Microsoft’s Windows operating system, the longstanding flagship of the company’s software empire, is getting a revamp for the AI age.
The company unveiled a variety of updates to Windows on Wednesday, including incorporating AI agents and other AI tools directly into the PC software, as Microsoft seeks to ensure that its products remain at the center of a rapidly changing tech industry.
Speaking at San Francisco’s Dogpatch Studios, Chief Executive Satya Nadella said Windows is becoming a “hybrid intelligence” system, meaning there will be capabilities for cloud-based AI, as well as AI that runs locally through products like the coding tool GitHub.
“Just having the [AI] model doesn’t do much for anything,” Nadella said, explaining that Microsoft is bringing together local AI, AI-powered software, and devices built natively for AI, such as the new Surface Laptop Ultra that the company unveiled at the event. “Some of the things you’ve been using all click together.”
Microsoft was one of the first Big Tech companies to recognize the importance of generative AI, investing $13 billion in OpenAI and partnering with the company years ago. But the alliance between the two companies weakened, and Microsoft is now trying to find its lane in a crowded AI landscape as competitors like Google, OpenAI, and Anthropic take the lead developing the most advanced large language models, and Meta carves out a space with its Muse personal AI assistant.
A big part of Microsoft’s plans involves integrating the reimagined Copilot AI app seamlessly into Windows. This means having Copilot run tasks without having to access the cloud when those tasks don’t need heavy compute, according to Jacob Andreou, the head of Copilot. A user, for example, will be able to have Copilot autonomously pull all of the files they need to file taxes from various parts of their laptop and do so without accessing the cloud, making it cheaper and faster.
“Copilot now truly understands your PC,” he said. “It’s copilot built natively for Windows.”
While Microsoft operates one of the industry’s largest cloud computing services, the company is betting that having a strong presence throughout the “tech stack” could give it an edge as AI transforms the way businesses operate. Local AI has become a popular way for coders and other users to experience the technology because it can be cheaper and safer than running AI on the cloud.
Microsoft is also tying its updates to its new Surface Laptop Ultra, a high-end device built for developers and creators. A user on the Ultra, the company showed, can play video games while editing a video and running AI workloads. Nadella was joined on stage by Nvidia Chief Executive Jensen Huang. The new Surface Laptop Ultra uses Nvidia’s RTX Spark “superchip,” which Huang called “a beast” of a product.
The Ultra will cost $2,599, while the Surface RTX Spark Dev Box that works alongside the Ultra will cost $5,999. The laptop will be available beginning October 16, and the box in November.
Nadella has recently refocused Microsoft on the basics after initially also pursuing general consumer AI with Copilot. Microsoft aims to own the enterprise side of AI workflows and cloud computing. Wednesday’s event was an extension of presentations it made at its June Build conference. During the conference, it introduced an AI wearable badge-like device and a cube-like device with a voice-activated screen, though it hasn’t yet provided an update.
Microsoft is reorienting its Copilot AI brand and its leading software for the AI era. It is also positioning its devices as the vehicle best suited to optimize customers’ workflows, without bogging down users with numerous Copilots. Microsoft received many initial user complaints about Copilot’s nonstop presence within the Windows OS.
The company’s redesigned Copilot app will now be a central interface through which customers can chat with AI bots, tap AI tools to help accomplish tasks, write code, and access a new Autopilot feature that brings agentic capabilities.
An Autopilot feature on the app will let users name their agent, assign it a role and a goal, and then set it loose on tasks such as project updates, tracking work decisions and deadlines, reminding colleagues when commitments are due, gathering prep materials, and reaching out to partners.
Microsoft is betting that this new “super app” will boost Copilot by connecting AI directly to its already lucrative business tools. As OpenAI and Anthropic push into enterprise offerings, Microsoft is racing to protect its turf and keep pace with customer expectations.
In July, the company said its Microsoft 365 Copilot had surpassed 30 million paid seats, with net seats added doubling quarter over quarter. Its shares have rebounded over the past six months on the strength of its cloud computing business, fueled by AI demand and Copilot growth. Its next quarterly earnings report is expected later this month.
