Microsoft AI for everyone

Another quote, which will become legendary — Microsoft’s Satya Nadella says “every company should build its own AI model” and later in the same interview Mr. Nadella said — “I don’t want to be locked into any one model.” #chokingonirony

That’s coming from a guy whose company gave OpenAI $13 billion and spent untold billions on building the infrastructure to run ChatGPT. All that when OpenAI struggles to move forward its IPO at a trillion dollar valuation, which would benefit Microsoft which holds about a $135 billion stake in OpenAI. While OpenAI is burning cash, it has to also pay 20% of its revenue to Microsoft until ChatGPT reaches the Artificial General Intelligence stage, an undefined goal which is slowly fading from any conversation about AI.

In other words, Mr. Nadella is saying to Mr. Altman — ‘It was nice to meet you, Sam. We had some good times together and I wish you well in your future endeavors. Strategies for our respective firms are diverging and I have to do what is good for my company. We can still do business if you have any money left. And good luck with the IPO, I still want to see ROI on our investment.’

Now, back to the announcement.

It would suggest that AI is not working for Microsoft that great. Do you remember MS Copilot which promised that you will be able to interact with a ‘constellation of agents’. With Microsoft putting a positive spin on it and claiming massive adoption while at the same time getting attention from FTC for monopolistic behavior when forcing the AI upgrades on its users.

How else can one judge that things are not that great? Based on the latest announcement from Microsoft — Microsoft launches firm to help companies adopt AI with $2.5 billion. Imagine how well the AI is flying off the shelves when you have to start a new company and spend billions to tell people how great it is.

The fiscal year end for Microsoft is coming and before you know it they will have to show any returns on all the money they spent so far. What to do, what to do?

What about if every customer trains their own AI model with their own data? That would significantly load our cloud services and provide ongoing monthly revenue to run the model? Customers can bring open models to tune or build their own models from scratch. The cost? From a few hundred dollars to millions.

That’s where the real might of Microsoft will show. Out of nowhere, a swarm of Microsoft business partners will descend on the customers with proof of concepts, pilots and future production deployments. A new era will begin. Microsoft cloud will get loaded and companies will create not one but many AI models. Why many? You can’t have just one model per company. There will be the private model for the CEO, which will be trained on the most secret documents and emails. Then there will be the C-suite model, which will contain the secret strategy documents and plans. The accounting department will have its own one. The HR will get another which will help to identify potential stars and the under performers. Everyone will get an AI model.

Ironically, the CEO of Microsoft AI, Mustafa Suleyman delivered a prediction that within the next 18 months “tasks that involve ‘sitting down at a computer’ will be fully automated by AI.” Put this on your calendars and try to recall the speed within which new IT initiatives are deployed in your respective organizations.

Maybe we won’t need that many AI models after all. But for the rest who will remain, there will be an AI model waiting. The one thing about AI models which Mr. Nadella didn’t mention is that they require tons of content to be trained on. Not only tons of content — Word files, PDFs, Power Point presentations, Excel files, CRM, email (just to name a few) — but tons of accurate content. And that will be the moment when companies realize that in order to train the models, they will have to go through every single document, assess its accuracy, decide who can see the document, when the document should expire and who is responsible for replacing this document with a new version. All that of course will require all the models to be retrained over and over and over till eternity.

Suddenly what’s sounded so appealing will turn into gigantic projects. Who will benefit? Microsoft which will see massive demand for its infrastructure, all the consultants running these projects, all the newly hired people in these companies to help to organize documents for the AI models to be trained. New AI departments will be created. The companies themselves? Maybe. Probably not. These types of projects don’t deliver expected results in 70% cases.

The recurrent pattern? The Microsoft Market Product Playbook. Introduce a product with questionable value and maturity. First as a standalone offer. Second, add it to the Office (or whatever the latest name is) bundle for free. Claim mass adoption. Start charging money for it and declare this as a huge win for the customer. Welcome to the Microsoft AI era.