Microsoft's two traditional cash cows, Windows and Office, are shrinking like crazy

Microsoft may have beat Wall Street expectations on profit and revenue in its third quarter of fiscal year 2015, but that's no thanks to the good old PC.

The good news for Microsoft is that its enterprise cloud has a projected run rate of $6.3 billion this year. That's up from $5.5 billion just three months ago.

But the bad news is that Microsoft's old traditional business - licensing software like Windows and Office for use on new PCs - is shrinking like crazy, amid a tougher market for PCs in general.

Overall, Microsoft's Devices and Consumer Licensing business, the catch-all unit responsible for Microsoft Windows on new PCs, consumer versions of Microsoft Office, and Windows Phone on phones from other manufacturers, was down 24% from last year, a dip of about $1.1 billion.

Microsoft Windows licensing revenue for businesses fell 19%, and fell 26% for consumers, for an overall 22% dip in revenue. Microsoft blames this on the generally weak PC market, hard comparables with last year (when a deadline for the end of Windows XP support drove a lot of PC upgrades), and a general trend towards cheaper devices.

Meanwhile, Microsoft Office consumer revenue was down 41%, and Microsoft Office commercial revenue was down 16%. (Note that business versions of Office roll up into a different financial segment, Commercial Licensing.)

Microsoft cites this as a side-effect of huge growth in Microsoft Office 365, which has a subscription-based model. It also blamed slow PC sales - the fewer PCs sold, the fewer people and companies buy Office for them.

Also, Microsoft Office is pre-installed on a lot of new PCs in Japan, and the weak PC market there cuts into that business, Microsoft says.

All of which adds up to a strange conclusion: The businesses and technologies that made Microsoft so successful in the first place are slowly fading in favor of the cloud.

That's going to cause some short-term pain, but at least Microsoft has prepared for the shift, and its cloud growth is a nice bright spot. Plus, it's always possible that Windows 10, expected out at the end of July, will drive growth in the PC market again, as Windows 8 failed to do.

Investors don't seem worried - the stock rose more than 3% after hours.