After Satya Nadella’s second year as CEO, Microsoft continues to realign itself around cloud computing–no mean feat considering that it built its profitable franchise on Windows and Office software that runs on customers’ internal servers and PCs. Now Microsoft must convince them to use more Office 365, which runs in Microsoft’s own data centers, without overly cannibalizing sales of old-fashioned, on-premise Office, Exchange, and other applications. And it means convincing startups and consumers who are more into Linux or Apple to view Microsoft Azure, the company’s public cloud infrastructure, as a welcoming place for their work as well. So far, Nadella has gotten good reviews: Azure is seen as the only public cloud that can give Amazon Web Services a run for its money, although it remains a distant second. And by all accounts, Office 365 has gained traction. Microsoft also hopes its year-old Windows 10 operating system will please existing Windows shops and stem defections to Apple or ChromeBook devices. And it continues to deal with fallout from the decision to buy Nokia’s phone business two years ago, which resulted in a $7.5 billion write-down last year.
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