As 2016 drew to a close, we looked back at a remarkable year for Microsoft, reflecting upon its highs and lows over the last twelve months. The year was far from perfect for the Redmond giant, but many of its accomplishments still struck the right note with its customers, and with tech media.

Microsoft still has a great deal of work to do, of course. The tasks of improving its products, and earning the confidence and trust of customers old and new - whether consumers, businesses, schools or developers - are never complete. There will no doubt be many more surprises to come over the coming year, but we already know some of what to expect from Microsoft as it continues on its mission "to empower every person and every organization on the planet to achieve more".

That mission encompasses every branch of its activities, from productivity and development, to gaming and entertainment. From what we know of Microsoft's plans for the next twelve months, 2017 will be a year of work, play, and creativity unleashed across the entire company.

For many of Microsoft's customers, their primary point of interaction with its software and services comes through their use of its operating systems. Windows 10 is now installed on over 400 million devices worldwide, and while its growth has slowed - and the company no longer expects it to reach a billion devices by the end of 2018 - the OS is still one of Microsoft's most important products.

In October, Microsoft announced the Creators Update, its next major 'service pack'-style feature upgrade for Windows 10. The update will bring a diverse range of new additions and improvements to the OS, including:

Microsoft hasn't yet revealed a firm release date for the update, but it could roll out in April, despite earlier internal references to Windows 10 'Version 1703' hinting at a March launch.

The Creators Update was announced alongside Microsoft's newest device, the Surface Studio all-in-one desktop PC - a machine developed specifically with the creative process in mind. The Studio quickly sold out (although Microsoft noted that it would be available in "limited quantities" through to the end of 2016), but the company will be making new stock available early this year.

One way in which Microsoft hopes to inspire fresh creativity among its users is with the new Paint 3D app that will ship with the Creators Update. Under its '3D for everyone' mantra, Microsoft aims to make it far easier for all users to create 3D animations and objects. This could obviously be a lot of fun for people wanting to share enjoyable content with family and friends - but the company hopes that tools like these will also spark a new burst of creativity in business scenarios.

One such tool is the new Windows Capture 3D app, enabling users to scan a real-world object in real time using the camera on their phone, which is then turned into a 3D model that can be manipulated, edited, and then shared with others, or exported into other applications. Imagine, for example, a retailer being able to scan their products using the app, so that they can quickly and easily provide a 3D view of each product to their customers via their website or app.

Coupled with Microsoft's ambitions in the mixed reality space, its 3D tools could be very exciting indeed. Imagine the same retailer being able to share 3D models of its products with its customers, which they can then view up close on a virtual reality headset, or even be able to visualize in their homes or offices through an augmented reality device like HoloLens.

In 2016, Microsoft launched its $3,000 HoloLens Development Edition headset in North America, and later brought it to six international markets. It will go on sale in China early this year too. Microsoft's Alex Kipman said that the company aims "to bring mixed reality to every person and organization on the planet" - but in order for that to happen, the cost of such devices will need to fall considerably.

Even virtual reality remains prohibitively expensive for many users, but in 2017, Microsoft hopes that its efforts to drive down the cost of VR will pay off. The free Windows 10 Creators Update will include the Windows Holographic shell - the core operating environment for Microsoft's mixed reality experiences - but more significantly, the company has also been working with its hardware partners to develop low-cost VR headsets that can connect to users' PCs. These headsets will be priced as low as $299 - far less than products like the Oculus Rift and HTC Vive - and won't require expensive, top-of-the-line PCs to power them.

While much discussion around VR has focused on entertainment, and buzz is continuing to build around the idea of VR and augmented reality for the workplace, we also expect to hear more from Microsoft this year about its plans to develop Windows Holographic mixed reality experiences for education too.

Virtual reality will also form an important part of Microsoft's gaming proposition in 2017. Last June, at the E3 gaming expo, it announced Xbox 'Project Scorpio', calling it the "most powerful console ever", with support for HDR, native 4K gaming, and VR experiences. Part of the Xbox One family, Scorpio will - unsurprisingly - cost more than the latest Xbox One S when it arrives at the end of the year. Expect to find out more about the new console at E3 this summer.

Microsoft is also working on improvements for PC gamers on Windows 10. It announced a handful of additions for gamers that will arrive with the Creators Update, but more recently, it also emerged that the firm is working on a new 'Game Mode' for Windows 10, which will boost performance by optimizing the entire OS and system resources to prioritize the gameplay experience.

Last month, details were revealed of Project Evo, a collaboration with Intel to better integrate mixed reality and gaming experiences with Microsoft's digital assistant, Cortana, and the company's vast suite of security tools and features, including Windows Hello biometric authentication.

That project will bring far-field speech communications support for Cortana, allowing users to ask the assistant a question or to play a song from across the room - much like the Amazon Echo and Google Home speakers. Microsoft will be bringing some of this functionality to Windows 10 PCs as part of its 'HomeHub' project later this year.

Along with the recently-announced Cortana Skills Kit and Devices SDK, this will enable Microsoft's partners to build new hardware running its digital assistant. Harman Kardon teased one such Cortana-powered device a few weeks ago, and Microsoft told Neowin to expect more hardware developed from Project Evo in time for the 2017 holiday season.

The Skills Kit will allow third-parties to connect to Cortana in all sorts of new ways, greatly expanding the assistant's abilities. Microsoft is also bringing Cortana to its Windows 10 Internet of Things (IoT) platform this year, opening up the possibility of the assistant being built into a wider range of devices, such as high-end refrigerators, and smart home hubs.

'Conversation as a platform' is an important area of development for Microsoft, not just with Cortana, but also as it continues to build the Bot Framework that it announced last March. Like many other companies, including Google and Facebook, Microsoft sees bots as an exciting area of technology ripe for exploration, and it's convinced that they'll become exponentially more important to our everyday lives as the underlying technology continues to mature.

Whether ordering a pizza, asking a question, booking a flight, or getting basic customer service, Microsoft envisages a future filled with 'digital agents' that can help users to get stuff done, and as its natural language processing technology improves, the tasks that such bots can assist with will no doubt become more complex. The company is investing considerable sums into its research and development of conversational computing as part of those plans.

Microsoft has already made it clear that we'll see a lot more bots emerging in 2017. The firm's massive investment into artificial intelligence research will also help development of those digital agents, although it will surely be a while before users can begin to consistently rely on such tools.

The Azure cloud platform will play an important part in building a future filled with bots, which will no doubt fuel further growth of the company's cloud business. Azure revenue rose by 116% year-over-year during the third quarter of 2016, while Azure compute usage more doubled year-over-year, and Microsoft will obviously be keen to maintain that momentum in 2017.

Over the coming year, the company will also be expanding its Office products and cloud services, bringing Office 365 to 97 new markets across the globe. In the first quarter of the year, it will launch the full version of Teams, its new 'chat-based workspace' for Office 365, which is currently available in preview form.

Last month, Microsoft completed its $26.2 billion acquisition of professional networking platform LinkedIn. During the weeks and months ahead, Microsoft will begin the process of integrating LinkedIn with its existing portfolio of products, including Office, Dynamics, Active Directory and Windows 10.

For many people, though, the most exciting announcements of 2017 will be those of Microsoft's new devices. Last year, it ended production and sales of its lower-end Surface 3, and its current Surface Pro 4 tablet and Surface Book detachable laptop are now over a year old.

It's no surprise, then, that speculation has been intensifying over the company's plans for its next-generation devices. In the last few days, a report suggested that the Surface Pro 5 could arrive by March, with an ultra-high-definition 4K display. That would be a curious change given the obvious impact on battery life from the need to power all those extra pixels, but it is possible that the Pro 5 will arrive before the second-generation Book.

It's only been two months since Microsoft updated its high-end Surface Book models with a new Performance Base option. Just three weeks ago, it announced plans to launch the Performance Base in eight international markets in the first quarter of 2017. It seems very unlikely that the company would release the Surface Book 2 so soon after those announcements - so we may well have to wait until later in the year for that device to arrive.

Concept image: Phone Designer

For some, the only device they want to see is the much-rumored 'Surface Phone'. Credible reports suggest that it may not arrive until the end of 2017, or perhaps as late as 2018 - but it may well be worth the wait.

Last month, Microsoft made a hugely important announcement in partnership with Qualcomm, promising to bring the full Windows 10 OS to devices with the latest Snapdragon chips, including support for 32-bit x86 applications through emulation. The announcement referred to "cellular PCs", hinting at a new wave of affordable and power-efficient notebooks and tablets with ARM-based processors, as well as that support for desktop-class applications.

But Microsoft fanned the flames of speculation surrounding a possible Surface Phone when it showed off the full desktop edition of Adobe Photoshop running on a device with a Snapdragon 820 - a chip that's already available on two high-end Windows 10 Mobile phones. The prospect of a handset with a mobile interface on the go, and a desktop UI with x86 apps when docked and connected to a large display, is an exciting one - but there's no guarantee that the Surface Phone will actually make an appearance this year.

But even if that device doesn't arrive in 2017, we will see other devices with Snapdragon chips, the full version of Windows 10, and desktop app emulation in the second half of the year.

Before that, Microsoft will deliver a range of improvements to its existing range of Windows 10 Mobile devices as part of the Creators Update.

Among the changes on the way are new features for the PC-like Continuum mode, which allows people to use a mouse and keyboard with their handset when it's connected to a second screen. With the Creators Update, Continuum will be improved to include resizable and snappable windows, along with the ability to pin apps to the taskbar. There will be new customization options too, and more features aimed at businesses.

Some user interface and design changes are also expected across all Windows 10 devices in the second half of the year as part of Project NEON, which is linked to the company's mixed reality efforts that we discussed earlier in this article.

Microsoft also has big plans in store for its Windows Insider Program this year. Program chief Dona Sarkar said this week that the company will share new insights with Insiders "into what the team is doing, how engineering decisions are made, what issues we're prioritizing each week... and much more 'behind the scenes' things."

The company is also actively exploring new methods of helping the millions of Insiders around the world to communicate and collaborate with each other more easily, and the recent launch of its new Insider community blog is the first step in those plans.

Those efforts are linked to its #Insiders4Good initiative, to "use tech to make a lasting impact in the world". #Insiders4Good will be expanded further in 2017, as Microsoft aims to make the Insider Program more than just a means to get people to evaluate its Windows 10 preview builds before their general release.

Of course, these are just some of the things that we know Microsoft is working on for the coming year, and there are undoubtedly plenty of other new products and improvements on the way.

It wasn't all that long ago that Microsoft seemed to focus on little more than Windows and Office - but now its development is spread across a huge array of hardware, software, tools and services for a vast range of customers with greatly differing needs.

The challenge for Microsoft is to bring all of these products, old and new, together in the most seamless and useful ways. Whether that's integrating LinkedIn with its Office 365 platform, equipping businesses with mixed reality tools to build new experiences and new business models, helping consumers to enjoy its apps and games across multiple platforms, or enabling developers to create more powerful and secure software, that challenge will continue throughout 2017 and beyond.

Last year, Microsoft managed to get people talking about it with genuine excitement, and some even began to hold it in higher esteem than Apple, as an example of a company that has embraced the value of innovation and listening to its users. If Microsoft can build on that momentum this year, and unleash its creativity to improve its products, and build compelling new experiences for work and play, 2017 could be very exciting indeed.

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