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Forget Windows; Microsoft is now all about the cloud

In the space of less than a week in late April, two events made one thing very clear about Microsoft: The company is now pursuing a cloud-first strategy, with Windows taking a back seat. And that will continue as far into the future as the eye can see.

The first event was the April 26 release of Microsoft’s earnings report for its third fiscal quarter, which ended March 31. A close look shows that cloud revenue has become the company’s driving force, outpacing money the company gets from its onetime cash cow, Windows.

Precise figures on total cloud revenue versus total Windows revenue don’t exist, because Microsoft doesn’t break things out that way. But the earnings report nonetheless shows the direction in which the company is moving. Microsoft divides itself into three major segments: More Personal Computing, which encompasses Windows, devices, gaming and ads; Productivity and Business Processes, which includes Office, LinkedIn and Dynamics; and Intelligent Cloud, which is composed of servers and cloud services. More Personal Computing revenue clocked in at $9.25 billion, Productivity and Business at $9.01 billion, and Intelligent Cloud at $7.9 billion.

Windows resides in the More Personal Computing segment, the revenue leader, but don’t let that deceive you. A closer look tells the real story.

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