Microsoft’s Latest Announcements & Their Vision for Gen AI – Six Five on The Road

By Patrick Moorhead - September 28, 2023

On this episode of The Six Five – On The Road, hosts Daniel Newman and Patrick Moorhead welcome Microsoft’s Matt Barlow, Corporate VP, Microsoft Windows + Surface Marketing, for a conversation on Microsoft’s latest Copilot announcements, Generative AI, and Microsoft’s vision for the future.

Their discussion covers:

  • Microsoft’s latest Copilot announcements
  • How Copilot can create new ways to monetize
  • The differences in the ways consumer and commercial customers might leverage Microsoft Copilot
  • Microsoft’s Generative AI vision, and Matt’s thoughts on the pace of the AI wave

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Transcript:

Patrick Moorhead: We are live here in New York City at Microsoft’s AI event. It has been an incredible experience here. We’ve seen the combined efforts of consumer Copilots meets work Copilots. It’s incredible, AI everywhere, great demos. Dan, how are you, my friend?

Daniel Newman: I thought you were going to say, “And here’s my copilot, Daniel Newman.”

Patrick Moorhead: No, we could be.

Daniel Newman: It would have worked. It would have worked.

Patrick Moorhead: It could be Pat Bot and Dan Bot.

Daniel Newman: Dan Bot and Pat… Batman and Robin?

Patrick Moorhead: Yeah. No, exactly. By the way, also, we saw some incredible Surface devices with all this technology integrated into it. Pretty exciting.

Daniel Newman: Yeah. Starting to look like the PC and AI are finding a home together.

Patrick Moorhead: Oh, exactly. And Microsoft’s got this really unique opportunity, and not only do they do the client, they’re big in cloud and pretty much everything in between. In the end, end users don’t care where it’s coming from, they just want the best experience. And sometimes those experiences, those AI experiences come out of the Cloud. Sometimes they come out of the AI.

Daniel Newman: It hasn’t been a big secret where Microsoft’s going, although I was very excited to find out what was being revealed today. But those experiences are experiences that I can tell you, I’ve bothered a few people that I might know at Microsoft because I want those experiences.

Patrick Moorhead: I wanted it yesterday.

Daniel Newman: Yeah. And by the way, it looks like we finally know when we’re going to get those experiences.

Patrick Moorhead: That’s exactly right. So, I want to introduce Matt, welcome to The Six Five. It’s great to see you. Gosh, I feel like we spent so much time… I just want to give you a hug.

Matt Barlow: We’re like brothers from a long distant family.

Patrick Moorhead: I think we are.

Matt Barlow: It’s good seeing you both live too versus watching you online.

Patrick Moorhead: Exactly. Yeah. Thanks for coming on the show.

Daniel Newman: It is good to be live.

Patrick Moorhead: We haven’t had a lot of, Microsoft’s…

Daniel Newman: Your events have been more kind of these pop-ups, smaller, haven’t gotten back to the big Ignites yet. I’m kind of excited, but Pat and I spent so much time on the road, everyone’s always like, do you love traveling? It’s like, “Oh yeah, I can’t wait to go to Vegas again.”

Patrick Moorhead: Awesome. New York’s always a lot of fun.

Matt Barlow: Well, when you got a lot to talk about, we had a lot to talk about in an hour today. It’s just good to be in person versus being over recording. So yeah, I am super pumped to be here with you guys, for sure.

Daniel Newman: I agree.

Patrick Moorhead: I agree. Well, listen a lot to talk about. So, we need to boil the ocean here in about 15 minutes. So let’s go with the, Hey, Matt, what was the coolest, most exciting standout moments for you here at the Microsoft AI event?

Matt Barlow: Let me hit the recap. There was a lot, right? So, we can boil that down in 90 seconds. But Satya came in and opened up and said, “Hey, there’s a new era of personal computing coming in. It’s all being driven by AI and Microsoft is bringing it to people at work, at home, everywhere in between.” And I think our view, and you guys saw it, we’ve talked about, it’s super unique in that way, of saying, “Hey, if you’re going to use Copilot, Copilot is basically your everyday AI companion. It runs through all of it, but you don’t have to go to another brand. You don’t have to learn something new. You just go to Windows 11, you go to Microsoft 365, you go to Binger Edge, you go on a Surface device.”

And you’re going to get those large language models with reasoning engines and chat interfaces, though it’s a single Copilot that you’re going to get to be able to do creative things, productive things, things that connect you to the world around you and people you care about effortlessly. Microsoft is the only place that brings that. We’re excited to share it today.

Patrick Moorhead: Yeah, it is funny in our analyst meetings trying to formulate the first and the only, and I got to tell you, Microsoft at scale to me is the only one that is combining the consumer element and the work element and doing it at scale. I mean, your technology has reached billions of people. And let’s not forget over the past five years, you found ways to integrate the data from the smartphone, whether they’re texts coming in, whether they’re images that you’ve taken on your favorite phone that magically show up into Windows Photos. And when I look at how many years it took to get there, it’s like, you guys planned this or something. It’s super cool.

Matt Barlow: It’s been years of work compressed and since January all this stuff took off. And you hit it. When I think about a billion people, over that, are using Windows 11 every day. And when you look at being able to access Copilot to turn on dark mode, to find other settings, to fire apps, to get information off of your phone. The text, reason them, and then kick out an email on Outlook you can share with your friends. I mean, it’s amazing. And that was just Windows. I mean, Microsoft 365, when you looked at what was coming in Copilot that we showed today as well. You can almost type whatever you want in the prompt, misspell and amazing stuff.

Patrick Moorhead: No, I saw that. I thought it was a mistake. And it was like, no, this is intentional.

Matt Barlow: It was totally great.

Patrick Moorhead: It was.

Matt Barlow: Even Binger Edge, on the creative side, to be able to use Dolly Three tools and generate images like that. I was even booked with Clip Champ. I mean, taking a 60-minute demo and turning into 30 seconds inside of a minute. I

Patrick Moorhead: Listen, I am not a big Clip Champ user, but I am going to go back in and use that, a hundred percent. Hey, I wanted to shift the conversation. As analysts, we get questions from everybody: enterprises, people who consumers, tech, governments, your ecosystem for Windows. They ask me, “Well, how are they going to monetize this?” Right? “Is this some new strategy that Microsoft is doing? Hey, let’s give all this free technology away that costs a ton of money, that takes a lot of GPU horsepower.” How do you explain that to people?

Matt Barlow: Yeah, it’s an interesting time in technology today because it’s just going to create more value for people. And anytime you create more value for people or businesses, yeah, it comes back to you.

Patrick Moorhead: It’s the lifetime value.

Matt Barlow: Yes. And when I look at it, it’s to say, “Hey, if people are saying I’m on Windows 10, but I want to get to Windows 11 to get Copilot,” that’s a nice step. Not only for Microsoft, but for all of our OEM partners too. It’s a great thing. If I want to subscribe to Microsoft 365 and get Copilot along with that to get that Microsoft 365 chat benefits too, that’s another revenue stream coming in. If I’m using Binging Edge in new ways now that’s even more. And I hate to talk about revenue. It’s just a delight. People are using these things, they want to upgrade them more, they want to spend more time with them. That’s what’s going to get people using it and using it means buying it and buying it means referring to it. So, I think we’re on a new edge of not only use cases and benefits, but from a financial perspective, we’re in a great position as a company to do something great with the ads.

Daniel Newman: Yeah, for sure.

Patrick Moorhead: My experience is that Microsoft has been one of the winners of telling a monetization story to the market around AI. Now, again, it didn’t all come straight away, it took a minute. Early on with Bing you were able to very clearly show the exact prescriptive value of gaining 1% market share. Remember that from the original launch, it was like.

Matt Barlow: Without a doubt.

Daniel Newman: 2 billion per 1%. I’m like, “I’m tweeting that.” Best tweet of the day. And then, you recently did the Copilot $30 or what I’m saying is then you can start doing the math. You’re like, okay, well this is how many licenses or enterprise users or consumers times that. That is the opportunity.

Matt Barlow: That’s right. But you only can talk about that if there’s value. And that’s the thing that we’re absolutely seeing Dan, is there’s value. People are using this thing saying, “Man, I want to get back on it again.”

Daniel Newman: Pat’s looking for a Copilot for the show.

Patrick Moorhead: 30 more a month, can’t make you fill my seat.

Matt Barlow: What do you make?

Patrick Moorhead: If we can do Pat bot, Dan bot Six Five bot. I’m like, in.

Daniel Newman: So, let’s demarcate something else. Consumers and enterprises. So, you were very focused on that kind of left to right consumer enterprise. We talk a lot about the blurring lines. Are you seeing kind of differences in the use cases, the adoption? Talk a little bit about how that works.

Matt Barlow: It’s funny, the more things change, the more things remain the same. It’s kind of how I’m seeing it. Before I thought there were going to be these uniquely different experiences. And to be honest, they’re really similar. I look at summarization, a tool to write and teams to basically say, “Hey, what happened in this meeting?” Summarize it and then you can kick out notes so I don’t have to take notes anymore. It’s magic. But my wife keeps feeding me web articles to say, “Hey, we’re going on a vacation.” She’s like, “Dude, read this thing.” And I don’t have time to read it, so I just have, summarize it and I get the same benefit.

Daniel Newman: Cliff’s notes.

Matt Barlow: Yeah,

Daniel Newman: What’s old is new.

Matt Barlow: And so I can say instead of like, “Yeah, I read it,” and obviously I haven’t read it, “Yeah, I did read it.” I just read the summary and that’s good enough to get by. So, there’s similarities that I can see between work and home. And that’s also a strength of this, of our unique position between both is that once you get connected to seeing the benefit in one place, it’s going to translate to the other. Creating an image at work to make your blog post look great is the same as creating an image at home for the party over the weekend. So, those parallelisms, if you will, are just going to ring true as people use it more and more and more people are using it.

Patrick Moorhead: I mean, all business people are consumers and a lot of consumers are business people. And it’s funny, this was the dawn of… The PC started where people used a PC in work and they’re like, “I want that at home.” And I see a huge opportunity for Microsoft to, I mean a hundred percent you’re successful, super successful on the business side. You’re successful on the consumer side, but you have a lot of growth as well. And I love what you said about great experiences. We’ll pull people in and I’m excited for you guys.

Matt Barlow: Yeah, so, great experiences. Did you guys get your hand on that surface laptop studio?

Daniel Newman: No, but there’s one right there, I’m going to probably try to walk out with it.

Matt Barlow: Yeah, he’s bigger than me so I can’t stop you.

Daniel Newman: I’ve been eyeballing it for the last few minutes here.

Patrick Moorhead: I was wondering what you were looking at over there. Right over here, folks.

Daniel Newman: I’m looking at that Surface. I’m wondering how big the guy at the door is.

Patrick Moorhead: So, there are some companies and some people that are like, we’re going way too fast on this AI stuff. Now I’ve been on the record, even on the Six Five podcast in my articles, I’m like, yeah, “Responsibility is important.” And I’m thinking Microsoft is a very responsible company. The downside for them is big. And then on the other side of mouth, I’m like, maybe because the competitors are behind, let’s stoke the fire on this. Can you talk about what you’re doing to minimize those risks? And by the way, I want to say with a caveat, anything that society has ever done that’s been meaningful, there have been issues. But we’ve come together as a society and plugged those holes and made it better.

Matt Barlow: I mean, Microsoft is a company that’s built on trust. Enterprises trust us, customers trust us all. We’ve built that over time and have earned every bit of that responsibly. And we’re taking that same approach. And you’ve seen us with a number of different agencies and a number of different things we published to say like any new technology, you said that. Like any new technology, you need to be measured, you need to be responsible and you need to try things and learn to be honest, too. You can’t not put things into motion and learn from it. We’ve done all of that. So, I look at the approach that we’re taking. I look at the coverage we’re getting. I look at the benefits we’re delivering to customers. And we’re doing what you would expect Microsoft to do with this technology; advance it in an appropriate responsible way. And I’m proud to see us doing that across our estate right now in products.

Daniel Newman: And we saw in our analyst time with Satya. I Actually asked him a question about the same thing. I think the company’s doing a really good job. I mean, look, the partnership with Open AI, they moved very quickly. You move very quickly. There’s going to be speed bumps. There’s no way you’re going to launch a product that’s going to be this societally influential that’s not going to raise a few eyebrows. And even Satya acknowledged that, you know, machines take over the world, kind of thing. All the way down to just simply protecting people’s data. But it’s been a problem we’ve had forever. I mean, this is a problem we had before it was AI. We had problems with this, with the systems, with machine learning databases, with search, with everything. So Matt, I think the company’s doing a really nice job. I want to congratulate you. Thank you very much for joining. Patrick and I here on the Six Five. Very excited to see what Microsoft has next.

Matt Barlow: Love it. Look, I can’t wait to see you again. I want to bring a bunch of the folks from Windows and Surface along to talk with you too. Thanks for the time guys. Appreciate it.

Daniel Newman: Thanks. Appreciate that. Thank you. All right, everybody hit that subscribe button. Join us for all of the sessions here at the Microsoft AI event in New York City. Patrick, it’s been a lot of fun, hasn’t it?

Patrick Moorhead: So much fun. We’ve been on the road all week, but I love being in events like this. I love product launches and talking with the executives. I love seeing great demos, love touching amazing hardware, and I got all of it.

Daniel Newman: You’re swooning here. You are swooned.

Patrick Moorhead: I am. I really am.

Daniel Newman: I love it. Alright everybody, we’ll see you all very soon. Bye-bye now.

Patrick Moorhead
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.