Leo, Richard, and Paul discuss the Microsoft earnings, Week D, Windows 11 pain points, AI, Xbox and gaming, and a lot more.
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Microsoft earnings
Microsoft announced that it earned a net income of $31.8 billion on revenues of $82.9 billion in the previous quarter. And it talked up its consumer offerings for the first time in what feels like 20 years. Analysis:
- Windows: 1.6 billion monthly active devices, a focus on quality after years of enshittification – But revenues from PC makers were down 2 percent YOY (after gains of 1, 18, 3, and 3 percent in previous quarters) and Microsoft expects Windows revenues from PC makers to “decline in the high teens,” later giving a more explicit number: 18 percent. Yikes.
- Microsoft Edge “has taken share for 20 consecutive quarters,” which isn’t supported by the evidence.
- Bing “monthly active users reached one billion for the first time,” raising questions about how Microsoft defines the term “user.” Bing has 5 percent usage share and is a very distant second in this market. That means, also, that it does not have one billion users.
- Xbox: “The team is recommitting to our core fans and players, and shaping the future of play,” new records for monthly active Xbox users and game streaming hours BUT Xbox hardware revenues declined 33 percent (after declines of 32, 29, 32, and 6 percent in previous quarters), Xbox content and services revenues declined 5 percent (second quarter in a row), no mention of overall gaming revenues (which it provided in previous two quarters). And now Microsoft expects Xbox content and services revenues to decline “in the low teens” (11 to 15 percent) in this quarter, in part because of the Game Pass price cuts. Hardware revenues? They will decline but no guesses given.
- AI: Capex spending in the quarter was $32 billion, down from previous quarter as previously described, but up 49 percent YOY. Microsoft will spend about $40 billion this quarter and about $190 billion this calendar year. One milestone: over 20 million Microsoft 365 Copilot paid seats, up from 15 million in previous quarter. But that means that 4.4 percent of M365 customers are paying for this, up from 3.5 percent previously. Not great. And every single analyst question was basically about the cost of AI and when the heck we’re going to see some ROI. Don’t worry, Amy Hood feels “quite good” about this.
More earnings
Windows
Microsoft shares an update about what it’s done to address Windows 11 pain points so far
- Marcus Ash is one of the good guys
- Some of this is happening in Insider, some is rolling out to retail
- Windows Insider Program and Windows Update improvements we discussed last week – two primary channels in WIP now
- Simplifying AI experiences – fewer Copilot icons (Notepad, etc.)
- File Explorer improvements – performance, fewer hangs, better polish and consistency
- Widgets – Feed will be off by default, fewer interruptions, no hover activate
- System performance – Smaller memory footprint, more aggressive RAM restoration, app launch responsiveness, core shell experiences responsiveness, Windows scheduler updates
- Soon: Taskbar updates, Start updates, and then Search updates a bit later; Microsoft will have more to share at Build in June
Week D update arrives with a peek at May’s Patch Tuesday
- Major: Xbox Mode, AI agents on the Taskbar are the first two big features of 2026
- Minor: Also adds File Explorer improvements, new haptic feedback effects, touch keyboard improvements, Drop Tray renaming and minor UI changes, Microsoft Store improvements
Shocking new report that Microsoft Edge is incredibly insecure should surprise no one
AI
Microsoft Agent 365 Platform is out of preview, supports local AI agents and Copilot Cowork Agent arrives on mobile with plugin support
Microsoft launches a Legal AI Agent in Word
Apple’s plan to open up to multiple third-party AIs is a good one
Canonical’s plan to add AI to Ubuntu is also good, but you’re never going to believe what happened next
Xbox and gaming
Asha Sharma reorgs Xbox, kills Copilot on the console
Forza Horizon 6, more coming to Game Pass in May
Xbox April Update is out with updates for all platforms
Next Call of Duty will not ship on Xbox One, PS4
Age of Empires II: Definitive Edition is coming to the Mac for some reason
And finally, with the Supreme Court refusing to block the implementation of the ruliing in Epic v. Apple, Microsoft’s Xbox game store for mobile is one step closer to happening
Tips and picks
Tip of the week: Embrace inconvenience
This isn’t “inconvenience maxxing,” but we lost the script on subscription services and need to simplify our lives by making them a bit less convenient. Also, save money every month.
App pick of the week: Windows Defender
You don’t need third-party antivirus and you absolutely should not pay for such a thing.
Plus: There is a 100 percent Rust-made developer editor out there
RunAs Radio this week: Securing Active Directory with Spencer Alessi
https://runasradio.com/Shows/Show/1035
Brown liquor pick of the week: Stalk & Barrel Whisky
https://www.stalkandbarrel.com/