Microsoft generated plenty of negative headlines in 2008. We watched as it struck out in its attempts to acquire Yahoo. And Microsoft-haters grew smug when the confusing Seinfeld-Gates commercials were quickly pulled and replaced with the Im a PC campaign. Microsofts attempts to out-market Apple and reverse the negative press of Windows Vista simply didnt work out.

Such debacles received the lions share of press. But in reality the software giant had several successes. Most every other iteration of Windows had a strong year, either with good execution (Windows Server 2008, Windows XP) or good buzz (Windows 7, Windows Azure). And from the ashes of the Yahoo failure emerged some smart hires for Microsoft that could boost the company's search business and set the tone for a possible future deal with Yahoo.

Here are four areas where Microsoft executed well in 2008, areas that will help set up the company for success in '09.

Windows 7 Buzz

Microsoft did a good job of building anticipation for Windows 7 in 2008, and did so without the overpromising and overhyping that weighed down Vista's debut (thanks to "The Wow Starts Now" campaign) two years ago. It's clear the software giant has learned its lesson.

Microsoft has been forthright about Windows 7, creating a blog that documents operating systems progress. Microsoft also offered up demos and a pre-beta at PDC (professional developers conference)

Developers who liked the pre-beta praised features such as the revamped task bar, Aero Peek GUI and touch-screen capability, while those more skeptical said it was just Vista with a prettier interface. That debate will carry on in 2009.

But despite the mounting pressure on Windows 7, the campaign for it has been subtle so far—at least by Microsoft standards. With all the news about Vista's bad reputation and users downgrading to XP, Windows 7 has been pushed into the shadows a bit, which is probably fine with Microsoft as it quietly positions Windows 7 as a lean, customer-focused OS designed to handle any and all compatibility issues.

The OS is also being positioned—by pundits and the press more than Microsoft—as a savior for the ailing Vista, and many industry experts believe Windows 7 will ship in mid-2009 rather than the anticipated release of early 2010.

It's a lot to ask of an OS to be a panacea, but if Windows 7 is rock solid and ships in a timely fashion, it could smooth over a lot of negative perceptions about Vista&and Microsoft itself.

Hiring Yahoo Talent

If you can't buy 'em, hire 'em.

Microsoft's failed attempts to buy all or part of Yahoo dragged on for most of 2008. Much of it was an embarrassment for both companies, but Microsoft's recent hiring of Yahoo's top search talent is turning out to be a smart move.

It's likely that the November departure of Yahoo CEO Jerry Yang opened the doors for Microsoft to start interviewing Yahoo-ites. By early December, Microsoft had hired Yahoo search chief Qu Li to run its online services group and Yahoo search VP Sean Suchter to be the GM of Microsoft's Silicon Valley Search Technology Center.

No two men, no matter how smart, will be able to pull Microsoft Live Search out of its distant third-place search ranking any time soon. But losing top talent to the company trying to take you over will chip away at Yahoo's already flimsy morale.

Also, having top search technologists like Li and Suchter on board will make for a smoother transition if Microsoft does indeed buy Yahoo's search business, an idea that Microsoft CEO Steve Ballmer mentions seemingly every other week.

Windows Azure and the Move to the Cloud

Microsoft's necessary transition to a cloud computing platform is Chief Software Architect Ray Ozzie's labor of love. At PDC in October, Ozzie unveiled Windows Azure, an operating system that lets companies run Windows applications in the cloud and store files and data using Microsoft's data centers.

According to Ozzie, this "Windows for the Web" will eventually facilitate all of Microsoft's enterprise software into the cloud. With Windows Azure, as well as Office Live and Live Mesh, Microsoft let the world know that it is building a Windows-branded Web-based environment and is not, in fact, a desktop dinosaur.

So Microsoft has stepped in the ring with cloud computing players Google (Google App Engine), Amazon (EC2) and IBM (Blue Cloud utility computing platform), but it hasn't thrown any punches yet. Those companies have cloud computing platforms in operation with lots of customers. So far, Microsoft has only announcements and demos.

Because Microsoft is so late to the cloud computing market, it will need to move quick in 2009 to turn Azure's grand plan into action for enterprises.

Windows Server 2008 Gets Raves

While Windows Vista languished in 2008, its server-side brethren Windows Server 2008 quietly flourished.

Microsoft's server operating system, released in February, received accolades for performance, reliability and new features. (It shares the same code base as Vista SP1, which did much to improve Vista.)

The reviews for Windows Server 2008 were positive across the board. In addition to having praised features such as unified scripting tool PowerShell, a Windows Firewall that enables by default and a new security technology called NAP (Network Access Protection), Microsoft followed through on its promise with Windows Server 2008 to go greener with the release in June of its virtualization hypervisor, Hyper-V.

Hyper-V sets the stage for a server virtualization slugfest with VMware and Citrix in the coming year as more IT managers try to save money in a weak economy by consolidating data on fewer physical servers through virtualization.

At PDC in October, there was a pre-beta developer release of Windows Server 2008 release 2, which will enhance the use of virtual machines, along with other features. And for the first time since Windows 2000, Microsoft is co-developing its Windows Server and Windows client products together. So Windows Server 2008 R2 will be in lock step with Windows 7.

Yep, Microsoft is getting organized, and it needs to because 2009 will be a pivotal year on all fronts for the software giant.