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Microsoft drops AI sales targets in half after salespeople miss their quotas

• jqpabc123 11mo ago
  AI agent technology likely isn’t ready for the kind of high-stakes autonomous business work Microsoft is promising. It's unbelievable to me that tech leaders lack the insight to recognize this. So how to explain the current AI mania being widely promoted? I think the best fit explanation is simple con artistry. They know the product is fundamentally flawed and won't perform as being promised. But the money to be made selling the fantasy is simply too good to ignore. In other words --- pure greed. Over the longer term, this is a weakness, not a strength.
  • ahartmetz 11mo ago
    Imagine your supplier effectively telling you that they don't even value you (and your money) enough to bother a real human.
  • jollyllama 11mo ago
    They've gotten away with shipping garbage for years and still getting paid for it. They think we're all stupid.
    • jqpabc123 11mo ago
      They think we're all stupid. As time goes by, I'm starting to think they may be right more than they're wrong. And this is a sad and depressing statement about humanity.
      • somenameforme 11mo ago
        Not really. It's just that the point you have to push people to get them to start pushing back on something tends to be quite high. And it's very different for different people on different topics. In the past this wasn't such a big deal because businesses weren't so large or so frequently run by myopic sociopaths. Ebenezer Scrooge was running some small local business, not a globe spanning empire entangling itself with government and then imposing itself on everybody and everything.
        • sallveburrpi 11mo ago
          Scrooge is a fictional person and Microsoft have been getting away with it since I’m alive with people hating it probably just as long. So I think GP definitely has a point.
          • somenameforme 11mo ago
            Are you a fan of reading? Good character fiction is based on reality as understood at a time and a great way to get insights into how and what people think, particularly as it's precisely those believable portrayals that tend to 'stick' with society. For example even most of George R. R. Martin's tales are directly inspired by real things, very much living up to the notion that reality is much stranger than fiction! Or similarly, read something like Dune and the 60s leaks into it hard. In modern times the tale of Scrooge probably wouldn't really resonate, nor 'stick', because we transitioned to a culture of worshiping wealth, consumerism, and materialism. See (relevant to this topic) how many people defend unethical actions by claiming that fiduciary duty precludes any value beyond greed. In the time of Scrooge this was not the case, and so it was a more viable cautionary tale that strongly resonated.
            • sallveburrpi 11mo ago
              I think we would agree on a lot of things over a beer or beverage of your choice. I also think that we as a (globalised?) culture have decided that money trumps everything. But I don’t think that it’s the “fault” of single sociopaths or big companies; it’s some inherent flaw in human intelligence - we’re just not equipped to make smart long-term decisions or deal with a vast alien intelligence such as “the market”. Scrooges tale just resonates strongly - why else would it be still so popular that basically everyone know it - we just aren’t able to stop this machine and it will grind on until our species is wiped from the planet. Not that it matters too much for you and me - but a thousand years more of this? I can’t imagine what that would look like. Edit: you ever read “The Jungle” by Upton Sinclair? I don’t think being greedy above all morals is a new thing, it’s always been there. We just “scaled up”
    • stocksinsmocks 11mo ago
      Given that they aren’t meeting their sales targets at all, I guess that’s a little bit of encouraging about the discernment of their customers. I’m not sure how Microsoft has managed to escape market discipline for so long.
      • SAI_Peregrinus 11mo ago
        Their customers largely aren't their users. Their customers are the purchasing departments at Dell, Lenovo, and other OEMs. Their customers are the purchasing departments at large enterprises who want to buy Excel. Their customers are the advertisers. The products where the customers and the users are the same people (Excel, MS flight simulator, etc.) tend to be pretty nice. The products where the customers aren't the users inevitably turn to shit.
      • thewebguyd 11mo ago
        > I’m not sure how Microsoft has managed to escape market discipline for so long. How would they? They are a monopoly, and partake in aggressive product bundling and price manipulation tactics. They juice their user numbers by enabling things in enterprise tenants by default. If a product of theirs doesn't sell, they bundle it for "free" in the next tier up of license to drive adoption and upgrades. Case in point, the InTune suite (includes EntraID P2, Remote assistance, endpoint privilege management) will now be included in E5, and the price of E5 is going up (by $10/user/month, less than the now bundled features cost when bought separately). People didn't buy it otherwise, so now there's an incentive to move customers off E3 and into E5. Now their customers are in a place where Microsoft can check boxes, even if the products aren't good, so there's little incentive to switch. Try to price out Google Workspace (and also, an office license still because someone will need Excel), Identity, EDR, MDM for Windows, mac, mobile, slack, VoIP, DLP, etc. You won't come close to Microsoft's bundled pricing by piecing together the whole M365 stack yourself. So yeah, they escape market discipline because they are the only choice. Their customers are fully captive.
      • drw85 11mo ago
        I think this time is the first time that it will actually hurt all the large corps investing gazillions of dollars into AI infra. Shipping some ads in windows? Doesn't really hurt you, it makes you extra money. Sure, some customers get a little annoyed, but who cares. But this time they invested huge amounts of money to chase something that will likely never get profitable and return enough to pay off.
    • carlosjobim 11mo ago
      Do they think or do they know? I thought that Microsoft was over after the complete failure of Windows phone and Windows 8 and Office ribbon. And that was 20 years ago... Subpar companies selling subpar products can be massively successive, because they know their customers.
  • zdragnar 11mo ago
    I was just in a thread yesterday with someone who genuinely believed that we're only seeing the beginnings of what the current breed of AI will get us, and that it's going to be as transformative as the introduction of the internet was. Everything about the conversation felt like talking to a true believer, and there's plenty out there. It's the hopes and dreams of the Next Big Thing after blockchain and web3 fell apart and everyone is desperate to jump on the bandwagon because ZIRP is gone and everyone who is risk averse will only bet on what everyone else is betting on. Thus, the cycle feeds itself until the bubble pops.
    • MengerSponge 11mo ago
      All these boosters think we're on the leading edge of an exponential, when it's way more likely that we're on the midpoint to tail of a logistic
      • rm_-rf_slash 11mo ago
        AI research has always been a series of occasional great leaps between slogs of iterative improvements, from Turing and Rosenblatt to AlexNet and GPT-3. The LLM era will result in a few things becoming invisible architecture* we stop appreciating and then the next big leap starts the hype cycle anew. *Think toll booths (“exact change only!”) replaced by automated license plate readers in just the span of a decade. Hardly noticeable now.
    • empath75 11mo ago
      Two things can be true: 1) We have barely scratched the surface of what is possible to do with existing AI technology. 2) Almost all of the money we are spending on AI now is ineffectual and wasted. --- If you go back to the late 1990s, that is the state that most companies were at with _computers_. Huge, wasteful projects that didn't improve productivity at all. It took 10 years of false starts sometimes to really get traction.
      • rizzom5000 11mo ago
        It's interesting to think Microsoft was around back then too, taking approximately 14 years to regain the loss of approximately 58% of their valuation.
  • Gormo 11mo ago
    > In other words --- pure greed. Pure greed would have a strong incentive to understand what the market is actually demanding in order to maximize profits. These attempts to try to steer demand despite clear indicators that it doesn't want to go in that direction aren't just driven by greed, they're driven by abject incompetence. This isn't pure greed, it's stupid greed.
    • wubrr 11mo ago
      Pure greed is stupid greed. Also, if the current level of AI investment and valuations aren't justified by market demand (I believe so), many of these people/companies are getting more money than they would without the unreasonable hype.
    • paganel 11mo ago
      > Pure greed would have a strong incentive to understand what the market is actually demanding in order to maximize profits. Not necessarily, just look at this clip [1] from Margin Call, an excellent movie on the GFC. As Jeremy Irons is saying in that clip, the market (as usually understood in classical economy, with producers making things for clients/customers to purchase) is of no importance to today's market economy, almost all that matters, at the hundreds of billions - multi-trillion dollars-levels, is for your company "to play the music" as best as the other (necessarily very big) market participants, "nothing more, nothing less" (again, to quote Irons in that movie). There's nothing in it about "making what people/customers want" and all that, which is regarded as accessory, that is if it is taken into consideration at all. As another poster is mentioning in this thread, this is all the direct result of the financialization of much of the Western economy, this is how things work at this level, given these (financiliazed) inputs. [1] https://www.youtube.com/watch?v=UOYi4NzxlhE https://www.youtube.com/watch?v=UOYi4NzxlhE
    • binary132 11mo ago
      you seem to be committing the error of believing that the problem here is just that they’re not selling what people want to buy, instead of identifying the clear intention to _create_ the market.
    • estimator7292 11mo ago
  • empath75 11mo ago
    It's not "fundamentally flawed". It is brilliant at what it does. What is flawed is how people are applying it to solve specific problems. It isn't a "do anything" button that you can just push. Every problem you apply AI to still has a ton of engineering work that needs to be done to make it useful.
    • stingraycharles 11mo ago
      You’re correct, you need to learn how to use it. But for some reason HN has an extremely strong anti-AI sentiment, unless it’s about fundamental research. At this point, I consider these AI tools to be an invaluable asset to my work in the same way that search engines are. It’s integrated into my work. But it takes practice on how to use it correctly.
      • rtp4me 11mo ago
        My suspicion is because they (HN) are very concerned this technology is pushing hard into their domain expertise and feel threatened (and, rightfully so).
        • seanw444 11mo ago
          While it will suck when that happens (and inevitably it will), that time is not now. I'm not one to say LLMs are useless, but they aren't all they're being marketed to be.
        • LtWorf 11mo ago
          Or they might know better than you. A painful idea.
          • rtp4me 11mo ago
            Painful? What's painful when someone has a different opinion? I think that is healthy.
      • bigstrat2003 11mo ago
  • nightski 11mo ago
    I think on some level it is being done on the premise that further advancement requires an enormous capital investment and if they can find a way to fund that with today’s sales it will give the opportunity for the tech to get there (quite a gamble).
  • giancarlostoro 11mo ago
    I have a feeling that Microsoft is setting themselves up for a serious antitrust lawsuit if they do what they are intending on. They should really be careful about introducing products into the OS that take away from all other AI shops. I fear this would cripple innovation if allowed to do so as well, since Microsoft has drastically fatter wallets than most of their competition.
    • delfinom 11mo ago
      Under the current US administration the only thing Microsoft is getting is numerous piles of taxpayer bailouts.
      • shevy-java 11mo ago
        Corruption is indeed going strong in the current corporate-controlled US group of lame actors posing as government indeed. At the least Trump is now regularly falling asleep - that's the best example that you can use any surrogate puppet and the underlying policies will still continue.
        • eastbound 11mo ago
          If I mention a president who was more of a general secretary of the party, taking notes of decisions taken for him by lobbies from the largest corporations, falling asleep and having incoherent speech to the point that he seems to be way past the point of stroke, I don’t think anyone will guess Trump.
    • dreamcompiler 11mo ago
      There's no such thing as antitrust in the US right now. Google's recent slap on the wrist is all the proof you need.
    • Eddy_Viscosity2 11mo ago
      Trump has ushered in a truly lawless phase of american politics. I mean, it was kind of bad before, but at least there was a pretense of rule of law. A trillion dollar company can easily just buy its way out of any enforcement of such antitrust action.
  • danans 11mo ago
    > So how to explain the current AI mania being widely promoted? > I think the best fit explanation is simple con artistry. Yes, perhaps, but many industries are built on a little bit of technology and a lot of stories. I think of it as us all being caught in one giant infomercial. Meanwhile as long as investors buy the hype it's a great story to use for triming payrolls.
  • h2zizzle 11mo ago
    It's part of a larger economic con centered on the financial industry and the financialization of American industry. If you want this stuff to stop, you have to be hoping (or even working toward) a correction that wipes out the incumbents who absolutely are working to maintain the masqerade. It will hurt, and they'll scare us with the idea that it will hurt, but the secret is that we get to choose where it hurts - the same as how they've gotten to choose the winners and losers for the past two decades.
    • hereme888 11mo ago
      It's like when a child doesn't want something, you "give them a choice": would you like to put on your red or white shoes?
    • tech_ken 11mo ago
      > correction that wipes out the incumbents who absolutely are working to maintain the masqerade You need to also have a robust alternative that grows quickly in the cleared space. In 2008 we got a correction that cleared the incumbents, but the ensuing decade of policy choices basically just allowed the thing to re-grow in a new form.
      • h2zizzle 11mo ago
        I thought we pretty explicitly bailed out most of the incumbents. A few were allowed to be sacrificed, but most of the risk wasn't realized, and instead rolled into new positions that diffused it across the economy. 2008's "correction" should have seen the end of most of our investment banks and auto manufacturers. Say what you want to about them (and I have no particular love for either), but Tesla and Bitcoin are ghosts of the timeline where those two sectors had to rebuild themselves from scratch. There should have been more, and Goldman Sachs and GM et al. should not currently exist.
        • tech_ken 11mo ago
          > A few were allowed to be sacrificed, but most of the risk wasn't realized, and instead rolled into new positions that diffused it across the economy. Yeah that's a more accurate framing, basically just saying that in '08 we put out the fire and rehabbed the old growth rather than seeding the fresh ground. > Tesla and Bitcoin are ghosts of the timeline where those two sectors had to rebuild themselves from scratch I disagree, I think they're artifacts of the rehab environment (the ZIRP policy sphere). I think in a world where we fully ate the loss of '08 and started in a new direction you might get Tesla, but definitely not TSLA, and the version we got is really (Tesla+TSLA) IMO. Bitcoin to me is even less of a break with the pre-08 world; blockchain is cool tech but Bitcoin looks very much "Financial Derivatives, Online". I think an honest correction to '08 would have been far more of a focus on "hard tech and value finance", rather than inventing new financial instruments even further distanced from the value-generation chain. > Goldman Sachs and GM et al. should not currently exist. Hard agree here
  • stingraycharles 11mo ago
    Don’t attribute to malice that which can equally be contributed to incompetence. I think you’re over-estimating the capabilities of these tech leaders, especially when the whole industry is repeating the same thing. At that point, it takes a lot of guts to say “No, we’re not going to buy into the hype, we’re going to wait and see” because it’s simply a matter of corporate politics: if AI fails to deliver, it fails to deliver for everyone and the people that bought into the hype can blame the consultants / whatever. If, however, AI ended up delivering and they missed the boat, they’re going to be held accountable. It’s much less risky to just follow industry trends. It takes a lot of technical knowledge, gut, and confidence in your own judgement to push back against an industry-wide trend at that level.
    • foobarchu 11mo ago
      > if AI fails to deliver, it fails to deliver for everyone and the people that bought into the hype can blame the consultants / whatever. Understatement of the year. At this point, if AI fails to deliver, the US economy is going to crash. That would not be the case if executives hadn't bought in so hard earlier on.
      • saubeidl 11mo ago
        And if it does deliver, everyone's gonna be out of a job and the US economy is also going to crash. Nice cul-de-sac our techbro leaders have navigated us into.
        • rwyinuse 11mo ago
          Yep, either way things are going to suck for ordinary people. My country has had bad economy and high unemployment for years, even though rest of the world is doing mostly OK. I'm scared to think what will happen once AI bubble either bursts or eats most white collar jobs left here.
      • anjel 11mo ago
        Race to "Too big to fail" on hype and your losses are socialized
  • ReptileMan 11mo ago
    It was the same with the cloud adoption. And I still think that cloud is expensive, wasteful and in the vast majority of cases not needed.
  • dehrmann 11mo ago
    > In other words --- pure greed. It's the opposite; it's FOMO.
  • bgwalter 11mo ago
    They want to exfiltrate the customers' data under the guise of getting better "AI" responses. No company or government in the EU should use this spyware.
  • GoblinSlayer 11mo ago
    Fake it till you make it.
    • dfedbeef 11mo ago
      outside of the recovery community, this is known as 'fraud'
  • didibus 11mo ago
    Thing is, it's hard to predict what can be done and what breakthrough or minor tweak can suddenly open up an avenue for a profitable use-case. The cost of missing that opportunity is why they're heavily investing in AI, they don't want to miss the boat if there's going to be one. And what else would they do? What's the other growth path?
    • binary132 11mo ago
      this idea that AI is the only thing anyone could possibly do that might be useful has absolutely got to go
    • layer8 11mo ago
      > And what else would they do? What's the other growth path? Are you arguing that if LLMs didn’t exist as a technology, they wouldn’t find anything to do and collapse?
      • rsynnott 11mo ago
        _Number would not go up sufficiently steeply_, would be the major concern, not collapse. Microsoft might end up valued as (whisper it) a normal mature stable company. That would be something like a quarter to a half what it's currently valued. For someone paid mostly in options, this is clearly a problem (and people at the top in these companies mostly _are_ compensated with options, not RSUs; if the stock price halves, they get _nothing_).
    • solumunus 11mo ago
      The cost of the boat sinking is also very high and that’s looking like the more likely scenario. Watching your competitors sink huge amounts of capital into a probably sinking boat is a valid strategy. The growth path they were already on was fine no?
  • layer8 11mo ago
    US technocapitalism is built on the premise of technological innovation driving exponential growth. This is why they are fixated on whatever provides an outlook for that. The risk that it might not work out is downplayed, because (a) they don’t want to hazard not being at the forefront in the event that it does work out, and (b) if it doesn’t work out, nobody will really hold them accountable for it, not the least because everybody does it. After the mobile and cloud revolution having run out of steam, AI is what promises most growth by far, even if it is a dubious promise. It’s a gamble, a bet on “the next big thing”. Because they would never be satisfied with there not being another “big thing”, or not being prominently part of it.
    • binary132 11mo ago
      Riding hype waves forever is the most polar opposite thing to “sustainable” that I can imagine
  • apercu 11mo ago
    It's not just AI mania, it's been this way for over a decade. When I first started consulting, organizations were afraid enough of lack of ROI in tech implementations that projects needed an economic justification in order to be approved. Starting with cloud, leadership seemed so become rare, and everything was "us too!". After cloud it was data/data visualization, then it was over-hiring during Covid, the it was RTO, and now it's AI. I wonder if we will ever return to rationalization? The bellwether might be Tesla stock price (at a rational valuation).
    • eastbound 11mo ago
      If rationalization comes back, everyone will talk like in Michael Moore’s documentary about GM and Detroit. A manager’s salary after half a career will be around $120k, like in an average bank, and that would be succeeding. I don’t think we even imagine how much of a tsunami we’ve been surfing since 2000.
  • Balinares 11mo ago
    > So how to explain the current AI mania being widely promoted? Probably individual actors have different motivations, but let's spitball for a second: - LLMs are genuinely a revolution in natural language processing. We can do things now in that space that were unthinkable single-digit years ago. This opens new opportunity spaces to colonize, and some might turn out quite profitable. Ergo, land rush. - Even if the new spaces are not that much of a value leap intrinsically, some may still end up obsoleting earlier-generation products pretty much overnight, and no one wants to be the next Nokia. Ergo, defensive land rush. - There's a non-zero chance that someone somewhere will actually manage to build the tech up into something close enough to AGI to serve, which in essence means deprecating the labor class. The benefits (to that specific someone, anyway...) would be staggering enough to make that a goal worth pursuing even if the odds of reaching it are unclear and arguably quite low. - The increasingly leveraged debt that's funding the land rush's capex needs to be paid off somehow and I'll venture everyone knows that the winners will possibly be able to, but not everyone will be a winner. In that scenario, you really don't want to be a non-winner. It's kind of like that joke where you don't need to outrun the lions, you only need to outrun the other runners, except in this case the harder everyone runs and the bigger the lions become. (Which is a funny thought now, sure, but the feasting, when it comes, will be a bloodbath.) - A few, I'll daresay, have perhaps been huffing each other's farts too deep and too long and genuinely believe the words of ebullient enthusiasm coming out of their own mouths. That, and/or they think everyone's job except theirs is simple actually, and therefore just this close to being replaceable (which is a distinct flavor of fart, although coming from largely the same sources). So basically the mania is for the most part a natural consequence of what's going on in the overlap of the tech itself and the incentive structure within which it exists, although this might be a good point to remember that cancer and earthquakes too are natural. Either way, take care of yourselves and each other, y'all, because the ride is only going to get bouncier for a while.
    • 12_throw_away 11mo ago
      > There's a non-zero chance that someone somewhere will actually manage to build the tech up into something close enough to AGI Bullshit
  • adventured 11mo ago
    It's not "pure greed." It's keeping up with the Joneses. It's fear. There are three types of humans: mimics, amplifiers, originators. ~99% of the population are basic mimics, and they're always terrified - to one degree or another - of being out of step with the herd. The hyper mimicry behavior can be seen everywhere and at all times, from classrooms to Tiktok & Reddit to shopping behaviors. Most corporate leadership are highly effective mimics, very few are originators. They desperately herd follow ('nobody ever got fired for buying IBM'). This is the dotcom equivalent of every business must be e and @ ified (the advertising was aggressively targeted to that at the time). 1998-2000, you must be e ready. Your hotdog stand must have its own web site. It is not greed-driven, it's fear-driven.
  • Workaccount2 11mo ago
    People think that because AI cannot replace a senior dev, it's a worthless con. Meanwhile, pretty much every single person in my life is using LLMs almost daily. Guys, these things are not going away, and people will pay more money to use them in future. Even my mom asks ChatGPT to make a baking applet with a picture she uploads of the recipe, that creates a simple checklist for adding ingredients (she forgets ingredients pretty often). She loves it. This is where LLMs shine for regular people. She doesn't need it to create a 500k LOC turn-key baking tracking SaaS AWS back-end 5 million recipes on tap kitchen assistant app. She just needs a bespoke one off check list.
    • trollbridge 11mo ago
      Is she going to pay enough to fund the multitrillion dollars it costs to run the current AI landscape?
      • Workaccount2 11mo ago
        Yeah, she is, because when reality sets in, these models will probably have monthly cellphone/internet level costs. And training is the main money sink, whereas inference is cheap. 500,000,000 people paying $80/mo is roughly a 5-yr ROI on a $2T investment. I cannot believe on a tech forum I need to explain the "Get them hooked on the product, then jack up the price" business model that probably 40% of people here are kept employed with. Right now they are (very successfully) getting everyone dependent on LLMs. They will pull rug, and people will pay to get it back. And none of the labs care if 2% of people use local/chinese models.
        • gitremote 11mo ago
          > And training is the main money sink, whereas inference is cheap. False. Training happens once for a time period, but inference happens again and again every time users use the product. Inference is the main money sink. "according to a report from Google, inference now accounts for nearly 60% of total energy use in their AI workloads. Meta revealed something even more striking: within their AI infrastructure, power is distributed in a 10:20:70 ratio among experimentation, training, and inference respectively, with inference taking the lion’s share." https://blogs.dal.ca/openthink/the-hidden-cost-of-ai-conversations-understanding-llm-inference-energy-consumption/ https://blogs.dal.ca/openthink/the-hidden-cost-of-ai-convers...
  • rsynnott 11mo ago
    I mean, see Windows Vista. It was eventually patched up to the point where it was semi-usable (and then quietly killed off), but on introduction it was a complete mess. But... something had to be shipped, and this was something, so it was shipped. (Vista wasn't the only one; Windows ME never even made it to semi-usable, and no-one even remembers that Windows 8 _existed_.) Microsoft has _never_, as far as I know, been a company to be particularly concerned about product quality. The copilot stuff may be unusually bad, but it's not that aberrant for MS.
  • DebtDeflation 11mo ago
    >So how to explain the current AI mania being widely promoted? CEOs have been sold on the ludicrous idea that "AI" will replace 60-80% of their total employee headcount over the next 2-3 years. This is also priced into current equity valuations.
  • int_19h 11mo ago
    At this point, the people in charge have signed off on so much AI spending that they need it to succeed, otherwise they are the ones responsible for massive losses.
  • deleted 11mo ago
    [deleted]
• ChrisArchitect 11mo ago
  [dupe] https://news.ycombinator.com/item?id=46135388 https://news.ycombinator.com/item?id=46135388
• forks 11mo ago
  If you click through to the article shared yesterday[0]: > Microsoft denies report of lowering targets for AI software sales growth This Ars Technica article cites the same reporting as that Reuters piece but doesn't (yet) include anything about MSFT's rebuttal. [0]: https://news.ycombinator.com/item?id=46135388 https://news.ycombinator.com/item?id=46135388
  • mwkaufma 11mo ago
    Semantics + Spin
• nba456_ 11mo ago
  made up story
• shevy-java 11mo ago
  Have we finally reached peak AI already? In that event we will see the falling down phase next.
  • verdverm 11mo ago
    Yea, we're getting their, had some people reach out to me who only do so once a hype bubble is well formed
    • ares623 11mo ago
      What do you do and why do people reach out to you?
      • verdverm 11mo ago
        I'm the "computer guy" in an IRL social group, same thing when blockchain was hyping I also have a PhD in CS/ML, work with a healthcare AI company, and am building my own agentic setup
        • ares623 11mo ago
          Ah so in this case your social group has started asking how to invest into AI?
          • verdverm 11mo ago
            One of them is involved in a 10MW data center prototype actually Not "investing" questions this time lol, more thoughts on the value or future of AI, a lot of hyperbolics online and in the media these days, people tend to ask those they think know something about technical things to get a sense of where reason lies
  • stogot 11mo ago
    Not until we put it on the blockchain
• meindnoch 11mo ago
  Top signal. Phase transition is imminent.
  • justonceokay 11mo ago
    Blaming slow sales on salespeople is almost always a scapegoat. Reality is that either the product sells or it doesn’t. Not saying that sales is useless, far from it. But with an established product that people know about, the sales team is more of a conduit than they are a resource-gathering operation.
    • seanw444 11mo ago
      > Reality is that either the product sells or it doesn’t. Why do people use this useless phrase template? Yeah, the point is that it's not selling, and it's not selling because people are getting increasingly skeptical about its actual value.
      • Ylpertnodi 11mo ago
        > it's not selling because people are getting increasingly skeptical about its actual value. So why are the sales-peops being blamed?
        • jccooper 11mo ago
          I think the point of this headline is that they're not being blamed in this one instance.
    • throwawaylaptop 11mo ago
      I worked car sales for years. The same large dealership can have a person anyone would call a decent salesperson, and they made $4k a month. There was also two people at that dealership making $25k+ a month each. If your organization is filled with the $4k type and not the $25k type, you're going to have a bad time. I was #7 in the US while working at a small dealership. I moved the the large dealership mentioned above and instantly that dealership became #1 for that brand in the country, something they had never done before. Because not only did I sell 34 cars a month without just cannibalizing others sales, I showed others that you can show up one day and do well so there weren't many excuses. The output of the entire place went up. So, depending on the pay plan and hiring process, who exactly is working at Microsoft right now selling AI? I honestly have no idea. It could be rock stars and it could be the $4k guys happy they're making $10k at Microsoft.
• lysace 11mo ago
  Is "The Information" credible? It's the sole source.
• type0 11mo ago
  But is it sold enough to regular Windows Home users? If MS brings an ultimatum: "you need to buy AI services to use Windows", they might get a bunch more clueless subscribers. In the same way as there's no ability to set up Windows without internet connection and MS account they could make it mandatory to subscribe to Copilot.
  • N19PEDL2 11mo ago
    I think Microsoft's long-term plan is exactly that: to make Windows itself a subscription product. Windows 12 Home for $4.99 a month, Copilot included. It will be called OSaaS.
    • amlib 11mo ago
      I think you wrote Ass OS wrong :)
    • danny_codes 11mo ago
      Imagine subscribing to an OS when Linux exists.
  • add-sub-mul-div 11mo ago
    > In the same way as there's no ability to set up Windows without internet connection and MS account Not true. They're clearly unwilling or unable to remove this code path fully, or they would have done so by now. There's just a different workaround for it every few years.
    • snoman 11mo ago
      There’s probably some compliance requirement that it’s technically possible to set it up without an internet connection, so they leave it there, but make it unreasonably difficult for a majority to do it.
    • type0 10mo ago
      I wrote about Windows Home, they sure can divert the code further and lock it down completely. The same probably can't be done for Pro version unless they want to break Group Policy
• mythz 11mo ago
  Despite having an unlimited warchest I'm not expecting Microsoft to come out as a winner from this AI race whilst having the necessary resources. The easy investment was to throw billions at OpenAI to gain access to their tech, but that puts them in a weird position of not investing heavily in cultivating their own AI talent and being in control of their own destiny by having their own horse in the race with their own SOTA models. Apple's having a similar issue, unlimited wealth that's outsourcing to external SOTA model providers.
• ceroxylon 11mo ago
  As someone who appreciates machine learning, the main dissonance I have with interacting with Microsoft's implementation of AI feels like "don't worry, we will do the thinking for you". This appears everywhere, with every tool trying to autocomplete every sentence and action, creating a very clunky ecosystem where I am constantly pressing 'escape' and 'backspace' to undo some action that is trying to rewrite what I am doing to something I don't want or didn't intend. It is wasting time and none of the things I want are optimized, their tools feel like they are helping people write "good morning team, today we are going to do a Business, but first we must discuss the dinner reservations" emails.
  • xnorswap 11mo ago
    I broadly agree. They package "copilot" in a way that constantly gets in your way. The one time I thought it could be useful, in diagnosing why two Azure services seemingly couldn't talk to each other, it was completely useless. I had more success describing the problem in vague terms to a different LLM, than an AI supposedly plugged into the Azure organisation that could supposedly directly query information.
    • yoyohello13 11mo ago
      I had the experience too. Working with Azure is already a nightmare, but the copilot tool built in to Azure is completely useless for troubleshooting. I just pasted log output into Claude and got actual answers. Mincrosoft’s first party stuff just seems so half assed and poorly thought out.
      • foobarian 11mo ago
        Why is this, I wonder? Aren't the models trained on about the same blob of huggingface web scrapes anyway? Does one tool do a better job of pre-parsing the web data, or pre-parsing the prompts, or enhancing the prompts? Or a better sequence of self-repair in an agent-like conversation? Or maybe more precision in the weights and a more expensive model?
• justapassenger 11mo ago
  AI is people looking at EV hype and saying - I'll 100x it. It has all the same components, just on much higher scale: 1. Billionaire con-man convincing large part of market and industry (Altman in AI vs Musk in EV) that new tech will take over in few years. 2. Insane valuations not supported by an actual ROI. 3. Very interesting and amazing underlying technology. 4. Governments jumping on the hype and enabling it.
  • cosmicgadget 11mo ago
    The valuations are based on value, not revenue.
• grim_io 11mo ago
  What can you even do in the ms enterprise ecosystem with their copilot integration? Is it just for chatting? Is it a glorified RAG? Can you tell copilot co to create a presentation? Make a visualisation in a spreadsheet?
  • cosmicgadget 11mo ago
    It wants to help create things in Office documents, I imagine just saving you the copy and paste from the app or web form. The one thing I tried to get it to do was to take a spreadsheet of employees and add a column with their office numbers (it has access to the company directory). The response was something like "here's how you would look up a office number, you're welcome!" It is functional at RAG stuff on internal docs but definitely not good - not sure how much of this is Copilot vs corporate disarray and access controls. It won't send emails for me (which I would think is the agentic mvp) but that is likely a switch my organization daren't turn on. Tldr it's valuable as a normal LLM, very limited as a add-on to Microsoft's software ecosystem.
  • jabroni_salad 11mo ago
    Chatting and everything you normally do in chats is there. needle hunting info out of all my Teams group chats is probably my favorite thing. It can retrieve info out of sharepoint I guess. Biggest complaint for me personally is that you run out of context very quickly. If you are used to having longer running chats on other platforms you won't be happy when Copilot tells you to make a new chat like 5 messages in. For most of my clients they are only interested in meeting minutes and otter does that for 25% of the price. I think in any given business the qty of people who actually use textgen regularly is pretty low. My workplace is looking to downsize licenses and asking people to use it or lose it because $21/user/mo is too much to have as a every now and then novelty.
  • LtWorf 11mo ago
    It's basically clippy without the funny animations.
  • mizzao 11mo ago
    Gamma.app is what people use for that now. And it definitely doesn't feel like PowerPoint with AI slapped on.
• glimshe 11mo ago
  The difference between poison and medicine is the amount. AI is great and very useful, but they want the AI to replace you instead of supporting your needs. "AI everywhere" is worse than "AI nowhere". What we need is "AI somewhere".
  • gdulli 11mo ago
    That's what we had before LLMs. Without the financially imposed contrivance of it needing to be used everywhere, it was free to be used where it made sense.
  • pnt12 11mo ago
    I fully agree. It's great for prototypes reactors, sometimes debugging (I'm kinda annoyed at how googling seems less and less efficient nowadays), and also reviewing. But you gotta be critical about it. It's like a junior assistant eager to show work - you shouldnt take it and deliver it as is, it needs to be filtered by a competent person with taste!
• pjmlp 11mo ago
  Even Devblogs and anything related to Java,.NET, C++ and Python out of Redmond seems to be all around AI and anything else are now low priority tickets on their roadmaps. No wonder there is this exhaustion.
• kryogen1c 11mo ago
  I went to Ignite a few weeks ago, and the theme of the event and most talks was "look at how we're leveraging AI in this product to add value". Separately, the theme from talking to Every. Single. Person on the buy-side was gigantic eye roll yes I cant wait for AI to solve all my problems. Companies I support are being directed from their presidents to use ai, literally a solution in search of a problem.
• derekcheng08 11mo ago
  Super interesting how this arc has played out for Microsoft. They went from having this massive advantage in being an early OpenAI partner with early access to their models to largely losing the consumer AI space: Copilot is almost never mentioned in the same breath as Claude and ChatGPT. Though I guess their huge stake in OpenAI will still pay out massively from a valuation perspective.
  • Zigurd 11mo ago
    Microsoft seems to be actively discarding the consumer PC market for Windows. It's gamers and enterprise, it seems. Enterprise users don't get a lot of say in what's on their desktop.
    • tetris11 11mo ago
      I'm not even sure if it's gamers anymore, given how they're throttling local compute with buggy updates. Though maybe that's a strategy to increase demand for cloud gaming... shoot the left foot so that the right foot can hop
  • xnorswap 11mo ago
    It's because Copilot isn't (just) a model, it's a brand that's been slapped on any old rubbish. If Clippy were still around, that'd have been rebranded as Copilot by now.
    • blitzar 11mo ago
      If they resurected Clippy and made it the face of their Ai I would switch in a heartbeat.
      • int_19h 11mo ago
        https://felixrieseberg.github.io/clippy/ https://felixrieseberg.github.io/clippy/
        • 11mo ago
• cmiles8 11mo ago
  Hearing similar stories play out elsewhere too with targets being missed left and right. There’s definitely something there with AI but a giant chasm between reality and the sales expectations on what’s needed to make the current financial engineering on AI make any sense.
• more_corn 11mo ago
  I wonder if it’s because Microsoft is hyper focused on a bunch of crap people don’t want or need?
• rewilder12 11mo ago
  Anyone who has had the pleasure of being forced to migrate to their new Fabric product can tell you why sales are low. It's terrible not just because it's a rushed buggy pile of garbage they want people to Alpha test on users but because of the "AI First" design they are forcing into it. They hide so much of what's happening in the background it is hard to feel like you can trust any of it. Like agentic "thinking" models with zero way to look into what it did to get to the conclusion.
  • yoyohello13 11mo ago
    Every new Microsoft product is like this. It all has that janky, slapped together at the last minute feeling.
    • codr7 11mo ago
      I can see why Microsoft likes AI and thinks it's great for writing code. The kind of code AI writes is the kind of code Microsoft has always written.
    • array_key_first 11mo ago
      It's so bizarre because their devs tools and frameworks are so well thought out. You'd think if they're using those it should come out not janky. But I don't think they do use their own devs tools, and I also don't think it would help.
      • moi2388 11mo ago
        They don’t use their own tools. It’s react, electron, JavaScript and Python. And I strongly suspect by Indian engineers from the recent learn page write ups
• zombiwoof 11mo ago
  [dead]
• mayhemducks 11mo ago
  Hopefully this is the beginning of the trough of disillusionment, and the steady return of rationalism.
• Bluescreenbuddy 11mo ago
  Good. Go make your OS useful and stop alienating your enterprise customers.
• lawlessone 11mo ago
  People are wondering how we got here when these AI's make so many mistakes. But the one thing they're really good at is marketing. That's why it's all over linkedin etc, marketing people see how great it is and think it must be great at everything else too.
• aabajian 11mo ago
  I think MSFT really needs some validated user stories. How many users want to, "Improve my writing," "Create an image," "Understand what is changed" (e.g. recent edits), or "Visualize my data."? Those are the four use cases featured by the Microsoft 365 Copilot App (https://m365.cloud.microsoft/ https://m365.cloud.microsoft/). Conversely, I bet there are a lot of people who want AI to improve things they are already doing repeatedly. For example, I click the same button in Epic every day because Epic can't remove a tab. Maybe Copilot could learn that I do this and just...do it for me? Like, Copilot could watch my daily habits and offer automation for recurring things.
  • blitzar 11mo ago
    > Copilot could watch my daily habits and offer automation for recurring things Pretty sure the advertising department already watches you and helpfully suggests things that you need to buy.
  • trollbridge 11mo ago
    I can’t find any use case for Copilot at all, and I frequently “sell” people Microsoft 365. (I don’t earn a commission; I just help them sign up for it.) I cannot come up with a reason anyone needs Copilot. Meanwhile I spent 3-4 hours working with a client yesterday using Dreamhost’s free AI tools to get them up and running with a website quickly whilst I configured Microsoft 365, Cloudflare, email and so forth for them.
  • abrichr 11mo ago
    > Like, Copilot could watch my daily habits and offer automation for recurring things. We're working on it at https://github.com/openadaptai/openadapt https://github.com/openadaptai/openadapt.
  • gibsonsmog 11mo ago
    >improve things they are already doing repeatedly. For example, I click the same button in Epic every day because Epic can't remove a tab. Maybe Copilot could learn that I do this and just...do it for me? You could solve that issue (and probably lot's of similar issues) with something like Auto Hotkey. Seems like extreme overkill to have an autonomous agent watch everything you do, so it might possibly click a button.
• mwkaufma 11mo ago
  Meanwhile, divisions that make actual products people wants are expected to subsidize the hype department: https://www.geekwire.com/2025/new-report-about-crazy-xbox-profit-expectations-helps-shed-light-on-microsofts-broader-gaming-changes/ https://www.geekwire.com/2025/new-report-about-crazy-xbox-pr...
  • robocat 11mo ago
    It would appear XBox is not subsidizing anything, since Microsoft's gross profit margin is ~70%. Although that depends on total revenues too (low margin on high revenue can be better than high margin on low revenue).
• deleted 11mo ago
  [deleted]
• niceworkbuddy 11mo ago
  I wonder what part of these failed sales is due to GDRP requirements in the IT enterprise industry. I have my own european view, and it seems our governments are treating the matter very seriously. How do you ensure an AI agent won't leak anything? It just so happened that it wiped entire database or cleared a disk and later being very "sorry" about it. Is the risk worth it?
  • RevEng 11mo ago
    Having worked with this stuff a lot, privacy isn't the biggest problem (though it is a problem). This shit just doesn't work. Wide-eyed investors might be willing to overlook the 20% failure rates, but ordinary people won't, especially when a single mistake can cost you millions of dollars. In most places I've seen AI shoved - especially Copilot - it takes more time to read and dismiss its crappy suggestions than it does to just do the work without it. But the really insidious case is when you don't realize it is making shit up and then you act on it. If you are lucky you embarrass yourself in front of a customer. If you are unlucky you unintentionally wipe out the production database. That's much more of an overt and immediate concern than leaking some PII.
• knowitnone3 11mo ago
  Why do they have salespeople when AI could have done the job?
• zkmon 11mo ago
  >> The Information notes that much of Microsoft’s AI revenue comes from AI companies themselves renting cloud infrastructure rather than from traditional enterprises adopting AI tools for their own operations. And MS spends on buying AI hardware. That's a full circle.
• drumhead 11mo ago
  Too much money being spent on a technology that isnt ready to do what they're saying it can do. It feels like the 3G era all over again. Billion spent on 3G licences which didnt deliver what they expected it would.
  • danny_codes 11mo ago
    But this time, it’s trillions! What could possibly go wrong
• breve 11mo ago
  Why wasn't AI able to help them meet their sales targets? Can't Microsoft supercharge its workflow with these five weird prompts that bring a new layer of intelligence to its productivity: https://fortune.com/2025/09/02/billionaire-microsoft-ceo-satya-nadella-reveals-ai-prompts-superchage-everyday-workflow-gpt-5-co-pilot-prompting-success/ https://fortune.com/2025/09/02/billionaire-microsoft-ceo-sat...
• maxdo 11mo ago
  It's almost a revenge of the engineers. The big players' path to "success" has been to slap together some co-pilot loaded with enterprise bloat and try to compete with startups that solve the same problems in a much cleaner way. Meanwhile, they believed the market was already theirs—so their logic became: fire the engineers, buy more GPUs. I have mixed feelings about this. I've interviewed several people who were affected by these layoffs, and honestly, many of them were mediocre engineers by most measures. But that still doesn't make this a path to success.
  • torben-friis 11mo ago
    >I've interviewed several people who were affected by these layoffs, and honestly, many of them were mediocre engineers by most measures. But that still doesn't make this a path to success. How mediocre are we talking about here? (I’m curious)
    • fingerlocks 11mo ago
      Very poor & mediocre. You can find secret little pockets within Microsoft where individuals & small teams do nothing at all, day in and day out. I mean literally nothing. The game is to maximize life and minimize work at the expense of the company. The managers are in on the game and help with the cover-up. I find it hilariously awesome and kind of sad at the same time. Anyway, one round of layoffs this year was specifically targeted at finding these pockets and snuffing them out. The evidence used to identify said pocket was slowly built out over a year ahead of time. It's very likely that these pockets also harbored poor & mediocre developers, it stands to reason that a poor or mediocre developer is more likely to gravitate to such a place. Not saying all the developers that were laid off were in a free-loader pocket, or that this cohort must be the ones that were interviewed. I'm only suggesting that the mediocre freeloaders form a significant slice of the Venn diagram.
      • lawlessone 11mo ago
        Damn that is crazy, how do you measure it? , AI use? , i hope you saying this doesn't affect the employment prospects of the ones that aren't "mediocre" but happened to be on those teams. I'm sure it's difficult enough for people to find work right now without you putting a knife in their back on the way out.
• tinyhouse 11mo ago
  Microsoft is strange cause it reports crazy growth numbers for Azure but I never hear about any tech company using Azure (AWS and GCP dominate here). I know it's more popular in big enterprises, banks, pharma, government, etc. and companies like Openai use their GPU offerings. Then there's all the Office stuff (Sharepoint, One Drive, etc). Who knows what they include under Azure numbers. Even Github can be considered "cloud". My point is, outside of co-pilot, very few consider Microsoft when they are looking for AI solutions, and if you're not already using Azure, why would you even bother check what they offer. At this point, their biggest ticket is their OpenAI stake. With that being said, I should give them some credit. They do some interesting research and have some useful open source libraries they release and maintain in the AI space. But that's very different than building AI products and solutions for customers.
  • godtoldmetodoit 11mo ago
    Anecdotally, Azure OpenAI is a big player in the mid sized enterprise market and up. Lots of corps want to use OpenAI models, and the easiest way to onboard is to just spin up Azure OpenAI. You already have an agreement, your legal department is fine with it, you have a MS rep etc. I think tons of businesses look to Microsoft first when it comes to AI solutions. I'm not saying they have the best products, but when has that ever stopped them?
• ChrisArchitect 11mo ago
  Again? https://news.ycombinator.com/item?id=46135388 https://news.ycombinator.com/item?id=46135388 Not only that but the headline and story changed by the time Ars went to print: Microsoft denies report of lowering targets for AI software sales growth
• gwerbret 11mo ago
  A bit tangential and pedantic, but: > At the heart of the problem is the tendency for AI language models to confabulate, which means they may confidently generate a false output that is stated as being factual. "Confabulate" is precisely the correct term; I don't know how we ended up settling on "hallucinate".
  • rsynnott 11mo ago
    I mean, neither is a great term, in that they both refer to largely dissimilar psychological phenomena, but confabulate is at least a lot _closer_.
  • torben-friis 11mo ago
    >fabricate imaginary experiences as compensation for loss of memory Uh, TIL. This is wildly different to the Spanish meaning, confabular means to plot something bad (as in a conspiracy). Which is a weird evolution in both languages, as the Latin root seems to mean simply “talking together”.
  • delecti 11mo ago
    The bigger problem is that, whichever term you choose (confabulate or hallucinate), that's what they're always doing. When they produce a factually correct answer, that's just as much of a random fabrication based on training data as when they're factually incorrect. Either of those terms falsely implies that they "know" the answer when they get it right, but "confabulate" is worse because there isn't "gaps in their memory", they're just always making things up.
  • neRok 11mo ago
    About 2 years ago I was using Whisper AI locally to translate some videos, and "hallucinations" is definitely the right phrase for some of its output! So just like you might expect from a stereotypical schizo: it would stay on-task for a while, but then start ranting about random things, or "hearing things", etc.
    • adammarples 11mo ago
      A hallucination is something that is experienced internally. Confabulation is better because it's the act of telling a porkie externally.
• gjmveloso 11mo ago
  "They just have no taste" - Steve Jobs Microsoft had a great start with the exclusive rights over OpenAI tech but they're not capable of really talking with developers within those large companies in the same sense Google and AWS are rapidly catching-up.
• cleandreams 11mo ago
  For the first time I have begun to doubt Microsoft's chosen course. (I am a retired MS principal engineer.) Their integration of copilot shows all the taste and good tradeoff choices of Teams but to far greater consequence. Copilot is irritating. MS dependence on OpenAI may well become dicey because that company is going to be more impacted by the popping of the AI bubble than any other large player. I've read that MS can "simply" replace ChatGPT by rolling their own -- maybe they can. I wouldn't bet the company on it. Is google going to be eager to license Gemini? Why would they?
  • blinding-streak 11mo ago
    For the first time? What about Zune, Nokia/Windows Phone, Windows Vista, attacking open source for decades, Scroogled campaign, all the lost Ballmer years, etc. Microsoft has had tons of blunders over time.
• keeda 11mo ago
  This is annoying because Ars is one of the better tech blogs out there, but it still has instances of biased reporting like this one. It's interesting to decipher this article with an eye on what they said, what they implied, and what they didn't say. Would be good if a sales person chime could in to keep me honest, but: 1. There is a difference between sales quotas and sales growth targets. The former is a goal, latter is aspirational, a "stretch goal". They were not hitting their stretch goals. 2. The stretch goals were, like, doubling the sales in a year. And they dropped it to 25% or 50% growth. No idea what the adoption of such a product should be, but doubling sounds pretty ambitious? I really can't say, and neither did TFA. 3. Only a fraction met their growth goals, but I guess it's safe to assume most hit their sales quotas, otherwise that's what the story would be about. Also, this implies some DID hit their growth goals, which implies at least some doubled their sales in a year. Could be they started small so doubling was easy, or could be a big deal, we don't know. 4. Sales quotas get revised all the time, especially for new products. Apparently, this was for a single product, Foundry, which was launched a year ago, so I expect some trial and error to figure out the real demand. 5. From the reporting it seems Foundry is having problems connecting to internal data sources... indicating it's a problem with engineering, and not a problem with the AI itself. But TFA focuses on AI issues like hallucinations. 6. No reporting on the dozens of other AI products that MSFT has churned out. As an aside, it seems data connectivity issues are a stickier problem than most realize (e.g. organizational issues) and I believe Palantir created the FDE role for just this purpose: https://nabeelqu.substack.com/p/reflections-on-palantir https://nabeelqu.substack.com/p/reflections-on-palantir Maybe without that strategy it would be hard for a product like this to work.
• naves 11mo ago
  It truly looks like they didn’t learn anything from Clippy…
• MajesticWombat 11mo ago
  turns out ppl dont want to pay astronomical sums for shitty hallucinating ai when it really matters
• themafia 11mo ago
  "after salespeople miss their quotas." Well.. that's certainly one way to view it. The other is: "because the company set unrealistic expectations." I'm sure this will slow down the growth of "AI datacenters." I'm sure of this.
  • snoman 11mo ago
    Every salesperson will tell you that good products sell themselves and therein lies the real story.
• zombot 11mo ago
  They don't give a shit about their users, but their own salespeople are worthy of this morsel of mercy.
• ludicrousdispla 11mo ago
  Is there something that AI is expected to be exceptionally good at, and that also has value?
• anonu 11mo ago
  Have you ever seen a sales target that was achievable? They are always aspirational.
• mathgeek 11mo ago
  I was playing with copilot in excel the other day, and (not surprisingly) it quickly got into a loop of “that’s not possible… oh yea here is how you do that… oh you are right that didn’t work because it’s not possible” starting from the very first prompt. You can tell it’s being given instructions to always find an answer.
• KellyCriterion 10mo ago
  MS365 subscription price rise next year for my area: 25% up :-D