While Microsoft is plotting its company-wide move to a devices and services strategy, two of its core products—Windows and Office—are getting major updates this year. Not surprisingly, each product update ties in very neatly with a part of that devices and services vision. Here's what you need to know.

An Update On Windows 8.1 Update 1

I've written about Windows 8.1 Update 1 before, but now Microsoft has finalized this release and it is becoming ever clearer why this update is so important to the entire Windows 8.1 ecosystem. Though clad as a minor update that will be distributed via well-understood means, not through the Windows Store, Update 1 is nothing short of a Hail Mary Pass for the OS that seemingly few want.

I suspect most readers are at least passingly aware of the history here. The short version is that by grafting a new mobile OS called Modern (formerly "Metro") onto the familiar Windows desktop environment in Windows 8, Microsoft alienated virtually everyone with a stake in Windows. The alienated users include Microsoft's partners, its customers, the IT pros who deploy Windows, and even many within Microsoft itself.

Microsoft's efforts to fix Windows 8 have occurred at a pace that is considered torrid inside the halls of Building 33 in Redmond, where not so long ago, three years was considered the right timeframe needed to create each Windows version. Windows 8.1 followed just a year after the initial Windows 8 release and made user experience concessions for both tablet (multi-touch) and desktop (mouse/keyboard) users. This release was an interesting revelation about how much the team could accomplish in a year. (Spoiler alert: About one-third as much as it can do in three years.)

On that note, Windows 8.1 Update 1 represents what's possible in about one-third of that time frame, or about four months. But this time, the changes are laser-focused to address the top remaining issues that the constituency has with this Windows version.

Hardware maker benefits: For PC and device makers, Windows 8.1 Update 1 includes technical changes that will allow for much lower-end devices—with just 1 GB of RAM and 16 GB of onboard storage, as well as new licensing terms and a new Windows version called Windows 8.1 with Bing—to acquire Windows for much less than usual for devices that cost less than $250. This combination of seemingly unrelated changes will let these PC makers address the increasingly important low-end of the market. From Microsoft's perspective, these changes will hopefully lead to a new volume of Windows devices that can compete more effectively with entry-level mini-tablets and Chromebooks.

Business customers: For IT pros and enterprises, Windows 8.1 Update 1 is packaged as a set of Microsoft Update Standalone Package files, or MSUs, a familiar and well-understood format that is compatible with commonly used deployment tools. Windows 8.1 was delivered as an update any user could obtain, but laboriously through a massive Windows Store-based updating mechanism. Update 1 includes a useful Internet Explorer 8 compatibility mode for the company's web browser that should remove a key blocker for educational and enterprise customers who simply couldn't consider Windows 8 otherwise.

End users: From the perspective of end users, Windows 8.1 Update 1 is all about making the system more amenable to the 1 billion+ people still using traditional, non-touch PCs. While Microsoft had hoped to push Windows forcibly into the multi-touch age with Windows 8, pushback from both PC makers and end users has dampened those plans. Update 1 is the first release to specifically address complaints related to this change.

Intriguingly, the changes Update 1 makes only show up on systems in which the user is interacting with a mouse and keyboard. If you're using a touch-based tablet or 2-in-1, Windows 8 will continue to work as before.

Modern mobile apps will now display a window title bar, complete with a menu box and close box, just like a normal Windows desktop application. If configured correctly, you can even access the taskbar from within Modern apps too. On traditional PCs, Windows 8 will now boot directly into the desktop, bypassing the Start screen. And you can pin individual Modern apps to the taskbar, as you can with desktop applications, and optionally configure the system to show buttons for all running Modern apps. In either case, Modern apps—including some of the built-in apps—can now utilize taskbar preview features such as thumbnails, progress bars, multiple window management and media player controls. The goal is to make Modern apps behave a bit more like desktop applications, but only on traditional PCs.

Sadly, it's not a complete makeover. You still can't replace the Start screen with a familiar Windows 7-style Start menu, nor can you run Modern apps in floating windows on the desktop. Those capabilities can be provided by third party apps, and my sources tell me both capabilities are coming in Windows 9, which is currently expected in April 2015. But there is some internal debate over what form a new Start menu might take, and the new menu may not be like the one in Windows 7. One tipster tells me Microsoft is now experimenting with a version that utilizes app tiles in the menu.

It's also unclear if Update 1 is a one-off or whether we'll see an Update 2 or other changes in the coming year. Even the Update 1 naming convention—which comes from Windows Phone, where they were previously called "General Distribution Updates," or GDRs—is unlikely to see the light of day. Microsoft has called it such things as the Windows 8.1 Update—which suggests that this is the only one—and the Spring Update, suggesting that there could be more.

The uncertainties are tied to the reorganization and CEO search that occupied Microsoft for the preceding six months and I'm expecting more clarity by the time the Build conference takes place in early April. At that time, Microsoft should come clean on Windows 9 and its plans to unify the Windows, Windows Phone, and Xbox One developer experiences. Perhaps we'll learn more about interim Windows updates, too.

From a timing perspective, Windows 8.1 Update 1 has already leaked, and Microsoft plans to deliver it to customers via MSDN on April 2 and then via Windows Update on April 8.

Future of Office 365

While Microsoft's Office 365 family of online services date back several years—its Business Productivity Online Suite (BPOS) predecessor first arrived as long ago as 2009—the service as we now know it launched just a year ago. That's when the second generation Office 365 service debuted with a Home Premium offering aimed at individuals and households and provided a more complete range of business offerings. Both offered the ability to stream Click-to-Run-based Office 2013 installs to PCs for the first time.

While I've written previously about Office 365's first year and how the rapid release cycle mantra has resulted in a wellspring of product updates in the intervening time, I was curious about Microsoft's plans for the future. How will Office 365 improve in year two?

At the time of the one year anniversary, Microsoft didn't have anything to say about these plans. But at the SharePoint Conference 2014 in early March, the firm released a veritable tsunami of information. And while it was couched, Microsoft used what seemed like a marketing slogan gone bad: "the future of work." What the firm discussed wasn't pie-in-the-sky future projection like its fanciful Productivity Future Vision video. Instead, Microsoft discussed advances it intends to deliver over the next year.

Related: Microsoft Showcases the Future of Work at SPC14

Before getting into specifics, it's worth reiterating that Microsoft's overreaching goal for Office 365 and the underlying services—and related on-premises servers like Exchange, SharePoint and Lync—is to lead with the cloud. The firm is now adding features to its cloud services first—meaning Exchange Online rather than Exchange 2013—and then adding what features it can to the on-premises versions at a later date. No, not all features will be back-ported to the on-premises products.

This may seem like a forced migration, but as the firm communicated to me recently, there are real-world advantages to this approach. For example, in the past it was difficult for Microsoft to create cross-product features because Microsoft could never ensure that its customers had both products or if they did, that the customers had the latest versions of each. Because of this, the number of features Microsoft could create that utilized both (or other) products was minimal.

With an offering like Office 365, the functional baseline is almost exponentially bigger. While there will still be features for the individual services—some of which will make their way to the related on-premises servers—the firm can now plan features for Office 365 broadly. This has some interesting effects, as you'll see.

As it turns out, this change also impacts the on-premises servers too. For example, while hybrid deployments remain a strong point for Microsoft's customers—Google and other online productivity makers only offer cloud-based solutions—the firm has come to a better understanding of which services its enterprise customers should adopt first. While email has always been the canonical first step, it turns out that email migrations are risky and difficult and result in absolutely zero benefit for end users. (If everything just works, users will notice no change at all.)

With all this in mind, here's what's coming:

OneDrive for Business Standalone Offering. Microsoft's SkyDrive Pro cloud storage service for individuals (part of SharePoint Online) was recently renamed to OneDrive for Business. As of April 1, 2014, Microsoft will offer this service as a standalone subscription so that enterprise customers can provide their users with 25 GB of storage to use as they please. This subscription costs $5 per user per month, with the option to purchase additional storage. Best of all, this storage is managed through the familiar on-premises SharePoint management console. It's a great first step into the cloud, for both users and their employers.

SharePoint Server 2013 Service Pack 1. Available now, this update for the on-premises versions of SharePoint includes bug and security fixes, of course, but also OneDrive for Business cloud storage connectivity, the ability to replace the built-in SharePoint Newsfeed with Yammer, and for developers, support for JSON Light in OData v3 requests.

New Office applications. With InfoPath heading off into the sunset, Microsoft is now plotting three new Office applications that will ship within the year. These applications are pretty exciting and more to the point, speak to the types of features that are possible when Microsoft thinks holistically across the separate Office 365 solutions. First up is Office Graph, which will map the relationships between people and information in your organization by recording their likes, posts, replies, shares, and uploads in email, social conversations, documents, sites, instant messages, meetings, and more. An app, code-named "Oslo," will tap into the Office Graph and then present information in a visual way that is more natural so users can navigate, discover, and search for people and information across the organization. A new Groups experience unifies people, profiles, conversations, email, calendars, and files across the Office 365 services; each group gets an inbox, social feed, calendar, and document library that group members can use to collaborate.

What's interesting about these new applications is that they're all based, at least in part, on functionality that was previously part of Yammer. By applying these capabilities to other areas of Office 365, however, they unlock a rich new set of possibilities. I'm very curious to get some hands-on time with each.