Microsoft Rallies Developers Around Copilot, Challenges Apple With “Copilot+ PCs”
What brand marketers need to know from the 2024 Microsoft Build Event
Ever since ChatGPT took off over 18 months ago and ushered in this current wave of generative AI arms race, Microsoft has smartly aligned itself with OpenAI, in which the company is a major investor, and worked in tandem with the AI startup to pressure Google, and to a lesser extent, other big tech companies, to keep up. By aggressively integrating ChatGPT into Bing search and the Edge web browser from the get-go, Microsoft has been betting on AI as a new differentiator for its products and, by extension, the Windows ecosystem.
Following the developer events from Google and OpenAI last week, Microsoft laid out the next chapter of its AI playbook this week with two events: a hardware-focused Surface event on Monday that introduced a new “Copilot+ PCs” branding, and its annual Build developer event, which kicked off on Tuesday and unveiled a series of AI integrations into Windows and beyond, as well as developer tools.
Taken together, the deluge of announcements coming from Microsoft this week paints a picture of a company eager to jumpstart the AI revolution in personal computing. Compared to Google’s consumer-centric integration points, Microsoft is looking to establish a user base for its AI products by going after PC users, Windows developers, and enterprise users.
Will their plan work? And how will these latest moves from Microsoft impact the AI competitive landscape? Let’s take a look at the major announcements this week.
Leveraging AI to Differentiate Windows PCs
On Monday, Microsoft unveiled what it calls the world’s first “AI-first PCs.” Under a new branding of “Copilot+ PCs”, this new group of computers will have top-tier hardware specs, including new Snapdragon chips made by Qualcomm, to sufficiently power the on-device LLM processing tasks, including natively integrated AI features such as Recall, a Windows 11 feature that keeps track of everything on your PC screen and, in return, allows you to search and retrieve anything you’ve done on the device.
Besides Microsoft’s own Surface laptops, the first batch of Copilot Plus PCs will be available from all major PC manufacturers, including Dell, Lenovo, Samsung, HP, Acer, and Asus. The laptops will run over 40 AI models as part of Windows 11, and support OpenAI’s GPT-4o model. Ambitiously, Microsoft said it forecast 50 million laptops to be sold under the Copilot Plus PC branding over the next year.
Obviously, selling AI-powered performance laptops would put Microsoft and its partners in direct competition with Apple’s Mac lineup. Interestingly, some of lower-end models in the current Mac laptop lineup would not qualify for the “Copilot+ PC” branding due to their insufficient hardware specs. Of course, people buy laptops for more than just computing power. Macs, especially, benefit greatly from the ecosystem synergy with iPhones and other Apple products. To fully compete with Apple in the high-end PC market, this new class of Copilot-powered PCs will need to offer a demonstratively better user experience with its AI-driven interface. And even if they deliver on that, there’s still the question of how Apple will react to the new competition.
Going all in on PCs as a key hardware integration point is a no-brainer for Microsoft, who famously lost out on the mobile era but has since successfully reorganized itself primarily a cloud and enterprise service company. Windows still has a huge market share among PC users, but it has not mattered much as a platform for over a decade since the majority of consumer interactions became mobile-first. Riding this new wave of rapid AI advancement, however, it is clear that Microsoft sees a golden opportunity to revive Windows as an AI-first platform. As analyst Ben Thompson pointed out in his postmortem analysis of this hardware event:
Windows is no longer differentiating the rest of Microsoft, but because the rest of Microsoft is now differentiating Windows. Nadella’s focus on AI and the company’s massive investments in compute are the real drivers of the business, and, going forward, are real potential drivers of Windows.
Copilot as an AI Platform for Developers
Another interesting thing that Ben Thompson pinpointed in his follow-up analysis is that, in this stage of AI development, it has become increasingly clear that the various AI models are progressing very fast, and they will continue to scale exponentially. Therefore, the idea of building AI applications directly on any given AI model might be a fool’s errand, as they may become outdated by the newer models coming out. In other words, AI models are like processing chips, another layer of abstraction is needed to give developers a stable foundation to build applications on. For Microsoft, this layer is its Copilot stack.
Originating from the integration of AI in Microsoft products, Microsoft Copilo began as “GitHub Copilot” for developers in 2021 and expanded to its widely used 365 productivity apps like Word, Excel, and Outlook as an add-on feature in 2023. Now, leveraging the AI models available on its Azure cloud platform, Copilot has emerged as Microsoft’s AI stack for developers.
Throughout the opening keynote of the 2024 Build event on Tuesday, Microsoft made an effort to position Copilot as an AI platform that developers can easily build on. The company launched Copilot Extension for GitHub, letting developers build third-party skills into Copilot, starting with DataStax, Stripe, MongoDB, and more.
Of course, developers won’t be building apps if there’s no users for them. Microsoft’s most widely used apps are its productivity apps within the 365 ecosystem, and that’s where the company is planning to roll out the AI integrations first. During the keynote, Microsoft demoed how easy it is to create a custom Copilot Extension by training it on additional documents and data spreadsheets, and sharing it via SharePoint, just like one would with any regular file.
Moreover, Microsoft is also shipping Azure AI Studio in broad availability, with added support for OpenAI’s GPT-4o, as well as a new multimodal model in its lightweight Phi-3 family. Both moves are aimed at rallying developers by offering easier ways to develop AI applications on top of Copilot. Right now, Azure is in second place in the cloud service market, trailing Amazon’s AWS but beating Google Cloud Services in terms of market shares. By upping Azure’s AI capabilities, Microsoft is aiming to bring more AI developers to its cloud computing platform via Copilot.
Another interesting thing to note here is that, because of 3D creation being one of the use cases of multimodal AI, Microsoft also previewed a new class of Volumetric Apps, which will help developers extend Windows apps in 3D space. During the keynote, Microsoft showed off a digital exploded 3D view of an Xbox controller from the perspective of a Meta Quest 3 headset.
Altogether, these announcements underscore Microsoft’s aggressive push to integrate AI into every facet of its product ecosystem. By positioning Copilot as a central AI platform and providing developers with the tools and resources to build upon it, Microsoft is rallying developers to build more AI-first applications that will, in turn, enrich the Windows experience.
Consumer-facing AI Features
Beyond positioning Copilot as a platform for developers to explore AI-powered use cases, Microsoft is also eager to prove that it could handle some low-hanging fruits itself. The company’s latest announcements highlight its commitment to integrating AI into everyday products and services, providing users with practical and engaging tools.
One notable development is the new AI feature on Microsoft Edge that enables real-time translation of spoken content on various platforms like YouTube, LinkedIn, and news sites. This feature enhances accessibility for non-native speakers and those with hearing impairments, fostering a more globally inclusive online experience.
In the education sector, Microsoft’s partnership with Khan Academy brings the Khanmigo AI agent, used by over 65,000 students, to Azure’s integrated OpenAI models. This move not only expands the reach of the educational tool but also makes it free for K-12 teachers in the US, promoting AI-powered learning in classrooms.
Gamers also have something to look forward to with Microsoft Copilot’s Xbox integration. This AI-powered assistant will offer real-time game guides, tips, and inventory searches, enhancing the social aspect of gaming on Xbox by essentially adding an always-on guide and AI companion.
Of course, for Microsoft’s grand plan to work, Copilot really has to deliver on its usefulness and convenience. Integrating it across the entire Microsoft ecosystem will ensure its ubiquity, but that doesn’t necessarily mean it will be useful. The specter of Clippy, the company’s infamous virtual assistant, looms large. Despite its initial chirpy charm, Clippy’s intrusive nature and lack of utility led to its eventual demise. Could Copilot suffer a similar fate? Only time will tell. But given that Copilot is context-aware and highly customizable, it would certainly seem to be better positioned to succeed.
Conclusion
With Microsoft Copilot, Copilot stack, and Copilot+ PCs, Microsoft is creating new opportunity for developers at a time when AI is transforming every layer of the tech stack. Unlike Google’s recent announcements at its I/O event, which lacked clear timelines, Microsoft is demonstrating a readiness to deliver, as most of its announced AI features are either available immediately or expected to roll out soon.
The AI arms race is far from over, and both Microsoft and Google have much to gain. Microsoft’s aggressive push could give it a significant early advantage, but it must ensure that its AI features deliver on their promises and resonate with users.
Near the end of its opening keynote, OpenAI CEO Sam Altman joined Microsoft CTO Kevin Scott on stage to share his insights on the recent AI developments and what is to come. After vaguely teasing the next GPT model, Altman urged developers to build AI apps by comparing the current AI arms race as the early stage of the mobile boom in the late 2000s. He warns that AI will quickly become table stakes that most companies will have, just like “mobile” eventually did, but businesses will still need to do the hard work and figure out how to differentiate themselves from competitors.
For brand marketers, Microsoft’s latest AI announcements mean that now it is time to start exploring AI. While Microsoft;s current AI initiatives are focused primarily on enterprise tools, they do have the potential to cross over into consumer-facing domains. For example, some brands could make a branded custom Copilot extension that targets knowledge workers. Plus, the integration of AI into gaming through Xbox Copilot could also open up some interesting avenues for brand partnerships and interactive experiences. As Microsoft continues to lead the AI revolution, brand marketers who embrace these technologies early on will be well-positioned to gain a competitive edge.
