Microsoft was criticized heavily in 2011 for their absence from the tablet market, its late arrival to the cloud, and low sales for Windows phones. To make things worse, they sat back and watched Apple have a breakthrough year in 2011 through the release of the iPad 2, the iPhone 4S, and Apple TV. However, Microsoft increased its bottom line nearly 12% from 2010 and posted a record-breaking $69.9 billion in revenue.

Despite very modest increases in sales, Windows is still a massive revenue generator for Microsoft. And the strong sales of Xbox and Xbox Kinect, along with the tight grip Microsoft has on business enterprise  through Office, SharePoint, Exchange, Lync, and Windows Server licenses - will only increase Microsoft's revenue in 2012.

Microsoft is heading in a new bold direction with upcoming launch of Windows 8. Analyst claim that Windows 8 will be a game changer for end users, and create a major shift for users and IT alike in terms of capability, usage, management, and overall technology strategy. Windows 8 will also introduce huge changes to how developers conceive and deliver their applications.

The new Windows platform - currently available in a pre-beta developer's version, is expected to be formally released in October of 2012. Windows 8 will reflect a changing world. It was created to respond to the new demands of touch and mobility. Windows 8 uses a tile-centric interface called Metro, (taken from the Windows Phone) that requires fewer system resources and runs on a wider variety of hardware platforms. Windows 8 is designed to operate on traditional laptops and PCs, as well as tablets. It's not mobile versus desktop; it's mobile and desktop together.

Apple's development of the iCloud, forced Microsoft to accelerate its progress with cloud services like Office 365, Dynamic CRM Online, and Windows Azure. Microsoft is also making Office apps like OneNote and Lync available on iPads and iPhones. The development of these cloud services is expected to keep Microsoft balanced in the challenging years ahead.

Microsoft's biggest task in 2012 will be the rollout of Windows 8, and having it run fast on tablets. It is critical that Microsoft begin making inroads against the iPad. The success of Windows 8 is very important because it affects all parts of the Microsoft machine. Despite the huge success of Office 2010 and the moderate success of cloud counterpart Office 365, Office is still tied to Windows - facing the challenge of remaining relevant in an iPad driven world. In some ways, unless an iPad version appears, the next version of Office is largely dependent on the market success of Windows 8.

Windows 8 tablets will undoubtedly pay a price for trailing behind Apple and Google in the tablet race. And the expected October release date may not even give Windows 8 a chance to succeed in 2012, as Apple will have released the iPad 3 and Android-based tablets will have evolved as well. Even if Windows 8 doesn't catch on in 2012, it is clear that Windows 8 is the first of many steps for Microsoft to compete with Apple. The Windows 8 operating system will be consistent for all Microsoft phones, tablets, and PCs. This standardization will enable integration between devices, and things will look and feel the same across devices like Apple's iPad, iTouch, iPhones, and other Mac devices.

Microsoft knows that Windows 8 won't position them to compete with Apple over night, but the release of Windows 8 is certainly the first of many steps in a new direction. Whether Windows 8 slices into Apple's market share in 2012 or not, its release will show the world that Microsoft is prepared for the future of mobile computing.