Leo, Richard, and Paul discuss one billion Windows 11 users, Microsoft’s recent earnings, AI, Xbox and games, and a lot more.
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Windows
Windows 11 has over one billion users – and, surprise, it got there faster than Windows 10 without any of the shenanigans
Microsoft to address the quality issues in Windows 11 in 2026
Microsoft belatedly delivered the January Week D update last Thursday, a preview of this month’s Patch Tuesday
Windows Insider Program
Microsoft earnings deep dive
Microsoft reported a net income of $38.5 billion on revenues of $81.3 billion in the quarter ending December 31. Those figures represent gains of 60 percent and 17 percent, respectively, year-over-year (YOY).
Earnings analysis: All eyes are on AI and no one is happy
- Microsoft spent $37.5 billion on AI infrastructure (capex) in the quarter, up 66 percent YOY, and it’s on track to spend $150+ billion in the fiscal year
- Every single question was about this and how it will ever recoup the costs
- There are now 15 million paid Microsoft 365 Copilot seats out of 450+ million Microsoft 365 seats
- OpenAI is Microsoft’s biggest Azure customer, but it’s unclear if there is any real money there because of accounting tricks
- Microsoft’s earnings announcement triggered a $357 billion valuation wipe-out, the largest in Microsoft’s history and the second-largest in history overall (Nvidia managed to lose $593 billion in value in the wake of DeepSeek in early 2025).
Other earnings tidbits
- Windows, Edge, and Bing all “gained share,” PC maker revenues were up just 1 percent, the Windows 10 upgrade cycle was mostly a bust (it’s likely that most of it was tied to RAM pricing fears, too)
- Xbox fell off a cliff with content and services revenues down 5 percent in a holiday quarter somehow and Xbox hardware revenue declined an astonishing 32 percent YOY
- Standalone Office 2025 suite was a surprise hit, Hood is curious if that continues
- Microsoft 365 “cost of business” up 10 percent YOY because of AI costs
Related earnings announcements
AI
Microsoft is going to basically make an app store for content makers who wish to be paid for use by AI
Anthropic advertises that Claude will be advertising-free, unlike ChatGPT
The next Firefox will include the promised AI kill switch and Vivaldi “extends the middle finger” to AI
Xbox and games
AMD reveals next Xbox console in 2027
Xbox is returning to its PC roots in 2026
- Hardware: Back to the PC, just like the OG Xbox, but this time mobile-heavy – There are challenges to PC gaming, most obviously with game updating, a huge pain point
- Software: Microsoft is now one of the world’s biggest game publishers, and the key to this business is cross-platform availability
- Services: Xbox Live begat Xbox Game Pass and Xbox Cloud Gaming, but there are questions about viability and growth
We’re getting a solid collection of Xbox Game Pass titles for the beginning of February
Battlefield 6 was the best-selling shooter of 2025 and EA made $1.9 billion in Q4
Epic Games has big plans for its PC launcher/store
Nintendo has now sold 17 million Switch 2s as OG Switch hits 155 million units
Tips and picks
Tip of the week: Make OneDrive Folder Backup work for you
Something wonderful is happening even if it’s not perfect. Two major changes:
App pick of the week: Bitwarden
I use Proton Pass, but Bitwarden is the only viable alternative for free, and it’s still the cheapest paid option, even after a big price hike
RunAs Radio this week: Getting Started using Purview with Erica Toelle
https://runasradio.com/Shows/Show/1022
Brown liquor pick of the week: Glendronach Ode to Dark
https://www.glendronachdistillery.com/product/ode-to-the-dark/