News

Copilot by the Numbers: Microsoft's Big AI Bet Paying Off

• By David Ramel
• 02/05/2024

So how much has Microsoft's big $10 billion-plus investment into generative AI paid off so far? The numbers tell the story, revealed in remarks from CEO Satya Nadella in a recent earnings conference call.

The transcript of Microsoft's fiscal year 2024 second quarter earnings conference call was provided by MarketBeat. Below are some quotes from Nadella about the company's AI investments, most falling under the Copilot moniker stemming from the original GitHub Copilot "AI pair programmer" from Microsoft-owned GitHub. That tool was based on revolutionary generative AI tech from OpenAI, with which Microsoft partnered to gain AI supremacy among the cloud giants. Nadella recently indicated how important OpenAI was to Microsoft when he appeared during a keynote presentation at OpenAI DevDay, (see the Virtualization & Cloud Review article, "How Important Is OpenAI Tech to Azure Cloud? Ask Nadella").

In the recent earnings call, Nadella didn't waste any time in getting to the monetary benefits of the Azure cloud, largely driven by AI, beginning his remarks with: "It was a record quarter, driven by the continued strength of Microsoft Cloud, which surpassed $33 billion in revenue, up 24 percent. We moved from talking about AI to applying AI at scale by infusing AI across every layer of our tech stack."

Toward the end of the call, Nadella was asked about the company's ability to drive ARPU [Average Revenue Per Unit or Average Revenue Per User] on GitHub Copilot over time.

"Yes. It's -- I always go back to sort of my own conviction that this generation of AI is going to be different, started with the move from 2.5 to 3 of GPT and then its use inside of an Office scenario with GitHub Copilot," Nadella said. "And so yes, I think this is the place where it's most evolved in terms of its economic benefits or productivity benefits."

Here are some data points and numbers revealed by Nadella in the call.

• We now have 53,000 Azure AI customers.
• GitHub revenue accelerated to over 40 percent year-over-year, driven by all-up platform growth and adoption of GitHub Copilot, the world's most widely deployed AI developer tool.
• We now have over 1.3 million paid GitHub Copilot subscribers, up 30 percent quarter-over-quarter, and more than 50,000 organizations use GitHub Copilot Business to supercharge the productivity of their developers from digital natives like Etsy and HelloFresh to leading enterprises like Autodesk, Dell Technologies and Goldman Sachs.
• This quarter, we added support for OpenAI's latest models, including GPT-4 Turbo, GPT-4 with Vision, DALL-E 3, as well as fine-tuning.
• Over half of the Fortune 500 use Azure OpenAI today, including Ally Financial, Coca-Cola and Rockwell Automation. For example, at CES this month, Walmart shared how it's using Azure OpenAI service, along with its own proprietary data and models, to streamline how more than 50,000 associates work and transform how its millions of customers shop.
• We're also the leader in low-code/no-code development, helping everyone create apps, automate workflows, analyze data, and now, build custom copilots. More than 230,000 organizations have already used AI capabilities in Power Platform, up over 80 percent quarter-over-quarter.
• With Copilot Studio, organizations can tailor Copilot for Microsoft 365 or create their own custom copilots. It has already been used by over 10,000 organizations, including An Post, Holland America, PG&E.
• In sales, our Copilot has helped sellers at more than 30,000 organizations, including Lumen Technologies and Schneider Electric, to enrich their customer interactions using data from Dynamics 365 or Salesforce.
• With our new Copilot for Service, employees at companies like Northern Trust can resolve client queries faster. It includes out-of-the-box integrations to apps like Salesforce, ServiceNow and Zendesk.
• In healthcare, DAX Copilot is being used by more than 100 healthcare systems, including Lifespan, UNC Health and UPMC, to increase physician productivity and reduce burnout.
• Early Copilot for Microsoft 365 users were 29 percent faster in a series of tasks like searching, writing and summarizing.
• Copilot in Windows is already available on more than 75 million Windows 10 and Windows 11 PCs.
• With Copilot for Security, we're now helping hundreds of early access customers, including Cemex, Dow, LTIMindtree, McAfee, Nucor Steel, significantly increase their SecOp teams' productivity.
• This quarter, we extended Copilot to Entra, Intune and Purview. All up, we have over 1 million customers, including more than 700,000 who use four or more of our security products like Arrow Electronics, DXC Technology, Freeport-McMoRan, Insight Enterprises, J. B. Hunt and The Mosaic Company.
• We also introduced Copilot as a standalone destination across all browsers and devices, as well as a Copilot app on iOS and Android. And, just two weeks ago, we introduced Copilot Pro, providing access to the latest models for quick answers and higher-quality image creation, and access to Copilot for Microsoft 365 Personal and Family subscribers.

As Copilot AI gets infused into more Microsoft software -- and even into the Windows OS itself -- expect more new AI-generated offerings to appear with associated price hikes to help recoup that $10 billion-plus investment in AI.