Microsoft's Windows operating system – the flagship product of this software empire for a long time – is being revamped for the AI era.
On Wednesday, the company announced several Windows updates, including integrating the AI intelligent agents and other AI tools directly into the PC software. Microsoft aims to ensure that its products remain at the center of this rapidly changing technology industry.
CEO Satya Nadella stated during a speech in San Francisco that Windows is becoming a "hybrid intelligence" system, which means it will have both cloud-based AI capabilities and AI capabilities that run locally through products such as GitHub.
Nadella said, "The [AI] model alone isn't of much help for anything." He explained that Microsoft is integrating software with local AI and AI drivers, as well as devices built natively for AI, such as the new Surface Laptop Ultra model released by the company at the event. "Some of the things you’ve been using all along can now be connected together."
Microsoft is one of the technology giants that first recognized the importance of generative AI. Earlier on, it invested $13 billion in OpenAI and established a partnership with the company. However, the alliance between the two companies has weakened, and Microsoft is now trying to find its place in the crowded competitive landscape of AI. Google, OpenAI, and Anthropic are leading in the development of large language models, while Meta is making headway with its Muse personal AI assistants.
A large part of Microsoft's plan is to seamlessly integrate the redesigned Copilot AI application into Windows. This means that for tasks that do not require heavy computational power, Copilot can run without accessing the cloud. Copilot's leader, Jacob Andreou, stated that, for example, users can allow Copilot to autonomously extract all the files needed for tax filing from different locations on their laptops, without the need to access the cloud, making the process cheaper and faster.
He said, " Copilot now truly understands your computer. It is Copilot that was originally created for Windows."
Although Microsoft operates one of the largest cloud computing services in the industry, the company bets that by maintaining a strong presence across the entire "technology stack," it will be able to gain an advantage when AI changes the way businesses operate. For programmers and other users, local AI has become the popular way to experience this technology, as it may be cheaper and more secure than running AI in the cloud.
Microsoft has also linked these updates to the new Surface Laptop Ultra, which is a high-end device aimed at developers and creators. The company demonstrated that Ultra users can play video games while editing videos and running AI workloads.
Nadella also appeared on stage alongside NVIDIA CEO Jensen Huang. The new Surface Laptop Ultra utilizes NVIDIA's RTX Spark "super chip," which Jensen Huang described as a "monster-level" product.
The price of Ultra is $2,599, while Surface RTX Spark Dev Box, which is used in conjunction with Ultra, is priced at $5,999. The laptops will go on sale on October 16th, and the developer kits will be available in November.
Nadella has recently refocused Microsoft on its core businesses, after the company had also pursued Copilot AI targeting ordinary consumers in the past. Microsoft's goal is to dominate the enterprise-side business of AI workflows and cloud computing. The event on Wednesday was an extension of the content presented at its Build conference in June. At that time, the company launched a AI wearable badge device and a cubic device with a voice-activated screen, but no subsequent updates have been provided yet.
Microsoft is repositioning its Copilot AI brand and core software to adapt to the AI era. The company is also positioning its devices as the best carriers for optimizing customer work processes, while avoiding users being burdened by the numerous Copilot features. Previously, Microsoft received many complaints from early users stating that the persistent presence of Copilot in the Windows operating system was troubling.
The newly redesigned Copilot application of the company will now become a core interface. Customers can chat with the AI robot here, use the AI tool to complete tasks, write code, and utilize the newly added Autopilot feature, which possesses agent capabilities.
The Autopilot feature in this application will allow users to name their agents, assign roles and goals to them, and then have them perform tasks such as project updates, tracking work decisions and deadlines, reminding colleagues when commitments are due, collecting necessary materials, and contacting partners.
Microsoft is betting that this new “super app” will drive the growth of Copilot by directly connecting AI to its already profitable business tools. As OpenAI and Anthropic accelerate their entry into enterprise services, Microsoft is racing against time to hold onto its market share and keep up with the changing expectations of its customers.
In July of this year, the company stated that the number of paid seats for Microsoft 365 Copilot had exceeded 30 million, with a net increase in seats doubling month-on-month. Over the past six months, driven by the strong performance of its cloud computing business, Microsoft's stock price has rebounded, which in turn is fueled by the demand for AI and the growth of Copilot. The company expects to release its next quarterly financial report later this month.
