They have no doubt realized that hosting third party models is far more profitable.
Let someone else take on the research and training costs, and charge a massive premium for your hardware.
Let someone else take on the research and training costs, and charge a massive premium for your hardware.
Data center hardware, by contrast, is a scarce commodity with rapidly growing demand, and therefore likely to capture most of the profits from AI and software development, if current market conditions persist.
Today's IT business trends represent a remarkable change in the industry compared to the situation 50 years ago, when startups like Microsoft and Oracle, whose business models were based exclusively on software development, challenged and overthrew the dominant player, IBM, whose primary source of revenue was from hardware.
the linked article is from July, it is almost three months old.
Now there may be a very relevant recent story; it has the potential to reduce the flow of new open weight models. This could change quite a few expectations, which are based on open weight models:
"China’s STAR 50 Index Falls 40%, Erasing $480 Billion as AI Stocks Crash"
https://www.technology.org/2026/10/27/china-ai-stock-bubble-...
https://www.reuters.com/world/china/china-ai-bubble-has-alre...
Reuters says there is a run, but also deeper reasons:
"There has been no obvious selling trigger in China, although traders said high prices, tax bills and the threat of the US or other nations banning Chinese equipment in data centers all contributed."
So far I don't see any discussions of this story on HN, interestingly.
Sounds like the opposite of what you're suggesting they're doing?
The problem was rather that Microsoft had no real plan what they wanted to get out of AI. If they had a plan, they could have laser-focused their all-in on AI.
Instead, Microsoft just AI-slopped a lot of their bread-and-butter products, making them much worse than before. If AI is as revolutionizing and beloved by users as Microsoft believes, Microsoft could easily have created an offering like "Windows AI Pack" or "Microsoft AI" that should sell like hot cakes.
On the other hand, if you have to force AI functionality onto the users, it should be considered as a strong sign that perhaps it is not something that the users want.
The bulk of the hands-on-keyboard time for those disciplines now seems to be using Copilot 365 as "fancy autocomplete" and "make this presentation better", Copilot Notebooks for deeper work, and coming up with all sorts of Copilot integrations and agents for managing email, Teams meetings and chats.
It's almost as if "copilot" has already become the generic term for "professional LLM", and many genuinely can't understand why us techies find it so limiting.
Do they, actually?
3 of the 4 orgs I consult with have actively warned people not to use it, and/or to only use their approved AI tool (OpenAI/Claude/Gemini)
clippy 2.0 is not selling well
Windows (and increasingly Apple) updates are more of a sigh and lip biting experience than an exciting one.
I'm really happy not to have touched Windows recently at all.
At work Microsoft's updates are buggy - Outlook and Teams are pretty awful on corporate Macs. Teams especially, it has a bunch of papercut type annoyances. And updates torture Corp IT.
Notice that you also see Google really struggling (and falling behind) in the AI race. This, despite massive resources and being responsible for key pioneering research. Same reason why IBM has failed in this area. The big established companies tend to shut their brightest people into research departments where they write papers and produce demos while the main cash cow areas remain undisturbed, so they have collections of bright people and they have money, but they rarely let their brightest people make big bets with the money, whereas startups do.
It's also why poor people spend more on lottery tickets than rich people.
Basically you want to run an LLM, Amazon. You want to build an LLM not Amazon