Microsoft’s AI Bet Pays Off: CoPilot’s Success and Azure’s Growth Challenge AWS

I mentioned the Microsoft CoPilot Super Bowl ad last week.  Microsoft’s Copilot AI app has gained popularity since that ad. It is currently the second most popular free app in the Apple App Store and the 12th most downloaded app in the Google Play Store.

And Microsoft’s lean into AI is showing results. CNBC is reporting how Microsoft’s Azure cloud is closing the gap on Amazon Web Services (AWS) with the help of its AI growth. Analysts estimate that Azure is now about three-quarters the size of AWS, compared to half its size five years ago. Microsoft’s recent momentum is attributed to its focus on artificial intelligence, with 6 points of revenue growth in the Azure division coming from AI. Azure’s revenue increased by 30% in the latest quarter, outpacing AWS’s 13% year-over-year growth.

According to Gartner, AI-optimized PCs and smartphones are expected to capture a significant portion of their respective markets this year, with shipments of AI PCs estimated at 54.5 million units. IDC predicts AI PC shipments will triple in the next three years, reaching nearly 60% of the overall PC market by 2027. The PC industry is focusing on moving AI capabilities from the cloud to discrete devices, and early adoption is expected to pave the way for broader demand. However, enterprise adoption may be slower as executives weigh upgrade costs against the benefits of emerging product lines. Software providers also need time to fully harness the potential of on-device AI and develop clear enterprise use cases.

There’s interest in AI.   For those of us in business services, the alignment is pretty straightforward.  AI like CoPilot drives Azure business, which drives Microsoft’s cloud business.  They’re all in and closing the gap on AWS.  

I’m skeptical about this whole AI-optimized PC thing – this sounds like lipstick on a pig right now – and will acknowledge that driving AI to devices IS a good privacy and usage angle.    We’ll see.  

I don’t have to be right on that prediction – either way, AI adoption will drive services and consulting, which is why we care.