The Year in Microsoft: 10 Defining Milestones

Did Microsoft have a good year or a bad year? For a company with products as sprawling as the creator of Windows, Office and the Xbox, it can be hard to tell. Microsoft grabbed plenty of headlines in 2013, but for many different reasons. To figure out whether or not the company is on the right track, it helps to look at its recent past.
With the introduction of Windows 8 and Windows Phone 8, 2012 was a huge year for Microsoft. But it was also a rebuilding year, when it completely revamped its software platforms as well as its fundamental purpose, to transition from a software company to a "devices and services" company, as then-CEO Steve Ballmer described it.

Microsoft made some big plays, but they were long plays

Microsoft made some big plays, but they were long plays, and it would take time to see whether they would pan out.Well, we've had time. A lot has happened in the world of Microsoft this year. Its fortunes in 2013 lent some insight into whether Microsoft's bets were well-placed and what it might do to stay in the game — and possibly even win it.
We've rounded up the biggest events in the life and times of Microsoft in 2013, below.

1. Office 365 and the Subscription Model

When the new version of Microsoft Office 365 arrived in January, the most important feature wasn't its optimization for the cloud and social networks or that it wasn't technically a Windows 8 app. Rather, the most noteworthy change was the business model. After years of selling Office as a standalone app, Microsoft switched to a subscription plan.
Now, instead of paying a lump sum for the familiar package that includes Word, Excel and PowerPoint, buyers would pony up a few bucks a month or $100 a year to access them. The apps themselves also improved tremendously, with direct ties to Microsoft services, including SkyDrive, which got even better this fall with real-time online collaboration in documents.

2. The Surface's $900 Million Stumble

When Microsoft announced its Q4 2013 earnings in July, it dropped a monumental goose egg: The company was taking a $900 million write-down because of Surface RT inventory, essentially meaning it had produced far more Surface tablets than people wanted to buy.
It wasn't hard to see that coming. Windows 8 was arguably fundamentally flawed, but Microsoft didn't do it any favors by christening a buggy, underperforming device as its flagship product, with few apps of any relevance at launch. While software updates rapidly fixed most of the issues, the damage was done, and the ARM-based Windows RT operating system is all but dead because of it.

3. Office Arrives on iPhone and Android

Office is one of Microsoft's pillars, but it has faced fierce competition from Google, Apple and others, particularly in mobile. To face them directly, Microsoft finally opened up Office to new platforms, including iOS and Android. While the apps themselves are stripped down to the bare minimum for tiny mobile screens, Office's migration to competing platforms represents an "OS agnostic" view that would have been heresy in the company's heyday.

4. Facebook, Foursquare and Flipboard for Windows 8

At Microsoft's Build developer conference this year, Steve Ballmer announced that Windows 8, which so far had done nothing to prevent to slide of PC adoption, was finally attracting some big-name apps. The big Fs — Facebook, Flipboard and Facebook — were all developing Windows 8 versions of their services.
Even better, they all came through, sometimes in big ways. Facebook's Windows 8 app uses the wider screen of most Windows tablets well, Flipboard has a unique live tile, and Foursquare's app re-invents the location service as a powerful discovery engine. With A-list apps on board, the road is paved for other developers to ride into Windows 8. At least that's the hope.

5. Ballmer Steps Down

With summer winding down, Ballmer awakened a sleepy news cycle with the announcement that the Microsoft cofounder would step down as CEO within the next year. Rumors about the move had swirled for a long time, but it seemed Ballmer and Microsoft just couldn't quit each other.
The scuttlebut says Ballmer's departure planned, then accelerated once the Surface RT failure was apparent and the company's across-the-board restructuring, which began in July, was underway. Now the hunt is on for his successor, with former Nokia CEO Stephen Elop and Ford's Alan Mulally rumored to be leading the pack of contenders.

6. Microsoft Buys (Most of) Nokia

Apple has the iPhone. Google bought Motorola. But what about Microsoft, keeper of the Windows Phone flame? To really be a top-to-bottom master of services and devices,

Microsoft needed a phone.

Microsoft needed a phone. Rather than create its own hardware as it did with the Surface tablets, Microsoft opted to simply buy its closest partner, Nokia, by far the leader in Windows Phone hardware. The move made a lot of sense. The mobile market is nothing like the tablet market, and it's much better to rely on someone else's experience rather than reinvent the wheel. Considering the strategic partnership Nokia and Microsoft made in early 2011, this was simply the consummation of protracted courtship.

7. Windows Phone Goes Big

In early 2013, it was even money whether Windows Phone or BlackBerry would be the true "third alternative" in the war of mobile ecosystems. It's now clear that the Windows Phone has won that title, with fast-growing market share in most regions — even taking the No. 2 position in places such as Latin America.
With its latest update, Windows Phone can now go toe-to-toe with Android in one of the most popular mobile categories: phablets. Big-screen phones are a big deal in China, India and probably a more than a few NBA locker rooms, and Windows Phone now has models like the Nokia 1520 and 1320 to offer those markets.

8. Windows 8.1 Arrives

Microsoft had a powerful operating system with Windows 8, but it was unfinished. Its multi-window mode, Snap, only worked with one size of window; you couldn't use custom images as Start screen backgrounds and working Word docs in SkyDrive was slow as hell.
Windows 8.1 fixed all of those problems and more while introducing several new features. In a symbolic gesture, Microsoft also brought back the Start button to the design of the desktop. It was almost functionally irrelevant, but it sent a message to users: Although we've already picked the road to travel on, we can still change lanes.

9. Surface, Generation 2

The original Surface RT may have been a failure, but its brother, the Surface Pro, was a much more successful product. Benefiting from a later release, meaning polished software and a more powerful processor, the Surface Pro received good reviews when it debuted in January and proved to be a more worthy flagship for Windows 8.
That explains why Microsoft doubled down on the Surface concept and released second-generation models this fall. The new Surface 2 and Surface Pro 2 also serve as flagships for Windows 8.1, and the Haswell chip inside the Pro eliminates the biggest criticism of Gen 1: battery life.
Are there enough apps and good feelings about Windows, though, to turn the Surface 2 into any kind of success? Microsoft badly needs it to be, but it will probably have to settle for "not a disaster."

10. The Xbox One

If Microsoft has any product with the kind of buzz and customer loyalty that Apple devices are known for, it's the Xbox. The Xbox 360 is one of the best-selling game consoles ever, and the new Xbox One looks to take its gameplay and versatility as a general entertainment gateway to the next level.
Microsoft may have stumbled out of the gate with seemingly draconian downloading policies, but it quickly reversed itself, especially when Sony rubbed salt into the wound by promising to deliver a more gamer-friendly approach. The Xbox One now appears to be a more fully-formed console than its rival, the PlayStation 4, so Microsoft's Xbox loyalty may carry into another generation. That is, as long as the next CEO doesn't sell it off.