The state of Microsoft, with Mary Jo Foley

Microsoft's profits rose 33% in the December quarter as CEO Satya Nadella touted a “second wave of digital transformation."

But what does the future really hold for the tech giant? What will be the next big opportunity for Microsoft? And what are the biggest threats it faces?

We discuss all of that and more this week with veteran technology journalist and Microsoft watcher Mary Jo Foley, who writes the All About Microsoft blog for ZDNet. She is the author of “Microsoft 2.0: How Microsoft Plans to Stay Relevant in the Post-Gates Era,” and is also the cohost of the “Windows Weekly” podcast with Paul Thurrott on the TWiT network.

Nadella's tenure at Microsoft has brought a new approach, doubling down on the company's traditional strength in enterprise software, pulling of successful acquisitions, and moving the Office productivity platform into a new era with products such as the Microsoft Teams collaboration software.

Discussing Microsoft opportunities and potential areas for future acquisitions, Mary Jo points to security and artificial intelligence as two key sectors for the company. She sees Microsoft Teams as another big area of opportunity. The company’s goal is to make Teams into even more of a platform -- an operating system for work, essentially.

One open question: How can Microsoft leverage its momentum with the Xbox game platform to create a stronger benefit for the rest of the company? Microsoft's Project xCloud could be one way, giving the company more of a presence on other platforms. GeekWire's John Cook, citing his son as an example, sees Microsoft's presence in gaming as a long-term benefit to the brand, as the next generation of consumers and IT decision-makers become adults.

On the subject of the biggest threats to Microsoft, Mary Jo points out that Google remains a formidable (and perhaps underestimated) rival to Microsoft in cloud productivity software.

And then there’s Windows. What’s up with Microsoft’s flagship operating system? Is it truly “back,” as Microsoft would have you believe? Mary Jo has some thoughts … and some doubts.

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