After a 2010 buoyed by Windows 7, Microsoft (news, site) is now relying on Office for the lion's share of its profits.

Time to Start Looking Forward, Again

It seems a little unfair that Microsoft has three massive hit products on the go (Windows 7, Office and Xbox) and yet everyone is now focusing their attention on Windows 8 and the next Office, while hacking at the company's expensive mobile and online forays. Overall, the company made US$ 19.95 billion in its last quarter, with just over US$ 5 billion from Windows products and US$ 6 billion from Office.

The news that consumers alone spent around US$ 1 billion on Office 2010 (which is selling 50% faster than Office 2007) and that Microsoft reckons 90% of enterprises are now upgrading to Windows 7 suggests that upgrade season is now in full force.

So, the company can expect another few quarters of strong growth from upgrades before the tail off begins and sales rely on new PC shipments, whose growth remains only slightly positive.

To the Cloud

Even so, attention is now being switched to Microsoft's next products. Windows 8, as we've already seen, will run on a range of devices beyond the humble PC. This is in response to Microsoft's concern that whereas customers used to have a Windows desktop and a Windows laptop, they are now more likely to have a Windows laptop and a tablet or phone powered by a rival OS as their second device.

We are also wondering how Microsoft's efforts to counter Google Docs -- and others -- by moving Office into the cloud with Office 365 will go. How will it affect the traditional upgrade path that Microsoft has milked for so long?

The Long Game

So, there are many questions for Microsoft to address in regards to its future plans, and its actions will be a good indication as to how the transition to the cloud and SaaS goes for the company's other products like Azure.

A beta of Windows 8 is rumored to be out before the end of the year, but how it help will transition users apps and data from desktop to tablets and other devices remains to be seen. Finally, Windows Phone 7 really has to deliver this year if Microsoft is to remain a credible player in the market. Decisions need to be taken sooner rather than later.

CEO, Steve Ballmer, talked about Microsoft's future in his CES keynote, looking at future PC processors like Sandy Bridge as a driving force for Windows, but will that model still be relevant in a few years time?