If we turn the clock back to the end of 2013, Microsoft was emerging from one of its worst years in recent memory. The great tech empire was beginning to show cracks. Windows 8 at launch was a disaster (still is) as it tried to mesh phones, tablets and desktops into a single user interface. And Microsoft's big hardware launch, the Xbox One, fumbled in the beginning with its high price and confused messaging around whether users would have to stay online as long when they played a game.
But fortunes began to swing for the Redmond giant in 2014. India-born Satya Nadella -- a 22-year-veteran server and enterprise guy at Microsoft -- was appointed to replace Steve Ballmer as CEO in February. Nadella made a big push for the consumer cloud computing space. He was able to leverage the company’s massive cloud infrastructure to create the most compelling services for consumers. This has been one space where Microsoft has been able to compete and arguably surpass similar offerings from Apple and Google.
The arrival of Office on iPad in March was a strong sign that Microsoft was not afraid to make big bets with its most valuable product. The big Office overhaul also took a much more significant step: in 2014, Office was Microsoft's most valuable software product surpassing even Windows. It was transformed into a service with Office 365 and tied to OneDrive, Microsoft's cloud-storage service that offers Office 365 customers unlimited storage.
Nadella made Windows and Windows Phone free of charge for devices with screens smaller than nine inches, a sign that he was going after Android. This was the first major step taken by the Redmond giant to keep Windows relevant in the "post-desktop" world. This is happening because Nadella has realised that in the current world, the operating system takes a backseat to the ecosystem it builds around it. Windows, in its current form as a paid OS, simply doesn't cut it.
One of the big tech stories of the year was the drop in growth of tablet sales and the subsequent low key announcement of the Apple’s flagship iPad Air 2. The tablet seemed to have hit a ceiling when it came to what you could do with it. The new iPad or Nexus tablets were just shinier and a bit more powerful upgrades to their previous iterations. Microsoft, though, brought some excitement into this segment when it chose to launch the Surface Pro 3, aligning its efforts around a productivity-focused tablet. The company’s latest earnings show that this move might have been a wise one, as Surface revenue is starting to rise.
Surface wasn't the only thing in 2014 that signalled Microsoft's arrival as a hardware giant. The Microsoft Devices division grew with the $7.2 billion acquisition of Nokia’s phone business. Microsoft now controls over 90 percent of all Windows Phone devices in a continued struggle for the mobile market. The company also surprised many with its unexpected entry into the wearables segment with the launch of the Microsoft Band, a fitness device that tracks a variety of health data from your wrist.
Microsoft's popular gaming console, the Xbox One, launched to a rather cool reception from gamers, and for good reason: Sony released the PlayStation 4, the Xbox's biggest rival at the same time as the Xbox. Sony's console was $100 cheaper than the Xbox in the beginning, but well-timed price cuts and free game made sure that the Xbox remained competitve.
Microsoft is also releasing a lot of its services as Android and iOS apps. For the first time in its history, it is embracing rival platforms, services, and even open source software to improve its own offerings.
Looking forward into 2015, it looks as if Windows 10 will be to Windows 8 what Windows 7 was to Vista. What we have seen of it so far looks -- like the rest of Microsoft -- promising.