[HN Gopher] Microsoft lowers AI software growth targets
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Microsoft lowers AI software growth targets
Author : ramoz
Score : 101 points
Date : 2025-12-03 15:11 UTC (7 hours ago)
(HTM) web link (finance.yahoo.com)
(TXT) w3m dump (finance.yahoo.com)
| philberto wrote:
| No wonder if Microsoft failed to deliver a single AI tool that
| adds value.
| ramoz wrote:
| I meet with enterprise clients who explore things like Copilot
| Studio.
|
| Microsoft platforms move too slowly too keep up with innovation
| pace, and suffer from classic platform restriction in regards
| to building useful, relevant, and *reliable* integrations into
| business systems.
|
| My advise is to always start from scratch with AI, e.g. "build
| your own agent" and focus intimately on the rules/guardrails
| and custom tools you need for that agent to create value. A
| platform can't do that for you in current day.
|
| MSFT needs to stay focused on O365 and coding tools with very
| simple UX wins. Not introduce custom agent platforms and auto-
| embed intrusive agents where no one asked for them.
| pbronez wrote:
| Microsoft's Power Platform should be a big advantage. If you
| already have your data in Outlook/SharePoint, the
| PowerPlatform makes it easy to access. Unfortunately I've
| encountered several roadblocks deploying CoPilot Studio &
| Power Platform for my enterprise. Note: I'm using GCC, so
| everything is worse than normal.
|
| 1) Incomplete integration. Often I just want to write a
| prompt to create structured data from unstructured data. e.g.
| read an email and create a structured contact record. There's
| a block for this in Power Platform, but I can't access it.
| Studio can do this pretty well, but...
|
| 2) CoPilot Studio sucks at determinism. You really need to
| create higher level tools in Power Automate and call them
| from Studio. Because of (1) this makes it hard to compose
| complex systems.
|
| 3) Permissions. We haven't been able to figure out a secure
| way for people to share Copilot Studio agents. This means you
| need to log into studio and use the debug chat instead of
| turning the agent on in the main Copilot interface.
|
| 4) IDE. Copilot Studio bogs down real fast. The UI gets super
| laggy, creating a terrible DX. There should be a way to write
| agents in VScode, push the definitions to source control, and
| deploy to Copilot, but it isn't obvious.
|
| 5) Dumb By Default. The Power Platform has hooks into Outlook
| and Active Directory. Copilot has access to the latest OpenAI
| models. CoPIlot Studio has an MCP server for Calendar. Out of
| the box I should be able to tell CoPilot "schedule a 30min
| meeting with Joe and Larry next week." Nope. Maybe if I
| struggle through CoPilot Studio to create an agent? Still no.
| WTF Microsoft.
|
| I guess I'll stop there. I really wanted to like Copilot
| studio, but it just didn't deliver. Maybe I'll circle back in
| a couple months, but for now I'm exploring other platforms.
|
| PS don't even get me started on how we were so excited to
| retire our home-grown chat front end for the Azure OpenAI
| Service in favor of Copilot, only to have our users complain
| that Copilot was a downgrade.
|
| PPS also don't talk to me about how CoPilot is now integrated
| into Windows and SIGNS YOU INTO THE FREE COMMERCIAL SERVICE
| BY DEFAULT. Do you know how hard it is to get people to use
| the official corporate AI tools instead of shadow AI? Do you
| know how important it is to keep our proprietary data out of
| AI training sets? Apparently not.
| s1mplicissimus wrote:
| Not to give "AI" too much credit here, but I wonder what was
| the last time MS built a value delivering product in the first
| place
| giancarlostoro wrote:
| Well they've been making improvements to Notepad, like now it
| has tabs, and you can close it without saving a single one,
| sort of how I used Sublime Text for note tracking.
| tehlike wrote:
| Wow. I had no idea. Last time I used windows was probably
| 13 years ago...
| cratermoon wrote:
| And it has AI now, too. Are those really improvements or
| change for the sake of change?
| https://www.youtube.com/watch?v=bmBd39OwvWg
| giancarlostoro wrote:
| Oh yuck
| hopelite wrote:
| It depends on your perspective on value. MS stock and
| lobbying, money bags, and government/corporate capture have
| provided unfathomable value.
| flohofwoe wrote:
| VSCode? Even if some peeps don't like it out of principle
| because it's an Electron app, it's undeniable that it is
| extremely popular (...and is actually a lot more lightweight
| and snappier than 'real' IDEs like VStudio or Xcode, or the
| various Java-based IDEs).
|
| Also indirectly: DirectX saved Linux gaming ;)
| PunchyHamster wrote:
| > Also indirectly: DirectX saved Linux gaming ;)
|
| Nah, if windows stayed with OpenGL instead of inventing its
| own, gaming on linux would be far easier for decades.
|
| But it is a bit funny that win32 api turned out to be most
| stable way to make apps running on linux
| flohofwoe wrote:
| > Nah, if windows stayed with OpenGL instead of inventing
| its own, gaming on linux would be far easier for decades.
|
| The problem with OpenGL is that it is a complete mess
| compared to the D3D APIs (D3D was the better designed API
| since at least D3D9, arguably even D3D7). Also DirectX
| wasn't just about rendering, it also covered sound, input
| and networking - although most of that has been dissolved
| into regular Windows APIs since quite a while).
|
| Also, Vulkan repeats some of the same problems that
| OpenGL had, but at least Vulkan is an uptodate mess, not
| a deprecated mess like GL.
| Rooster61 wrote:
| I keep wondering how many things like this need to happen before
| the other shoe drops and the ring-around-the-rosie investment
| structure collapses. It's become very obvious that "AI" in its
| current form isn't going to turn a profit, at least not in the
| short term.
| baal80spam wrote:
| It won't happen. Too much $ had already been invested. It will
| work, one way or the other. It is here to stay.
| Culonavirus wrote:
| The Internet was also "the new industrial revolution" and is
| here to stay... yet a lot of people lost their pants in the
| dot-com bubble.
| digdugdirk wrote:
| I'm intrigued by this thought, and I'm not sure it's the
| right way to look at the current situation.
|
| Think about it via a manufacturing analogy. I think we can
| all agree that modern cnc machining is much better for mass
| manufacturing than needing to hire an equivalent number of
| skilled craftspeople to match that throughput.
|
| Imagine we had a massive runup of innovation in the cnc
| manufacturing industry all in one go. We went from cnc lathes
| to 2d routing tables to 3, then 4, then 5 axis machining all
| in the span of three years. Investment was so sloshy that
| companies were just releasing their designs as open source,
| with the hope that they'd attract the best designers and
| engineers in the global race to create the ultimate
| manufacturing platform. They were imagining being able to
| design and manufacture the next generations of super advanced
| fighter jets all in one universal machine.
|
| Now these things are great at manufacturing fully custom one-
| off products, and the technicians who can manipulate them to
| their fullest are awestruck by the power they now have at
| their fingertips. They can design absolutely anything they
| could imagine.
|
| But you know what people really want? Not fighter jets, but
| cheap furniture. Do you know what it takes to make cheap
| furniture? Slightly customized variants of the early
| iterations that were released as open source. Variants that
| can't be monitized by the companies that spent millions on
| designing and releasing them.
|
| The tech might work great, but that doesn't mean the
| investment pays off with the desired returns.
| danans wrote:
| AKA "too big to fail". The interests of major and early AI
| capital owners will be prioritized over those of the later
| capital and non-capital-owning public.
| criddell wrote:
| Things that are _too big to fail_ can end up being
| nationalized when they do fail. That might not be a bad
| outcome.
|
| I could see US-built AI being a national security concern.
| danans wrote:
| > Things that are too big to fail can end up being
| nationalized when they do fail.
|
| And if that happens, will the taxpayer be on the hook to
| make investors whole? We shouldn't. If it is
| nationalized, it needs to be done at a small fraction of
| the private investment.
| criddell wrote:
| When the government takes your property with eminent
| domain, they don't give you what you've put into it or
| what you owe, they give you the market value for the
| property.
|
| If one or more of the AI companies fail, the government
| would pay what they feel is the market value for the
| graphics cards, warehouses, and standing desks and it
| will surely be way less than what the investors have put
| in.
| red-iron-pine wrote:
| that would be a bad outcome. why is the public
| responsible for the bubble chasing idiocy of evil
| megacorps?
|
| they failed to grow their capital and they can hold the
| bag
| rsynnott wrote:
| Yes, that's why we all do our meetings in the metaverse, and
| then return home on our segways to watch some 3d tv, while
| the robotic pizza making van delivers robot-made pizza.
|
| Ultimately, you can spend what you want; if the product is
| bad people won't use it.
| veber-alex wrote:
| Well at least one, because this one didn't happen.
|
| https://www.cnbc.com/video/2025/12/03/microsoft-have-not-low...
| cratermoon wrote:
| Is "Microsoft Lowers AI Software Growth Targets as Customers
| Resist Newer Products" really "way different" than sales
| quotas? Or more to the point, a statement from Microsoft PR
| spinning it as "growth targets" doesn't prove they haven't
| also lowered sales quotas in some divisions.
|
| Even if the Microsoft spokesperson is being completely
| honest, lower growth targets is still evidence of weakness in
| the AI bubble.
| gortok wrote:
| The "They" here are the folks who are currently investing in
| 'selling' AI solutions to other companies. OpenAI, Microsoft,
| Google's Gemini, and a slew of AI-backed startups are good
| examples.
|
| They don't need AI to turn a profit.
|
| They need AI to be seen as widely adopted and "a part of life".
|
| They need certain categories of folks (CEOs, CIOs, Boards of
| Directors) to see AI as valuable enough to invest in.
|
| They need to keep up the veneer of success long enough to make
| their investments attractive to acquisition by Private Equity
| or to an IPO.
|
| They need to juice the short-term stock price.
|
| Their goal isn't to produce a long-term business, their goal is
| to raise short-term returns to the point that the investors get
| a nice return on their investment, and then it becomes someone
| else's problem.
| willis936 wrote:
| They filled the bag. They can hold it.
| stoneforger wrote:
| "How money works" YouTube channel had a nice video about this
| trend in particular going back to making stock buybacks legal
| in 1982 I think, which made CEO and execs wealth acquisition
| driven not by a long successful career with healthy margins
| and dividends, but a short-tenured local maximum pump-and-
| dump and a hold-the-bag game funded by endless fiat currency
| which is printed on the backs of other people. Other people's
| money , Gordon Gecko, they're not just real, they're
| celebrity sociopaths running us into the ground because of a
| fragile ego.
| PunchyHamster wrote:
| Oh it's gonna turn a profit to _someone_ , especially when
| market cools down into "it's just a service making some things
| easier/more efficient" (and not "will replace all the expensive
| experts company needs, but never the people pushing for it in
| the company").
|
| Just not whoever ends up with the bag of now far less valuable
| stock.
| dpflan wrote:
| Where is AI actually selling and doing well? What's a good
| resource for these numbers? What are the smaller scale use-cases
| where AI is selling well?
|
| I am generally curious, because LLMs, VLMs, generative AI,
| advances are proving useful, but the societal impact scale and at
| this the desired rate is not revealing itself.
| ramoz wrote:
| Coding - e.g. Claude Code, Cursor both announced 1B revenue run
| rates.
| dpflan wrote:
| Agreed, coding is one. What else?
| Deegy wrote:
| Professional legal services seem to be picking up steam.
| Which sort of makes sense as a natural follow on to
| programming, given that 'the law' is basically codified
| natural language.
| sc68cal wrote:
| Except that it keeps getting lawyers into trouble when
| they use it.
|
| https://www.reuters.com/legal/government/judge-
| disqualifies-...
| nextworddev wrote:
| sales, marketing, customer support, oh my, so many
| paxys wrote:
| Market size for this is in the billions though, not
| trillions.
| nextworddev wrote:
| it's easily a 200bn ARR business, if coding agent achieved
| another step jump in abilities ~ 1trn+ marketcap
| nyrikki wrote:
| I am running a container on an old 7700k with a 1080ti that
| gives me vscode completions with rag with similar latency and
| enough accuracy to be useful for boilerplate etc...
|
| That is something I would possibly pay for but as the
| failures on complex tasks are so expensive, this seems to be
| a major use case and will just be a commodity.
|
| Creating the scaffolding for a jwt token or other similar
| tasks will be a race to the bottom IMHO although valuable and
| tractable.
|
| IMHO they are going to have to find ways to build a mote, and
| what these tools are really bad at is the problem domains
| that make your code valuable.
|
| Basically anything that can be vibe coded can be trivially
| duplicated and the big companies will just kill off the small
| guys who are required to pay the bills.
|
| Something like surveillance capitalism will need to be found
| to generate revenue needed for the scale of Microsoft etc...
| PunchyHamster wrote:
| Given how every CPU vendor seems to push for some kind of
| NPU, local running models will probably be far more common
| in next 5 years. And convincing everyone to pay
| subscription for very minimal improvements in functionality
| gonna be hard.
| Balinares wrote:
| Have you documented your VSCode setup somewhere? I've been
| looking to implement something like that. Does your setup
| provide next edit suggestions too?
| 0cf8612b2e1e wrote:
| I keep idly wondering what would be the market for a plug
| and play LLM runner. Some toaster sized box with the
| capability to run exclusively offline/local. Plug it into
| your network, give your primary machine the IP, and away
| you go.
|
| Of course, the market segment who would be most
| interested, probably has the expertise and funds to setup
| something with better horsepower than could be offered in
| a one size fits all solution.
| nyrikki wrote:
| I am working on a larger project about containers and
| isolation stronger than current conventions but short
| kata etc...
|
| But if you follow the podman instructions for cuda, the
| llama.cpp shows you how to use their plugin here
|
| https://github.com/ggml-org/llama.vscode
| raw_anon_1111 wrote:
| That would be meaningful if they weren't losing money to
| generate that revenue.
| myth_drannon wrote:
| you can check on trustmrr.com (mostly indie/solo businesses)
| that a large chunk of those smaller companies make money by
| selling AI video generation and other genAI services.
| petesergeant wrote:
| Most of my family uses ChatGPT instead of Google to answer
| questions, despite my warnings that it'll just make stuff up. I
| definitely Google much less now than I used to, directing a
| fair amount of that into ChatGPT instead.
| creshal wrote:
| But how much are you _paying_ for these services?
| PunchyHamster wrote:
| that's frankly mostly because google search got so massively
| worse... I'd still use google more if not for the fact the
| stuff I asked it 5 years ago and got answer no longer
| provides useful answers
| mcswell wrote:
| I don't use it, but I know several people who use ChatGPT to
| edit emails etc. so they don't come across nasty. How well it
| works, I can't say.
| hansmayer wrote:
| You'd think after Clippy and Windows 7, they'd take the clue and
| stop producing software that creates friction for users, instead
| of removing it?
| allisdust wrote:
| You mean Vista. Windows 7 was perfect. Till it was ruined by
| what shall not be named.
| adithyassekhar wrote:
| What ruined windows 7?
| flohofwoe wrote:
| Windows 8.
|
| (yes, hardly anybody remembers that there was a Windows
| version between 7 and 10 - but it _did_ exist, I 'm not
| making it up, saw it with me own eyes on a coworker's PC
| once).
| rpowers wrote:
| Is 8 where they leaned heavily into touch screen boxes?
| LM358 wrote:
| Yes. As if it wasn't out of touch enough, they even did
| it on the server version as well!
| thewebguyd wrote:
| Considering Windows 7 (if you count ESM) was supported
| all the way up to 2020, it's no wonder people skipped 8
| (start menu tiles aside). It was a weird release
| schedule, and it was split into two versions 8 and 8.1,
| with 8 only having like 3 years of main stream support,
| and no ESM and 10 released just two years after 8.1.
|
| If you count paying for ESM, someone could have gone from
| XP->7->11 and still been within support the whole time.
| Or from vista straight to 10.
|
| Fun fact: Windows for Workgroups 3.11 was supported all
| the way to 2008. I believe it was the longest supported
| version of Windows.
| intrikate wrote:
| Nah, I still have my boxed Windows 8 Pro on my shelf. The
| key used to activate Windows 10, maybe even 11, but last
| I tried it didn't work anymore.
| PyWoody wrote:
| I would even say there were two Window versions between 7
| and 10, namely, 8 and 8.1.
| cyberax wrote:
| Not really. They started doing the "easy-to-use" alternative
| configuration panels in Vista. Windows Vista also started
| requiring driver signatures, making it impossible to write
| your own device drivers without going into the ugly test mode
| on every boot.
|
| Windows XP was the pinnacle, with everything working just as
| it should.
| mcswell wrote:
| XP SP 2
| hansmayer wrote:
| I think I meant whatever came after WinXP which I recall was
| the last solid version. Either way, I sort of switched to
| Linux in those years and never looked back again...
| red-iron-pine wrote:
| > it was ruined by what shall not be named.
|
| what does lorraine williams have to do with this?
| fodkodrasz wrote:
| Both examples were great, beloved products.
| boh wrote:
| Along with the Xbox app and eye tracking software that took
| forever to get rid of (with many-many steps--that still got
| reinstalled with subsequent updates) out of my "Professional"
| Windows installation, having co-pilot embedded in every screen
| finally convinced me to switch to Linux--forever.
| OsrsNeedsf2P wrote:
| Have you switched, though? I hear people talking about it, but
| I doubt they stay the first time they need to configure WiFi.
| Get a MacBook.
| PunchyHamster wrote:
| I think your Linux knowledge might be out of date by about
| decade.
|
| Well, unless someone gets recommended Arch Linux as a first
| Linux experience
| flohofwoe wrote:
| Pfft, when was the last time you installed Linux, 1998?
| Nowadays it's all about getting audio to work ;)
| mcswell wrote:
| I switched a month or two on my desktop. Then when that
| turned out good, I switched my laptop to Linux, too. No
| hardware issues on either one, and the WiFi on the laptop
| works just fine. (My desktop is connected by Ethernet.)
| thewebguyd wrote:
| Linux is fine now, and has been for at least the past 5 years
| if not more. Even HiDPI works just fine now which has been a
| pain point for a while (at least, it works great on KDE).
|
| That being said, my daily driver is macOS ever since apple
| silicon released, purely due to the laptop hardware. I keep a
| reasonably powerful Beelink mini PC mounted under my desk
| running ubuntu server and most of my work happens there over
| SSH with Tailscale. If you're primarily a laptop user, I'd
| definitely recommend this set up (or something similar), you
| get the best of both worlds.
| kragen wrote:
| It sounds like you haven't configured Wi-Fi on Linux in the
| last 10 or 15 years. It just works these days.
| treis wrote:
| The MacBook I use for work sucks and has weird issues when it
| wakes up from sleep. I've started having to restart my
| computer to fix them. I can't remember the last time I've had
| to do that.
| sylens wrote:
| I built a new desktop PC last fall and every Linux distro I
| have tried this year has WiFi working out of the box.
| Contrast that with Windows where I need to keep the drivers
| on a USB stick so I can bootstrap myself on a fresh install
| boh wrote:
| With MacBooks I'm over the premium on unfixable hardware.
| toshinoriyagi wrote:
| I've been on NixOS full time for probably 1.5 years. 0
| problems, other than some games that need kernel anti-cheat
| to run.
|
| EDIT: I was also able to connect to my solar panel gateway
| trivially from the CLI just a few days ago.
| PyWoody wrote:
| I haven't had issue with WiFi on Linux in over a decade.
|
| Sleep/Hibernate on the other hand; well, let's just say that
| fast boot times "solved" those issues.
| zamadatix wrote:
| Sleep is really most useful for laptops and I'm not sure
| fast boot really solves that use case as well as it does on
| a desktop (where you really never got as much out of sleep
| anyways since you're always plugged in).
| jsheard wrote:
| They got in trouble for tricking Office users into paying for AI-
| enabled plans they didn't actually want, and now they're all out
| of ideas.
| jagged-chisel wrote:
| "Tricking" or "forcing"?
|
| I do not participate in the Microsoft ecosystem except only
| when needed. And every time I have to buy something on
| someone's behalf, I can't just buy or subscribe to The Thing, I
| have to get all of Office and cloud storage when all they need
| is an email box.
| jsheard wrote:
| They forced all personal accounts to "upgrade" to more
| expensive AI plans, but the trick was that they presented the
| change as if it were a general price increase when the old
| plans actually still existed, albeit buried at the bottom of
| a chasm. The only way to revert back was to attempt to cancel
| your subscription at which point they'd relent and offer the
| non-AI plans again.
|
| Then Australia slapped Microsoft over the head and forced
| them to apologize:
| https://news.microsoft.com/source/asia/2025/11/06/an-
| apology...
| Havoc wrote:
| Not surprised. Just bought a office 365 sub that comes with 60 AI
| tokens. Cool so tried to figure out what that means.
|
| Answer - 60 shots of generation/summarization etc per month. ie
| way below even casual use.
|
| Ok so maybe the copilot chat works well if I'm logged in with my
| paid account then? Nope. Slow and often generates empty code
| cells. (The enterprise version at work never has issues).
|
| ie between low quota and broken tech their consumer level office
| AI is literally of no use to me.
| thomasjudge wrote:
| Per CNBC, MSFT is denying this report...
| rkaregaran wrote:
| https://x.com/amitisinvesting/status/1996245002930753760?s=2...
| ramoz wrote:
| title fixed per microsoft correction
| antiloper wrote:
| Copilot is so useless compared to the rest, using Windows really
| is like trying to evade having shit smeared in your face all the
| time.
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