Still think of Microsoft as the Windows company? Think again. In Microsoft’s latest quarter, it was the cloud, not Windows, that drove revenue to $25 billion in non-GAAP revenue in the quarter, over the expected $24 billion and up 10% year-over-year from $23 billion.

Not bad. Not bad at all.

“Innovation across our cloud platforms drove strong results this quarter,” said Satya Nadella, Microsoft’s CEO. “Customers are looking to Microsoft and our thriving partner ecosystem to accelerate their own digital transformations and to unlock new opportunity in this era of intelligent cloud and intelligent edge.”

Microsoft hides its cloud revenue in two areas: Productivity and Business Processes, and Intelligent Cloud. These divisions also include non-cloud businesses such as Microsoft’s newly acquired LinkedIn.

Productivity, which includes Office 365 and Dynamics 365 Enterprise Resource Planning Software-as-a-Service (SaaS), saw 21% year-over-year growth to over $8 billion. Office 365 alone saw 44% year-over-year growth.

Intelligent Cloud, which is where Azure lives on the balance sheet, did almost as well. This division increased 11% to reach $7.4 billion. For those of you at home, that’s 30% of Microsoft’s total revenue. Azure revenue, in particular, grew like a weed, growing 97% year-over-year.

Put it all together and Microsoft’s commercial cloud revenue run rate surpassed $18.9 billion. There’s now little doubt that Microsoft will hits its goal of $20 billion of cloud revenue by 2018.

Embracing hybrid cloud

One reason why the cloud is so important to Microsoft these days is Microsoft’s embrace of the hybrid cloud. Enterprises can use Microsoft’s public cloud while also running some applications in their own data centers — Microsoft says 80% of potential cloud companies want a hybrid cloud approach. And, of course, Microsoft already has its foot in the door at most businesses.

Windows? These days it’s under Microsoft’s More Personal Computing segment. This division fell 2% to $8.8 billion. Windows OEM revenue did increase slightly by 1%. All in all, though, Windows accounts for — brace yourself — less than 10% of Microsoft’s overall revenue.

Surprised? You shouldn’t be. Microsoft, under Nadella, has seen this coming for years and has planned for it.

You see, the PC has stopped being the center of the personal computing world. Smartphones, where Microsoft has stumbled time after time, are where the action is today.

Now, of course, PCs aren’t going anywhere. People who do real computing work will always need a real keyboard for getting work done. But, thanks to the rise of smartphones, we know that many people don’t need PCs. Hence, the long, long decline of PC sales.

In the meantime, Microsoft started building up its SaaS and Infrastructure-as-a-Service cloud services. As my writing friend Preston Gralla wrote last year, “Microsoft’s future is all about the cloud, so much so that one day Windows may become an afterthought.“

This quarter removes the “may.” Microsoft foresaw the growth of the cloud and it’s now making the most of it.

Of course, Microsoft isn’t the only would-be cloud power. While smaller cloud players like GoDaddy are still leaving the field, others like industry giant Amazon Web Services (AWS) and rivals old — IBM — and new — Google — are still posed to give Microsoft a battle for the cloud.

RELATED LINKS

DXC and Microsoft: The power of partnership

How does a business benefit from hybrid cloud?

Docker comes to Microsoft Azure