Shares of Microsoft (NASDAQ:MSFT) rose today, after the company reported earnings last night. In particular, there were several signs that the company is making progress in its transition toward becoming primarily a devices-and-services company, as CEO Steve Ballmer had envisioned. Xbox One sales are at 3.9 million units sold, neck-and-neck with Sony's Playstation 4, and revenue from Microsoft's Surface tablet more than doubled sequentially, to $893 million.

However, the Surface has been a major trouble spot for Microsoft in the past, and still has a negative gross margin, even today. In this segment of Tech Teardown, Erin Kennedy discusses Microsoft and its future with Evan Niu, CFA, our tech and telecom bureau chief. Evan takes a closer look at sales of the Surface, as well as the Windows Phone, and discusses how important each is to Microsoft's core business going forward. He also looks ahead to the company's future new CEO, and consumer anticipation for Windows 9.