Microsoft’s close call, 2014: The 10 wins and 9 fails of a company racing to transform itself

That image of Microsoft chief executive Satya Nadella slouching casually in a hipster hoodie says so much about the company’s aspirations. But inside it’s the same old Microsoft. Or is it?

Challenged to reinvent itself in the face of a new breed of mobile apps and services, Microsoft’s $2.5 billion purchase of Minecraft developer Mojang makes more sense. So does Microsoft’s Cortana. Or Sway. 

In 2014, under Nadella’s direction, Microsoft evolved away from the bluster of Steve Ballmer to something more modern, more humble, more collaborative. But the tally of successes to failures was nail-bitingly close. Don’t believe us? Come on in and see.

Nothing proved Microsoft’s “rule of three” as neatly as the third generation of its Surface Pro line. 

Due in part to some nifty engineering on the part of Microsoft and its chip partner, Intel, the Surface Pro 3 is the first Surface Pro that feels like a true tablet. I’m typing this on an SP3 right now, as you know. And many of you agreed with me: In October, Microsoft revealed that Surface sales alone doubled to nearly a billion dollars compared to a year ago, thanks to the Surface Pro 3.

I’d like the Surface Pro 3 to be a bit sturdier and somewhat cheaper. But this is a shining example of what Microsoft’s hardware teams can produce.

Say what you will about the dearth of apps in Microsoft’s app store, but Windows Phone 8.1 shows that Microsoft aspires to being more than just a distant third in the smartphone market. And the voice of Windows Phone is Microsoft’s digital assistant, Cortana.

Choosing the name of your best buddy in the “Halo” games was inspired. Cortana’s sassy, smart, even festive (ask her to sing you a Christmas carol). Yes, Cortana came in third in our digital assistant showdown earlier this year, but she’s definitely improved—heck, she even picks the winners of football games. Best of all, Microsoft is making Cortana personable. Sorry, Siri—Cortana is the popular girl everyone wants to talk to.

In February, Nokia debuted the Lumia Icon, a robust if understated flagship Windows Phone. It was the best Windows Phone of its time. How distant those days seem now.

After Microsoft’s acquired Nokia, it killed the flagship Windows Phones, choosing to grow the market through midrange and low-end models—although “affordable flagships” like the surprisingly good Lumia 830 gave hope for the future. 

But the bottom line is this: The ambitious designs of Windows Phone 8.1, Cortana, and the Lumia line need a flagship Windows Phone—something Microsoft calls a flagship—to show them off properly. It’s so damn frustrating to see them stuck on ordinary handsets.

The counter-argument to the “no more flagships” debacle is the Microsoft Lumia 830, the so-called “affordable flagship” that Microsoft began selling recently. I was surprised at how much I missed it after reviewing it. 

Windows Phone fans should happily embrace the Lumia 830 as a solid, if not cutting-edge smartphone. That’s the sort of lukewarm endorsement that normally would doom a new phone, but Microsoft plays by different rules. Microsoft may not win many converts from the Android and iOS camps, but the Lumia 830 should help Microsoft hold its own with Windows Phone fans.

Eventually, Microsoft will solve its app-store problems: an outright shortage of Windows and Windows Phone apps, coupled with a rancid cut of apps that are either knockoffs or outright ripoffs. Meanwhile, developers have to wonder what they need to do to get quality apps in front of users. 

But right now, the Microsoft Store on Windows 8 is like the back alley behind the mall: there’s some good stuff there, just piled next to a dumpster full of absolute crap.

At least the Xbox Store serves as a model for what Microsoft’s app store could be. But Valve’s Steam service could continue to dominate PC gaming, and possibly eventually productivity, too.

And if you don’t believe us when we complain about Microsoft’s apps, listen to these guys.

Ed Bott (right), who has authored or co-authored dozens of books on Microsoft products, publicly ditched Windows Phone in favor of an iPhone in early December. Tom Warren (left), who covers Microsoft for The Verge, did the same. Bott blamed Verizon for holding back Microsoft’s OS updates. Warren said too many never-updated “dead apps” had forced him to flee to an iPhone 6.

Either way, two high-profile followers of Microsoft are no longer with Windows Phone. Ouch.

$2.5 billion? Why on God’s green, voxel earth would Microsoft spend even $250 million on a sandbox game, as good as it is? More puzzling: Microsoft has given absolutely no indication of its plans for the studio. Is Minecraft a sandbox to teach code? Will we see Lego-styled reincarnations of popular franchises, such as Minecraft: Halo?

Creator Markus Persson’s farewell letter to fans was honest, emotional, even somber—as it might also be for whoever greenlighted this deal. After all, Mark Pincus bought OMGPOP and “Draw Something” for about $200 million—and was forced out soon after. 

Microsoft’s new Sway app shows what Microsoft can do when it reevaluates its product line. Sway is Word for Millennials: an easy, graphics-rich environment to show off your camping trip (left), a school report, or something else. Now that Sway is open to all, you have a chance to use it, too—and tell Microsoft how you’d like to see it improved.

Sway isn’t just an interesting app by itself, but emblematic of a new breed of in-between, blended apps that unite Microsoft’s traditional tentpoles—Excel, Word, PowerPoint, and more. It’s also a public experiment, a direction Microsoft refused to go down for many years. Let’s hope Sway sticks around for a while.

Microsoft’s decision to invest $300 million into Barnes & Noble was ultimately a lousy one—and probably Microsoft’s fault more than the retailer.

For its money, Microsoft ended up with little more than a Windows 8 app—instead of a partner or even an acquisition target. Microsoft sells movies and music through its Xbox division—but not books, which it could have pitched as an ideal companion to a Surface or Windows Phone.

Ultimately, Microsoft may have decided that e-readers and ebooks were a lousy investment. But that still leaves it with a large hole in its e-commerce strategy.

Is the Microsoft Band a fitness band? A smartwatch? Or do we care?

Right now, we’re calling it a winner, albeit barely so. The launch of the Band may have spurred long lines, but we’re not sure it’ll have the long-term focus of say, a FitBit. And that’s okay: If anything, the Band is ahead of its time, leaping beyond fitness bands to something like a wrist computer. Yes, it’s a trifle clunky, and it’s notifications tend to blur together. But Microsoft thought big with the Band, and that’s worth applauding.

Pinch us—yes, we’re excited about a new operating system. Windows 10 takes the best bits of Windows 7, gives them a fresh update, and givers users the option (yes, this is important) to merge them with Windows 8 tiles. Add in some virtual desktops, notifications, and even Cortana, and Microsoft seems to have a winner on its hands. You can even download ongoing builds of the new OS to familiarize yourself before it launches. 

If you’re like us, you’re looking forward to the consumer preview in January and the full release later next year. But what’s the price going to be? That’s a question we want answered, too. 

Who knew that people might actually look forward to using Office? Mac users didn’t—they’re still stuck with ancient versions. But for those with an iPad, Office for the iPad dropped like a bombshell, with free apps that maintained the Apple aesthetic of simplicity on top of hidden depths. 

And it only got better: Microsoft eliminated the need for an Office 365 subscription to create documents, then announced an Office for Android preview that extended Office to the world’s most popular mobile platform. Next up: a true touch-based Office suite for Windows, which should debut in 2015. 

When Microsoft announced Halo: The Master Chief Collection would appear on its Xbox One game console, fans cheered. Who wouldn’t want to play the first four games of the franchise on a single disc, especially with HD remakes of the first included?

Well, quite a few people, apparently. And when developer 343 Industries launched the game, fans flocked to the multiplayer. Except they couldn’t find games, couldn’t connect, and couldn’t play. And it was like that for over a month. On Dec. 15, 343 said it shipped a patch that solved the multiplayer problems, once and for all. Did they? You’ll have to wait and see.

Apple’s in the business of telling you what you want. Google throws beta after beta into the market, supporting what succeeds. And Microsoft? It’s actually asking.

In 2014, Microsoft made it clear that its customers are an integral part of the design process. Users can suggest and vote on features to be added to Windows 10;  the Xbox and Xbox One; Windows Phone; and heck, even OneNote. Microsoft won’t be able to please all the people all of the time, of course. But making the customer part of the process is a very, very good thing.

Tech support options abound: Apple has the Genius Bar. Or you can take your PC into Best Buy and let its Geek Squad technicians take a look under the hood for a couple hundred bucks. But in 2014, Microsoft made it clear that they’ll take any Windows PC—bought anywhere—and Microsoft techs will troubleshoot it for free in a Microsoft Store. 

In one fell swoop, Microsoft can lure customers into its store, casually tout the advantages of Windows, and reassure customers who’ve lived within Windows XP and Windows 7 for the past decade. It’s smart, welcoming and friendly.

With a tech press starving for scoops, even the most mundane announcement tends to be picked up by someone, somewhere. But Microsoft was a company founded on spectacle (see: its Windows 95 launch), and its decision to abandon milestone updates for frequent point releases seems a bit misguided. 

The irony, of course, is that we’ve already had one press conference for a technical preview of Windows 10, and we can look forward to another in January. It’s just that, if Microsoft hews to its current game plan, that’ll be all it until Windows 11. 

In June, blogger turned venture capitalist Michael Arrington reported that he was asked “to spread the word on the new Internet Explorer browsing experience,” and would be paid for his efforts. While Arrington noted that the payment would be coming from an agency, and not from Microsoft, it was still the sort of sleazy practice that Microsoft had been known for years earlier. 

Anyway, c’mon—Internet Explorer? It’s already the most popular browser on the planet. They should’ve asked him to push Windows.

Microsoft in late June filed a civil suit against the U.S. domain hosting company Vitalwerks, which operates as No-IP.com, for its role in hosting malware that infected more than 7 million computers.

In the course of combating the spread of the malware, Microsoft took control of more than 20 No-IP domains, knocking out service for the provider’s customers, some of whom were not even affected by the malware. Microsoft later settled with the affected domains —just the affected domains, we presume. At least we hope it got that right.

Much of what Microsoft accomplished—and didn’t—during 2014 is the responsibility of Satya Nadella, who snagged the brass ring after former CEO Steve Ballmer departed.

Nadella seems to embody the new Microsoft: thoughtful, responsive, loyal but not blindly so. His “mobile first, cloud first” mantra evolved Ballmer’s devices-and-services strategy. He’s made tough calls, slashing the majority of Nokia’s staff after the acquisition closed. His one public faux pas, a careless, sexist remark, was quickly walked back.

In February of 2015, Nadella will have been on the job for a full year. Time will tell whether Nadella and Microsoft succeed, but the direction seems positive. Do you agree? Tell us below.