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Transcript:

Patrick Moorhead: And we are back with more Six Five live action here in Las Vegas at CES 2024. One of the biggest, most exciting things we’ve seen here… I mean, you hear about the gadgets, the TVs, the cars, but PCs are back, baby. And Windows PCs, AI PCs, and I can’t think of a better guest have on here. Matt Barlow, Microsoft, how you doing, my friend?

Matt Barlow: I am good, Pat. Good to see you. Good to be here at CES.

Patrick Moorhead: Isn’t it great? And both you and I have both lived through all these super cycles, whether it was PC for internet and Wi-Fi, multimedia, desktop to mobility, and then thin mobility. And it’s just like, here we are with AI PCs, pretty exciting.

Matt Barlow: The word super cycle is it. I can’t think of a more exciting category right now than the Windows PC, especially when you’re talking about AI PCs coming in and running Copilot experiences. Everybody wants it, everybody’s talking about it. And I tell you, the benefits to productivity, creativity, connecting with people you care about, and searching in new ways, there’s nothing better than Copilot.

Patrick Moorhead: Yeah, and what’s interesting, I was on a panel with Pavan, with Microsoft, your cohort there, and the cool part is you saw OEMs on stage, HP, Lenovo, and Dell, that spend 364 days a year beating each other up trying to build markets. But they were all on stage because they believe in the ecosystem. They need to come together with Microsoft to build this. And the thesis, I think we both agree, and I called it on stage yesterday too, we are going to have a super cycle, here’s when it’s going to be and why. But all the boats rise, right? That’s kind of how this works, right?

Matt Barlow: Yeah. That is the unique thing about the Windows ecosystem and Microsoft leading it, along with the great brands that you talked about. HP, Dell, Lenovo, Surface, I mean, just great brands that are bringing this stuff to market. And when our ecosystem gets behind something, like we’re behind with Copilot and AI PCs right now, magic happens. And to hear people and what they want to build and the demand that they’re seeing, and to see the experiences we have with Copilot and software marrying up to some of the hardware innovations in Silicon, and even the key, it feels like the beginning of a new era of the PC around AI, and Windows and Microsoft have it.

Patrick Moorhead: Yeah. And I love the physical instantiation of the Copilot key. And Microsoft doesn’t make changes like that very often. I mean, what? Once every 10 years or something like this. And it’s not just because… I mean, it’s marrying the two, right? It’s big, it’s valuable to consumers, it’s valuable to business customers, and marrying that together with a physical instantiation, I think, is super important. So I want to ask you about Surface. How is Surface taking advantage of the AI-ness here?

Matt Barlow: Surface is the product that’s built by Microsoft, specifically for Microsoft experiences. So we’re right at the center of it with these things, along with a lot of great OEMs. And when you look at some of the great experiences that we’re going to be bringing out, especially you think about now we’ve got Copilot and Windows helping you be more productive. Copilot and Microsoft 365, helping you get more things done. Copilot and Designer helping you create with your own words. The experiences are going to show up great on Windows 11. And we want Surface, again, to be one of those great brands where those Surfaces shine through for people. And I think you’re seeing that today, just tens of millions of people are using Copilot every single day.

Patrick Moorhead: So what are they telling you about the experience and what dynamics… What are they doing? Are they happy? Are they using their PCs more? What are you seeing up front?

Matt Barlow: Yeah, so the thing that’s neat about what Copilot brings is that it’s going to be unique for lots of people, but we’re seeing distinct themes, and the theme that we’re seeing right now is about 80%, a little north of that actually, once they use Copilot one time, say they’re never going to live without it. They’re just never going to live without it. 75% of them are saying they’re more productive because of it, and their work quality is better. What they’re really doing is you’re creating a draft faster, easier. You can change the tone of a note or a mail and get it just right. If you’re looking for an image and you can’t find it on the web, you can create it with your words. I mean, Pat, this stuff is super exciting. The thing that I like using most, and again, this is just my own personal thing, is I miss a lot of meetings or I get distracted in meetings. And we’re finding people who use Copilot, especially in teams, with summarization, can catch up on meetings they missed or didn’t pay attention to, four times faster than they typically would’ve before.

Patrick Moorhead: Yeah. So N equals one, N equals two now, right? Summary is key, and it’s whether it’s summarizing a Word document, a webpage, a PDF, I’m all about summary. Not that I don’t read long stuff. I mean, my company writes long research papers and I’ve written a couple too, but summarizing things, at my point in what I do, is super important. And I have to admit that when I need a graphic for something, I mean, I went out on Copilot and created a graphic for the next family vacation, which was, hey, we’re going to go to this city, this city, and city, create an image that represents all three cities. I think it put Eiffel Tower next to Big Ben next. Anyways, the creativity, I’m pretty excited about too because I lack that. And if Copilot can help anybody like me who really isn’t that creative, I think they’re going to be all in.

Matt Barlow: It’s awesome. And like you say, if you haven’t tried it yet, you got to try it. You just have to. And it’s available even on Windows 10 PCs right now. So get into Copilot, try it for the experiences. Summary and image creation in particular I love, but there’s so many other great capabilities in it.

Patrick Moorhead: So Pavan was on stage yesterday at the Intel event, the AI PC event, and he said some really great stuff that talked about operating system integration, big NPU. So he was talking about the future and what to expect. It was funny, at the very end, after he said it, I’m like, “Listen to what he said and replay what he said. We know the awesomeness that’s there today, but think about what could be next.” So what is next? And maybe taking what Pavan said and equate that down to maybe experiences or what it means to the ecosystem.

Matt Barlow: The thing I love about what we’re doing right now is when we announced the Copilot capabilities and really focused in on the one application you can get to, unlocking all of the AI capabilities and the stuff you use every day, Windows, Microsoft 365, BING, Edge, Teams, more applications coming, that then hardware begins to catch up. The hardware key, I think, being able to invoke that and putting it at people’s fingertips, the first time we’ve ever changed any key on the Windows PC in 30 years is amazing. But the real innovation is coming with silicon integration and optimization of Windows for that particular silicon. And when Intel and AMD and Qualcomm start talking about AI PCs, the thing they’re talking about isn’t the CPU. CPU’s super important, powerful, getting better all the time.

It isn’t even the GPU, graphic performance. Awesome, getting better all the time. It’s this advent of the NPU. The NPU’s the thing you’re going to want to get. It’s going to fire up these AI experiences that are here today and are still coming in the future, in ways that don’t tax the CPU, don’t tax the GPU, and extend your battery life. And the thing that I love, and we’ve seen that before, is when we run Windows Studio effects. And if you’re running Windows Studio effects with an NPU, your CPU and GPU aren’t taxed at all. You can keep having that Teams call and you can still do really productive stuff on a thin and light PC. That’s just the beginning. These new experiences that are going to keep coming out for AI, and they’re all going to be driven by Copilot, are going to be better on PCs with an NPU. NPUs are great today, they’re going to get even better in the future.

Patrick Moorhead: No, I’m super excited about that. And I’m looking at this in terms of six month increments of goodness. And when’s the last time you knew every six months something incredible was going to come out? And some people are like, “Well just wait.” I’m like, “No, because you’re getting awesome today.” And you could wait around forever, but people need to get in now, get the experience, and just know that each generation… Kind of like technology is going to get better. So Matt, I really appreciate your time and I’m super excited about what Microsoft is doing in Windows and enabling the ecosystem, and with Surface. I cannot wait to see a Microsoft design Surface fully around Copilot and what you’re going to do with that in the future. So thanks for coming out.

Matt Barlow: You too, Pat. It’s going to be a great future for sure.

Patrick Moorhead: Yeah, I’m looking forward to it. Folks, thank-you for tuning in. You heard it straight. We talked to Intel today. We talked to Microsoft today about AI PCs and what the future holds. Thanks for tuning in. Take care.