For the naysayers writing the obituaries of the PC industry and Microsoft over the past several weeks, the firm’s surprisingly strong quarterly results—including record revenues of $20.49 billion—must have come as a shock. But this isn’t the first time Microsoft has confounded its critics, who routinely overlook the company’s successful transition to the cloud.

I’ve often referred to Microsoft as a “software giant” in the past, because its bread-and-butter products (Office and Windows, of course, but also Windows Server) have historically been delivered as traditional, locally installed, on-premises software. Microsoft has long been—and still is—the largest maker of software in the world. The term is certainly apt.

But last year, Microsoft explicitly redefined itself as a “devices and services” company, a description that seemed fanciful, considering that none of its core products have anything to do with devices or services. Its first PCs, Surface RT and Surface Pro, have been only moderate successes. And its Online Services division has long been seen as a money-losing albatross, one that has predictably lost money every single quarter. In the most recent quarter, again, a bonanza overall by any measure, it lost $250 million.

Believing that either is unsuccessful is both short-sighted and beside the point.

Although Microsoft has yet to provide sales figures for its Surface lineup, it’s pretty clear that Surface was successful enough to overcome the bad effects of diminished Windows 8 license sales in the most recent quarter. Ignoring the delayed recognition of pre-release sales of Windows 8 upgrades, Windows division revenues were flat when compared with the same quarter a year ago. By all accounts, the division should have recorded a revenue drop-off commensurate with the 12.5 percent drop in PC sales in the quarter. Surface made up a big part of the difference, perhaps all of it.

And that Online Services loss? Critics continually suggest that Microsoft is wasting its time trying to take on Google in search and online advertising, but they also conveniently ignore the fact that the losses have been getting trimmed, and nearly linearly, since mid-2010. So although the division lost close to $800 million twice in early 2011, that $250 million loss represents its smallest loss since the same quarter five years ago, and revenues were up almost 20 percent year-over-year. A market that Microsoft allegedly can’t compete in is on the verge of making money, and though eight years of “investment” are perhaps painful to justify, that time will certainly be worth the effort when you consider where the computing market is currently heading: to the cloud.

But Surface and Online Services performance this past quarter are just slices in time. There is a bigger picture emerging, one that paints Microsoft in an obviously positive light.

And it goes like this: Microsoft’s successful transition from a maker of traditional software to one that delivers online services—and, it should be noted, traditional software that is delivered and serviced like online services—is the single most dramatic and unheralded success story in technology over the past decade. Period. Microsoft’s core products—again, Office, Windows, and Windows Server—as well as related products related to management, aren’t just heading to the cloud. They’re in the cloud. Now.

This is an amazing change on a number of levels. Business customers can now choose between traditional, on-premises installs of heavy servers such as Exchange Server, SharePoint, Lync, and System Center, as always. Or they can choose Microsoft’s cloud-hosted options. Best of all, they can mix and match, deploying hybrid solutions that traverse both realms, providing customers with both an upgrade path and a model that meets their regulatory and compliance needs. No competitor does this or can offer such a diverse range of options. Not Google. Not anybody.

For those products that simply need to be deployed locally on PC clients—like Windows and Office—Microsoft has moved aggressively to a cloud services model too, delivering the software quickly from online sources and then servicing those products more regularly and with both fixes and new features, from the cloud. Windows 8 and Office 2013 aren’t monolithic products that will sit unchanged for three years; they’re continually evolving and improving products, like any true cloud service.

Microsoft, we’ve been told again and again, will simply roll over and die as faster and smaller companies, born in the cloud era, eat its lunch, steal its customers, and offer solutions that the software giant—sorry, the devices and services company—can’t match. And while Microsoft has certainly shown both slowness and weakness, especially on the consumer front where Apple in particular moved more quickly to seize new markets, even that should be viewed in perspective: Apple needed new markets because its traditional Mac business had plateaued. Microsoft, meanwhile, had a 1.3 billion-strong customer base already, and job one was to move those people forward while embracing new industry trends. You know, like devices and services.

Not too shabby, when you think about it. Yes, there’s a lot of work to be done. But one thing I can tell you after 20 years of watching and analyzing this company in particular and the computing market in general is that the most radical and strident viewpoints are almost always dead wrong. And as Microsoft has shown again and again, you can’t count out a firm that does its best work when under fire.