Filter Events:
Bank of America Global Technology Conference
Who:Yusuf Mehdi, CVP, Consumer CMO
Event:Bank of America Global Technology Conference
Date:June 7, 2023
Brad: Good
morning. Thanks everybody for joining. I’m delighted to be welcoming Microsoft
to the conference here on stage. I’m Brad Sills, senior analyst covering large
cap software, including Microsoft. We’re very fortunate today to have Yusuf
Mehdi, who is Consumer Chief Marketing Officer and Corporate Vice President.
Thank you so much, Yusuf, for joining us.
Yusuf: Thanks,
Brad.
Brad: Great
to have you here.
Yusuf: Yeah,
thank you.
Brad: So
why don’t we just start, Yusuf, with a little bit of your background and your
role at Microsoft as chief marketer for the consumer?
Yusuf: Yeah,
great.
Brad: Please.
Yusuf: It’s
great to see everybody. Good morning. In Microsoft, the role I play as I run
essentially product marketing, product management for most all of the consumer
products at the company. This includes Windows, our Surface device portfolio,
Microsoft 365 Consumer, and then most notably of late Bing and Edge and all of
our AI, consumer AI efforts.
Brad: Wonderful.
And why don’t we just start high level. When we think of Microsoft, we think of
the Enterprise. So maybe if you could just touch on kind of the state of the
Microsoft brand with the consumer, and where are the key focus areas?
Yusuf: As
a whole with Microsoft, we are fortunate to have a very strong brand on a
worldwide basis. We have great strength in the Enterprise, as you know, and
that translates over into the consumer space because people are people as we
say. So they use our software at work and at home.
And we have excellence in certain categories of productivity and creativity where we’re well known. And now we’re coming in new areas. Obviously with Windows we’ve got strength, and then with Bing and Edge.
Brad: Wonderful.
Great. And we saw the launch of the new Bing early this year, and I thought the
demo was impressive. Wanted to just get your thoughts on what was the
motivation behind that? What are the use cases you’re going after with Bing in
search?
Yusuf: Sure.
Well, the big opportunity that we saw with the launch of the new Bing is that
there are roughly about 10 billion search queries that happen every day. And at
least half of those, by our account, go unanswered so people aren’t getting the
answers to the questions they want. These are things like longer travel
queries, more sophisticated research. And so we saw an opportunity to marry the
power of AI with Bing and create a new interface to go after that and start to
solve some of those problems for customers. And we’re seeing some good success
already early on with that.
Brad: Wonderful.
Wonderful. And we’d love to get your comments on the OpenAI partnership and the
integration there with being and in general across Microsoft, if you could,
Yusuf: Sure.
As many of you may know, we have a very tight relationship with OpenAI that
dates back now multiple years to about 2019. We’ve worked together with them to
start from the foundation. We’ve helped provide the cloud power behind the
phenomenal work that they’ve done in AI through large language models with
Azure.
We built the supercomputer; the powers, all of that training, and the inferencing. These are very high-end sophisticated computers. There was special work done for that. We did that work.
And then more recently now with Bing, we’ve worked together, we’ve built a proprietary technology inside of Microsoft that we call codename Prometheus. This is a proprietary way that we have to access the large language model to access AI and get the most out of it. So essentially think about taking the power of the web index, our understanding of the Internet, and of webpages, which is only essentially two companies that really have that kind of power. And we can now more intelligently call, access the AI, refine the answers, and get that back. And we’ve worked together with OpenAI in a number of ways on that.
From ChatGPT, we made an announcement at our Developer Conference last week that we are now going to enable with them the ability to use search within ChatGPT, just like we have with Bing.
Today with Bing, we have a very differentiated offering, which is you can not only access the AI to answer questions, but we can call the Internet. That means we can reference things, it means we have more timely data. And so those are real strengths and that we’re continuing to partner with ChatGPT in that.
And then the final thing is we announce with them a common plugin architecture. So as third parties want to not come and write on this new emerging platform, when people write, developers write a plugin, it’ll run on Bing and on ChatGPT, and for that matter on all of our copilots at the company.
Brad: Wonderful.
And at the time of that launch for the new Bing, you referred to the next
generation LLM from OpenAI that was coming that’s more tailored for search.
Would love to get any more color on that, please, if you could elaborate.
Yusuf: Sure.
Yeah. At the time we were essentially were running on an early version of GPT-4.
Already it’s recent memory. But at the time GPT-3 was out, we had more advanced
results, and people were asking, why are your results so great? It’s because we
had been working in an early version, so that’s what we were referring to. OpenAI
confirmed that about a month or so later after they announced it.
Brad: Got
it. And what is the results been so far in terms of the relevance of Bing since
you had this integration with OpenAI?
Yusuf: And
it’s only been about four and a half months. But since the launch, we’ve had a
bunch of great progress and milestones on that. First off, and just from in
terms of usage, Bing has now surpassed 100 million daily active users, which by
all accounts of any kind of product in the Internet is a super impressive
number. In the world of the Internet search, it’s not that much. We’re still
single digit, single digit player, which means we have a lot of upside. But 100
million daily actives is pretty impressive.
We’ve seen our mobile traffic increase 4x, and we’ve seen a lot of pickup now and usage of it. We’ve seen new users come. I think back, early on we had millions of new users come and try Bing that they hadn’t before. So it’s really, I think in our minds, started a new day in search and a new round of competition.
Brad: Wonderful.
Thank you. And there were some enhancements to the Prometheus model as part of
this Bing overhaul earlier this year. Could you elaborate on what Prometheus is
and what were some of those changes?
Yusuf: Prometheus
is a little bit of some of what I was mentioning earlier. It’s our proprietary
method for accessing the Bing search index. We’ve used it effectively to do a
couple things. One is to get better answers in search. What’ll happen is you,
let’s say today you call an AI in ChatGPT or something else, you get back an
answer that gets created from the AI. We’re able to check that against the
search index to understand, hey, is that really something from there we can use
search data to make the answer, help the answer get more relevant, and we can
footnote it.
The other thing we’ve done is we’ve actually used AI in the converse and we’ve applied it to our search ranker. And for those of who follow search closely, improvements in search ranking is very tough. It’s 20 years for us and Google. The largest increase, I think, in at least a decade, if not longer, came after we applied the AI sort of techniques to the search ranker. And so now our results, I would say, rival Google’s results in terms of relevancy.
Brad” Interesting. Okay. Great. And you demoed some new use cases when you rolled out the new Bing. Are there any use cases that have surprised you that you’ve seen more of that perhaps maybe you didn’t expect? And just any commentary you can make on how some of these new use cases for search are coming in with Bing?
Yusuf: Sure.
A couple different things. Like we said, first off, I said about half of the
queries that we see in search today go unanswered, and those were things like
travel, like more sophisticated travel planning, deeper shopping research, sort
of advanced kind of research. Those things we’re seeing now in the early data;
that people are in fact doing better queries.
And it gets kind of nuanced, so like when you’re in search, people might say Flex for 500 bucks. When people are in a chat interface, they might say, hey, help me plan a trip to Kenya, two week trip to Kenya. So it’s different questions, different answers. So we’re seeing people do more sophisticated travel analysis and planning as one example.
We’ve seen a lot of people do much more research, historical discovery of information and content that they hadn’t done before because it’s the ease of use is now there. So we’ve seen some changes in those things.
The big takeaway, though, is in the chat, when we see people chat, the vast majority of what they’re trying to do is search specific stuff. If there was a question before we launched about whether the new AI and the new chat would revolutionize search, that has proven out, at least in our data.
Brad: Wonderful.
Okay. Great. And when you think about the advantages Microsoft has here in
search, the dataset that you’re leveraging, if you could provide a little bit
of color as to what that is from your seat.
Yusuf: Sure.
So we have a – I would say we have a couple of really clear advantages. One is
the OpenAI, AI foundation model. It’s very clear that is by far the best, most
advanced model that’s out there. And we’ve seen that through various testing. Number
one, we’re getting to leverage the most advanced AI foundational model.
Second thing is because of our Bing Web Index, and like I said there’s really only two big search Web Indexes out there, we have a unique opportunity to be able to marry sort of daily crawling up-to-date information, deep search understanding with the AI. That’s a very unique thing that we can do. And then thirdly, because we’re more of a challenger, if you will, we have smaller share.
We’re very focused on the new emerging customer needs, and we can take more steps to be innovative. So the user experience that we’ve done with chat, what we’re doing with search on the search page itself, and then the integration that we’re doing with that, like we’ve announced Windows Copilot. We put Bing on the Windows task bar, so half a billion people now can get access to – one click access to chat. Those are some unique strengths that we can bring to help people with their searches.
Brad: Wonderful.
Thanks, Yusuf. And at the time of the launch you referenced the convergence of
the browser, chat, and search. If you could elaborate on that and how you see
that direction.
Yusuf: Yeah.
One of the things that we see is most people don’t distinguish between their
browser and their search engine. They think of it as one concept. And obviously
when you go in – I’m sure as you all use the Internet, you go into the URL
address bar and you type in.
What we’re doing is we’re doing really deep integration of that search and chat capability in Edge, so that you get what we think of as your copilot for the web, which means that as you go anywhere on the Internet, not just on Bing.com or some other site dot com, but anywhere on the web. If all of a sudden you want to apply AI to the page you’re looking at, so for example, you go to a page and you say, hey, tell me what this page is, summarize a long pdf or tell me the ingredients for this recipe. With one click on Bing we can now read that page with the power of AI.
And if you want, you can then go outside the Internet and access additional information. So for example, you can say, hey, read this third quarter report of financial earnings from Company X, give me the key takeaways, compare their earnings in the last quarter against another company, and put it in a table for me. And you can literally do that anywhere on the web, on any type of content. That’s an incredible merger and we’re very unique in doing that right now.
Brad: Wonderful.
Thank you. And what kind of impact have you seen from the new Bing and Edge on
search volumes and engagement?
Yusuf: A
couple things. Like I said, our daily active users now have surpassed 100
million. We were sort of on that. We were on a path of growth, but that has
certainly picked up since we launched the new Bing. Likewise, our Edge browser
has been growing share for the last eight quarters in a row. That’s continued.
If anything, we see when people use the new Edge with chat, they spend more
minutes on it and they use it even more.
All of the early signals, and this is still early data, but all of the early signals are very positive. In particularly when we see people use chat, we see them search more, we see them come back more frequently. And so the early signals are good. And now as we are starting to scale more broadly, we’ll see how that expands out.
Brad: Great.
Thank you. Thank you. And when you think about Microsoft’s advantage, I mean we’re
all – a lot of focus this week on AI and LLMs. What is Microsoft’s advantage in
training LLMs, your own internal LLMs?
Yusuf: Again,
we use OpenAI a lot for the LLMs, so they do a lot of the training. We work
with them a bit, as we said on the Azure infrastructure, the supercomputers. We
do a lot with our responsible AI, so there’s a lot of techniques we’ve done. We
have an incredible responsible AI at the group, at the company, across many
dimensions from ethicists to researchers, to scientists, to user experienced
designers. We collaborate with OpenAI on some of that as well.
And then, of course, we have the web index and the search index, and so a lot of the learnings we have there, we’re able to work with OpenAI on the training of the LLMs.
Brad: Great.
And if you could comment on some of the challenges faced when training LLMs;
data quality, bias, user privacy. How do you see those challenges and how is
Microsoft and your partnership with OpenAI, how are you addressing that?
Yusuf: So
both us and OpenAI are really committed to having a super quality offering in
the content in the AI in all of that training. There’s a lot of thought and
care that has been put into making sure that quality content is essentially
clearly in their content that is of suspicious thing gets ranked appropriately.
And then again, we do a lot of training to protect against sort of bad actors. We don’t want people to use the AI to cause harm, self-harm, harm and otherwise sort of bias against people. So there’s a lot of work that has been put in between ourselves and OpenAI to make sure we have really an inclusive and equitable solution.
Brad: Wonderful.
Great. And how do you approach the balance between personalization and privacy
with search through Bing?
Yusuf: Well,
we think privacy is a very personal thing. And so for us, privacy is built in
by design in all of our products. And we’ve put that work into the way we
designed the service; how we gather data, how we store data, so all of that is
in there.
I think first and foremost, privacy is of the utmost thing for us, and so we protect against that. Within that constraint, then we can start to build a real personal experience for people.
Brad: Wonderful.
Great. Thank you. And 10 years ago you had the launch of Cortana. Curious to
get your perspective on how Cortana fits in here with ChatGPT and the Microsoft
AI portfolio.
Yusuf: I
think Cortana and other sort of like agents were early forerunners of different
interfaces to try and access content. Where we are today with the new Bing, and
in partnership with ChatGPT is, we have really now a much more advanced,
powerful system that can in fact answer questions or in the case of some of the
work we’re doing now with even Windows and with Microsoft Edge can take action
on your behalf. And so the tech there is really much, much more advanced and I
think is sort of the future where we see things going.
Brad: Great.
And maybe we could talk about the Bing Image Creator, which is powered by OpenAI.
What are some of the possible monetization opportunities there?
Yusuf: Yeah,
I think two different things probably we could take in turn. There is Bing Image
Creator. For those of you who don’t know, Bing Image Creator is a service where
you can essentially create images just by typing in words. So you can say,
like, for example, I’ve used this, I’m doing a home remodel design. So I’ve
said help me design a mid-century modern living room that has brass and wood
and whatever. And it’ll come back with a picture. And then I can say, oh, hey,
make that rounded and let’s change the color from black to white. And it can do
that. It’s an incredible thing.
Since we’ve launched that we’ve had hundreds of millions of images now created. And it’s probably one of the most exciting features that we’ve seen. So we put that in chat, so the ability to iterate – so if you guys haven’t all tried it, Bing.com. Go up there now and go into chat in creative mode, although we’ve just launched it in all the modes, and try it, and say, create an image of X, Y, Z. And you can see the power of it. And that’s a great feature.
Then separately, I think the question you’re probably at after is like a broader thing, what’s going on with modernization? What are the opportunities there? It’s obviously super early days. Two, I think of monetization, sort of innovation happening in two sort of segments. There is what happens on the classic search page where in there we’re seeing, as we get more relevant answers, we’re able to kind of use traditional search advertising, and that’s doing really well.
Then there’s the chat interface where obviously it’s a different user experience. It’s cleaner. There’s more chat. And so does it make sense to have a lot of answers there with a lot of advertisements? And obviously one of the things people are liking about chat is that you don’t have all the blue links; that you can get right to the answer you want and then go find.
We are right now experimenting a lot with our content publisher partners and with advertisers on what is the ad opportunity within the chat window. And we’re finding good things. We’re finding the ability to, for example, have links to more content. That’s one thing that’s been very unique with what we’ve done with Bing. Unlike any other services, we put citations and footnotes. We’re also having richer answers. In some cases we’re testing. And we’re testing the ability to potentially have the right ads on the page, and we’re flighting all that now.
As you can imagine, advertiser demand is very high for this because they know this is where there’s a lot of action. And it’s still very early to say how it’ll play out, but my guess is that – my sense is a couple things. One, you’ll see fewer ads, but they’ll be much more relevant and they’ll have much higher click through rate. And I think it’ll be a very disruptive experience to traditional search, which for us is all goodness because, again, we’re early and we’re happy to engage with a new and improved search experience. But we’re in the beginnings of that process.
Brad: Wonderful.
Thank you. Thank you, Yusuf. And why don’t we shift gears to Windows and the PC
business. What are some of the key focus areas for consumer in the roadmap for
Windows?
Yusuf: Windows
broadly.
Brad: Yeah,
please.
Yusuf: So
couple different things. We’ll just start and just kind of give an up/down Windows.
We are now at an all-time high in terms of Windows usage and engagement. I
think we we’re over 1.4 billion people use it monthly. A huge majority of that
uses it daily. We’ve seen usage of Windows go up. We’ve seen use cases since
the pandemic go up. The pandemic had many bad things, but one small silver
lining as we saw people return to use the PC. And they rediscovered the value
of the PC.
All of us live a lot on our phones. People saw that you could use the PC for things like video conferencing, not just for work, but for home use, for staying in touch with family. Online shopping went up, telemedicine went up, grocery delivery. And so people – since the pandemic has sort of subsided, people have continued to do those use cases because of that. And so the value of the PC probably has never been higher. And that has been one of the great things that we’ve seen.
More recently with Windows 11, we’ve made great strides to make that much more cloud powered. And now as we’re starting to talk about AI powered, so a couple of things. On the cloud powered side, it’s hard to believe, but Windows 10 did not require a sign in, but imagine using your iPhone and not signing in with an ID. You couldn’t imagine it? The phone wouldn’t make any sense. Maybe you’d make a phone call, but that’d be about it.
But Windows, until Windows 11, about a year and a half ago, we didn’t require that. Now that we do, we’re seeing the use of Windows change dramatically. People are now – and we have a very high login sign-in rate. Now we can give you a personalized newsfeed. We have Widgets now, which is a new platform for people to do development. That’s much more personalized. People are able to back up their content. They can roam their files. All these things that you take for granted on your phone, we’ve brought to the PC, and so the value of the PC has gone up quite a bit. So that’s been one thing we’ve done; much more cloud powered, much more service-enabled with Windows.
We’re also then most recently announced that we’re now enabling you to be able to send messages from your phone, either an Android or an iPhone. So if you’ve always wanted to have your text messages come in to your PC, you can now do that. That’s a huge thing that I’ve always wanted. We still have more work to do. You can’t necessarily do group messages, but you can do the individual messaging.
Brad: That’s
great.
Yusuf: And
then most recently, the AI has now come in and so we announced that build two
weeks ago, Windows Copilot. Windows Copilot is essentially powered by Bing, so
you get all of the power of the Internet, all of the power of the intelligent
agent, but now within Windows. And so just like I referenced with the Edge
example, you can use your PC experience and ask it questions about what’s going
on, on things on your desktop to take advantage.
And you can take what we call actions, like you can do in Edge. So now with your Windows, if you’ve ever sort of said, hey, how do I put this thing in dark mode? You can just pull up Windows Copilot and say, put my PC in dark mode, put me into focus mode because I have to work now, and it will arrange your Windows, dial in your playlist. And so everyone who didn’t know how to use Windows is now going to be a power user of Windows because you now have the Windows Copilot that you can just talk to and it’ll take action on your behalf.
Brad: Wonderful.
That’s exciting. Great. Thank you for that.
Yusuf: I
can’t wait for that myself.
Brad: Why
don’t we – if we could talk about the interplay with Xbox Game Pass and Windows
and what’s on the roadmap there for the convergence of those two.
Yusuf: Sure.
One of the things that’s been great as we look at our Xbox business is we’ve
seen a lot of, obviously, great success on the console and gaming and online
gaming. We’re seeing a lot of success now with gaming on the PC. PC has always
been a home to obviously gaming. It’s the platform for games. But now with
Xbox, we’re starting to really see some progress there.
We brought our Game Pass subscription service that lets you play games across console and the PC. In fact, we almost doubled the total number of countries now that have Game Pass on the PC. We’ve seen that tick up quite a bit. We’ve got some great experiences there with an Xbox app on Windows, so you can keep track of your friends, your gamer profile, all of your gamer stats. And so that has all come together. So we’re seeing really good progress there on the PC.
Brad: Great.
Great. And why don’t we shift to devices; Surface tablet, laptop. Where’s the
focus on the product line? Anything on the roadmap there as well? Yeah, please.
Yusuf: We’re
really focused on the core of our Surface portfolio, which is primarily the
Surface laptop and Surface Pro, our 2-in-1. The Surface Pro continues to be
really an unrivaled and unique product on the marketplace. It’s the only 2-in-1,
as we like to talk about it. It is the tablet that can replace your laptop. You
have a full tablet; you have an incredible screen with Pen; you have access to all
of Windows on that. That is a big focus for us. We’re continuing to improve on
that. Performance has gotten better. We’ve had 5G capabilities on it now, so
you can move around. And now with Windows 11, you can take advantage of it. It
is by far the best devices for mobile professionals and for creatives.
On the laptop, we’ve continued to do a lot of work to build more and more powerful laptops that again, give you that real incredible computing experience with Windows. And so that’s really been the big focus. And yeah, the innovation trend continues. I can’t talk about things that are coming in the future, but suffice it to say that if you’re a Surface fan, there’s a few Surfaces out there, you’re going to want to continue to use it.
Brad: That’s
great. Thank you. On the Q3 earnings call, you called out some elevated
inventory levels there. If you could elaborate on that, please.
Yusuf: Sure.
What happened? Because of the pandemic, there’s been sort of ebbs and flows on
PC purchase and how the PC market’s gone. One of the things that happened is
people bought a lot of PCs, I think in advance of, they were thinking to return.
And so we saw elevated inventory channel levels. Sell-through has continued, so
sell-through has continued sort of steady. But obviously what’s happening is we’re
seeing retailers want to work down the inventory levels. And so the way that
that impacts us is short-term there’s less sell-in. The sell-through continues and
it’s working its way through.
Brad: Great.
Great. I think you’re also – you have responsibility for Skype?
Yusuf: Yes.
Brad: Okay.
Great. And there’s clearly an investment being made there. Any commentary on
where those key investment areas are for Skype and how does that fit into the
broader consumer portfolio?
Yusuf: The
way to think about it, and let me take a step back from that. Like in terms of
communications, consumer communications, we really have a couple different assets.
We have Teams that you use a lot for work, but we now have Teams for Consumer and
that has been growing nicely in terms of monthly active users. Still early.
We have Skype, as you referenced, which is something that we’ve had for traditional that still has a very loyal fan base. And then we have this product called GroupMe. Don’t know if you have GroupMe, but if you have kids, they all use GroupMe because it’s a huge hit in college.
Those three products, what we’re looking at doing is increasingly bringing them together on a common platform and architecture, while still respecting the user experience that people love on each of these things. So with GroupMe, people, college kids love the simplicity of it. With Skype, people love the ability to call friends and family from across international lines. And Teams Consumer now is really becoming a great place for communities, people to come together with communities. We have brought a lot of the new Bing and AI into those products.
So getting to Skype specifically, which you asked about, one of the things we’ve done with Bing and AI is we’ve put essentially a chatbot in Skype. And so if you are talking with your family, for example, and you’re planning a night out or a trip, you can call the Bing chatbot and say, hey, Bing, tell me great places to travel, and Bing will put that together and drop it in the chat window. So while you’re chatting with your family, you can actually call the chatbot to help you. It’s like having an intelligent assistant or a concierge or a butler help you while you’re conversing. And we see that expanding as we add the capabilities.
Brad: Okay.
Wonderful. And how does Microsoft think about some of the overlap between Skype
and Teams or is it truly complementary as you’re describing there?
Yusuf: We
see it as complementary on the core infrastructure, so the communications, the
idea of having one contact list. We think of the user experience as being
unique and distinct for those. And like I said, Teams is focused increasingly
more on some communities work; getting groups of people to do that. Skype is
more sort of point-to-point family, much more for international expansion.
Brad: Wonderful.
And maybe just a higher level question. When you think about the Microsoft
brands, again, a lot of Enterprise association. How does that benefit Microsoft
and the consumer with Windows PCs and some of the other offerings you talked
about?
Yusuf: Well,
our strength in Enterprise and at work is that we are the tools and the
devices, the software and the devices that people use every day for their work.
That becomes a real reason that people then want to come and use it in their
home life. And so that provides a nice virtuous cycle.
And conversely, when we sell our service devices, in particular that people love, they come and then want to bring those into work. I see that with my kids who are now working. And they’ll have a laptop that they got from work, I won’t say from where. And then, of course, I’ll buy them a Surface for their birthday. And they’re like that’s awesome. I’m like, well take that into work. They’re like, well, we’re not allowed to in some cases. I’m not allowed to. We have a – be like, gosh, I wish I could use my Surface. And then vice versa. I’ve had people who have a computer at home and then they love the Surface they got at work.
So that flywheel for us of consumer to commercial is a very unique thing. And again, like all of us, we have jobs and we have personal lives. Being able to use a single device, being able to use a single productivity suite, an email, a browser; that virtuous cycle of work to consumer and back, really benefits us in terms of being able to better meet customer needs.
Brad: Got
it. Got it. And, and maybe shifting to Xbox a little bit. The strategy has
always been you can play games from anywhere on any device. It’s less console-centric
strategy. If you could just comment on how you see the convergence of the Game
Pass with the PC and how that fits in with that overall strategy.
Yusuf: I
mean, I think you said it well. We believe that the future of gaming – right
now there’s three different gaming silos. There’s games on your phone, games on
your PC, and games on the console. Historically, those have been three
different worlds, and frankly three different audiences.
Our vision for Xbox is that you should be able to play the games you want with the people you want on the devices you want. And so what we’ve done is we’ve built much more of a cloud gaming solution that can now work across all those devices. And we’re taking all of the steps.
So like I mentioned earlier, having Game Pass give you the ability to play games on the PC and the console. So you buy them once and you can run them across both those platforms. And so we’re building that capability. We’re bringing the Xbox app out to all those platforms.
Brad: Wonderful.
Great. And when you think about Microsoft Studios, what are some of the things
you’re excited about that you can talk about here that might be coming?
Yusuf: I
mean there’s a lot of great games coming. There’s a big one that’s coming up. I
don’t know how much we’ve talked about it, so I probably won’t mention it, but
it’s coming up shortly. And the team has been playing that game a lot and we’re
pretty excited about it. I think it’ll be sort of a great look-forward in terms
of what gaming can do.
Brad: Great.
Yusuf: As
a whole, the Studios team does a really fantastic job building next generation
content. It is the fastest form of growing entertainment and we think that the
ability to expand upon that with AI will improve quite a bit.
Brad: Great.
And how do you see the convergence of gaming with the metaverse in the enterprise
potentially? I think the talent base that you have there, engineering talent,
you could see, you could apply a lot of that, you could deploy some of those
resources towards the metaverse. So curious to get your perspective on how you
see that playing out and where is the talent base for the metaverse within
Microsoft? And is there overlap between the gaming franchises in those
applications?
Yusuf: Yeah,
I mean I think from a technology perspective, a lot of games, not all games,
but a lot of games are about world development, character development, so the
techniques in terms of how you do the programming, how you do the design of
that software to build it, that is applicable in the metaverse. And then, of
course, we have all of our own work that we’ve done in the Enterprise space to
build sort of digital twins, if you will. And so yeah, I think there’s a lot of
relevance there.
Brad: Wonderful.
We’re running short on time here, but any other comments, Yusuf, that you’d want
to make. Any kind of closing comments on kind of the state of the Microsoft
consumer brand across multiple franchises?
Yusuf: I
think what I would say is that one of the thing – we’re probably been at the
best place we’ve been in our consumer business in a while because we see the
opportunity of AI to really transform everything we’ve done. We talked about
Windows and how Windows Copilot. It will be the operating system that I think
will lead the way with AI and assistance in a way that you haven’t seen before.
And that’s because some of our competition either doesn’t have that capability
in house or it’s not in their interest to disrupt their own current search
model.
The second thing is with Microsoft 365. We didn’t talk a lot about that. But that’s our productivity suite that’s not just Microsoft Word and PowerPoint. And we’re going to bring Microsoft 365 Copilot to that so that you can talk to Excel and have it do things on your behalf. But we’re also now using things like Designer, which is, I think of it as sort of equivalent to a Canva, but with more powerful capabilities for design and creatives. We’re early in the testing of that, but we’ve already crossed a lot of users on that as well. So we see that coming.
And then with the new Bing and Microsoft Edge, that is really the big thing. That’s the big opportunity. It’s a huge market, a huge TAM. We have first mover. We don’t have any of the innovators dilemma. And we’re excited to meet customer needs and to go out and get some of those things.
So I would say broadly across Windows, our devices, what we’re seeing with Microsoft 365, it is super early days in the Internet, super early days with the development of AI, and we’re quite excited about what we’re going to be able to do with it.
Brad: It’s
very exciting. Yusuf, thank you so much for joining us at the conference.
Yusuf: Thanks
very much.
Brad: Great
to have you here.
Yusuf: Thank
you.
Upcoming Events
JP Morgan Global TMT Conference
Jefferies Software Conference