Momentum … Or Just Inertia? (Premium)

30 minutes into Microsoft’s New Era of Work digital event this past week, Brad texted me in disbelief at the wooden, tired nature of the presentation. I’m paraphrasing there, what he wrote was, “I have seen a dead squirrel on the side of the road have more soul than this event.”

But you get the idea. How is it possible that Microsoft, which has been releasing new AI products and services at a pace unprecedented in its entire history, could stumble this badly in delivering “the latest Copilot news across Windows and Surface,” as Jared Spataro, Microsoft’s newly appointed CVP of “AI at Work” put it at the start of the event?

It’s a good question, though I’m not sure the presentation style of this event differed all that much from recent Microsoft events. But the better question, to my mind, is why Microsoft didn’t have more to say. Indeed, in private conversations with others who follow Microsoft like I do, the big takeaway here was confusion, as most of the event was just a reiteration of information we already knew, with little in the way of actual news.

Indeed, our news coverage of this event reflected that reality: Laurent wrote up the new Surface for business PCs, the Intel Core Ultra-based Surface Laptop 6 and Surface Pro 10, but didn’t mention the rest of the event. That’s because the new devices were literally the only news. But even the Surface announcements were tainted.

To be clear, there’s a lot to like about the new Surface PCs. And they arrived with a subtle acknowledgement by Microsoft that previous Surface PCs didn’t always live up to customer expectations, a complaint I championed for years. These devices address feedback from businesses by including NFC readers, more ports (in the 15-inch Surface Laptop only), an optional smart card reader (also only in Laptop 15), improved repairability and upgradeability, and improved cameras for hybrid work scenarios.

I was originally noodling around with an article idea I thought of as Last Stand for Surface?, but that’s not fair: While the original rationale of this product line is indefensible and led to a permanent rift with its PC maker partners, Microsoft is simply trying to make sense of this business. Part of that involved cutting back on the number of superfluous PC models and accessories it previously sold, some of which I felt harmed the premium promise of the brand. And what that leaves, frankly, are the two products that Microsoft just updated, the only two essential Surface PCs to my mind, Pro and Laptop.

Businesses are just one half of the customer base, of course, but they’re also the more important half, and by revenue, it’s likely closer to two-thirds of the mix. That’s certainly true of Windows more broadly, and if it’s not true of Surface, it must be the goal internally. Business PC sales are far more lucrative than consumer PC sales, for all kinds of reasons, but key among them is the associated monthly per-user vig that Microsoft collects from volume licensing, Microsoft 365, and, now, Copilot. This is the virtuous cycle writ large.

Compared to other business-class PC lines, like Lenovo’s ThinkPad and HP’s EliteBook, Surface lacks breadth and depth, but these new PCs at least deliver the basics. And as a Surface fan myself, I appreciate the minimalist sensibility on display here. Yes, we should acknowledge the Apple envy inherent in the Surface business, but there’s also a real market for customers who want the look, feel, and quality of a MacBook with any of the Apple baggage. It’s not the reason for Surface to exist per se, but it’s on the list.

That said, some immediate criticisms emerge, both of which originated in enthusiast circles.

The first is that individuals can’t even buy these PCs, at least not easily, as you won’t find them in the physical stores (that almost none of us even visit anymore), let alone popular ecommerce sites like Amazon.com. And the second is that we all know, based on rumors from trustworthy sources, that Microsoft also plans to release consumer versions of these same products based on Qualcomm’s is-it-ever-going-to-get-here Arm-based Snapdragon X Elite processor.

Both criticisms—questions, really—are reasonable.

I suspect that the former—Microsoft not selling Intel-based Laptop 6 or Pro 10 PCs to individuals, even from its own website—is tied to two things, the consolidation of the Surface product line I noted earlier (tied to cost savings) and Microsoft betting—knowing?—that the X Elite chipset is so good that the user base migration from x86 to Arm can finally happen. Put another way, Microsoft has wanted a PC that it can hold up against the MacBook Air, in particular—something with roughly comparable power, compatibility, and battery life, in a fan- and noise-free thin and light enclosure—ever since Apple shocked the world with its first M-series chip and the Mac transition to Apple Silicon. It may finally happen.

As to the latter, all I can say that Qualcomm has been on its own slow-boat schedule with the X Elite chipset since the Nuvia acquisition that made it possible in the first place. Qualcomm announced that acquisition three long years ago; that it happened just two months after Apple’s M1 announcement is almost certainly not coincidental. But the company has publicly targeted mid-2024 for the first PCs based on the Nuvia-based X Elite chip, and all indications are that we’re on track for some good news in May. And that this news will include the new consumer Laptop 6 and Pro 10 models many of us want.

Moving back to what Microsoft did announce this past week, and how it fits into the broader Copilot strategy, I’m curious why this wasn’t just promoted as being a Surface event. After all, Microsoft has had many Surface-specific events in the past, live and in-person and virtual, and they’re always of interest in the broader personal technology community. Here, again, I can only speculate, but my guess is that a Surface-specific event would have only made sense if the consumer devices were also ready, and that by positioning this event as a work/business event, Microsoft was hoping to manage expectations. The problem, of course, is that if you ignore the Surface parts of the presentation, there’s not much there there. That is, there was no news.

Literally.

In the Microsoft 365 Blog post that accompanied the event, Mr. Spataro casually noted an important milestone that serves to justify the timing, at least: One year ago, almost to the day, the firm announced what’s now called Copilot for Microsoft 365, and while there were many questions about the viability of this offering throughout much of 2023, we now know it to be both useful and desirable, and a clear growth engine for Microsoft’s AI capabilities generally and Microsoft 365 specifically. Indeed, it’s clear that Copilot’s biggest impact on business users—and thus on revenues—will come via Microsoft 365. (And, to a lesser degree, from the similar but less expensive Copilot Pro subscription for individuals.)

It was reasonable to believe, given the above facts and the focus of this event—Copilot and work, basically—and Microsoft’s torrid year of rapid AI advances and product and feature releases—that the New Era of Work would deliver some news. That there would be a list of new Copilot productivity capabilities for businesses, new features that might be exposed through Copilot broadly, but also in specific Microsoft 365 apps like Word and Outlook. But that’s not what happened. Like others, I’ve scoured the announcements—from Microsoft 365 and Windows—and have rewatched the event twice (I was able to view it ahead of the public release), and have always come up short. There’s nothing there. Nothing.

Back in the day, Microsoft used to refer to this type of event—an announcement with little in the way of actual news—as a momentum update. And I wouldn’t be surprised to discover that the company and its PR firms still use this term, as there was plenty of talk about momentum as a hand-waving exercise used to hide the lack of news. For example, we were told that Copilot for Microsoft 365 is now saving “some employees” as much as 10 hours each week, a curiously specific figure attributed to a deliberately vague audience.

But the lack of news—the lack of new—stands in sharp contrast to the amount of information Microsoft communicated this past week.

Copilot is now available to “every employee,” meaning that Microsoft offers free Copilot capabilities in Windows, Windows 365 (which is Windows), Edge, and on the web, in addition to paid Copilot subscriptions.

Copilot in Windows 11—it’s in Windows 10, too, but that’s how Microsoft communicated it—serves as “an orchestrator,” the language I’ve latched onto in my hope that the software giant will finally stop treating this platform and its users as third-class citizens, “securely lighting up across apps, files, and the web, to conduct tasks on a user’s behalf.” In reality, Copilot in Windows is just Copilot but with a selection of semi-useless feature and settings integrations that no one will ever use.

Windows 365 lets business customers offer a remote, Azure-hosted Windows instance called a Cloud PC, and there’s a new Windows app, in preview, that serves as a front-end to this service for those who can’t or don’t want to use the Windows 11 integrated experiences. There was no Windows 365 new, but there is Windows 365 momentum, of course: “We’ve already seen over three million active hours of usage of the Windows app across platforms since the preview launch,” Microsoft noted. Nice. When’s that app shipping in non-preview form?

As for Windows, it’s now “super easy” to access Copilot using the new Copilot key that’s found only on the select new PCs no one even owns yet, including the Surface Laptop 6 and Surface Pro 10. Copilot in Microsoft 365 capabilities (and Copilot Pro capabilities) are now available in Copilot for Windows, and there’s a “Work/Web” switch now for Copilot in Microsoft 365 subscribers, but neither of those are new.

Indeed, there was nothing new. Nothing. Microsoft mentioned several features across Copilot, Copilot Pro, Copilot for Microsoft 365, Copilot for Windows, and Windows 365, but it was all just an overview of the work Microsoft has done in recent months, a reiteration of features it’s already announced and/or released. It was a recitation of momentum.

There’s nothing wrong with momentum. But this event felt more like inertia, heavy with the inevitability and weight of Microsoft’s new AI focus. The problem is that tech enthusiasts are jaded to begin with, raising the bar on expectations, and we’ve long been programmed to expect big, splashy announcements for individuals (if not literally consumers) at these kinds of events, even those that target businesses (like Ignite) or developers (Build, I/O, WWDC). Given its role in this marketing shift, Microsoft’s failure is all the more confusing.

It’s no wonder we were all so disappointed.