods and services or simply be entertained by chatting with bot. The first wave of Skype bots is promising, and the company learned some tough lessons from its ill-fated Tay social chatbot regarding how the internet’s dark side will push any consumer-facing technology to its limits.

While Microsoft is now a “cloud-first” company, its Windows desktop operating system still matters. This past summer, the company released its first major update for Windows 10, the Anniversary Update. Highlights included built-in support for the Bash Unix command shell and a smarter Cortana. The company hopes to keep the momentum going next spring with the Creators Update aimed at 3D designers and virtual-reality enthusiasts.