Microsoft's dominant position in generative AI may not be as secure as many believe. This is according to a source who served as a technical advisor to the Microsoft CEO for four years.Former Vice President Matt VelosoRecently, the critics publicly attacked Microsoft, pointing out that although it has invested heavily in AI infrastructure, it has been unable to translate it into real user value and expected profits, and is even repeating the mistake of missing out on the Internet and mobile device era.
Even more serious is the situation with Microsoft's closest strategic ally.OpenAINow, they have also started to set up their own independent deployment departments to directly target enterprise customers, which obviously poses a huge threat to Microsoft's Azure cloud service monetization model.
Huge capital expenditures and extremely low paid conversion rates
Microsoft's current investment in artificial intelligence is nothing short of extravagant, with quarterly capital expenditures reaching a staggering $375 billion. However, the return on these massive investments in both the consumer and enterprise sectors is a cause for concern.
Despite Microsoft's efforts to integrate Copilot pre-installed into the Windows 11 workbench and Office suite, the actual conversion rate has been incredibly low. Of Microsoft's 4.5 million 365 users, only about 1500 million have purchased a paid Copilot plan, representing a mere 3.3% conversion rate. This means that a staggering 96.7% of users refuse to use these advanced AI features.
Faced with ever-increasing sales costs and shareholder skepticism, Microsoft has recently had to address customer feedback. In the latest version of Windows 11, Microsoft has begun to reduce the mandatory role of Copilot and is restructuring its infrastructure, retesting the movable taskbar and resizable Start menu, attempting to win back lost customer loyalty by improving the performance of the native user interface.
Hardware ecosystem disconnect and core platform stability crisis
In addition to the setbacks in promoting software services, Microsoft also faces serious challenges in its hardware and developer ecosystem.
Over the past year, Microsoft has been pushing PC manufacturers to incorporate NPU (Neural Processing Unit) designs into their laptops, promoting the concept of "AI PCs." However, because Windows and Office systems have yet to develop killer applications that truly rely on the NPU, most consumers simply don't care about this hardware specification.
Furthermore, as the core platform for Microsoft's AI-powered programming ecosystem, GitHub's recent Service Level Agreement (SLA) reliability has plummeted to below 90%, which is clearly a fatal warning sign for global developers who rely heavily on the platform for collaboration.
OpenAI "goes it alone," bypassing Azure to directly target core profits.
If the loss of focus in its internal strategy is a hidden concern for Microsoft, then direct competition from its close ally OpenAI is the biggest external threat Microsoft faces.
OpenAI was recently officially launched.A new business unit named "OpenAI Deployment Company"It has already secured over $40 billion in initial investment from major global companies. The division currently has a team of 150 deployment engineers who will be stationed directly within Fortune 500 companies to provide highly customized AI solutions.
OpenAI's strategic intent is very clear: they want to bypass cloud "intermediaries" like Microsoft Azure and directly enter the core of the most profitable enterprise services market. For Microsoft, which has almost staked everything on OpenAI and is trying to monetize through cloud services, this is undoubtedly a fatal threat that shakes the foundation of its long-term corporate revenue.
Analysis: Is it a pioneer or a hardware supplier working for others?
Matt Veloso's harsh criticism points out Microsoft's blind spot in its AI frenzy: having the most powerful models and the most computing power does not equate to having the hearts of users.
Microsoft's past failures in the smartphone and mobile internet era stemmed from ignoring users' real needs and attempting to forcefully push products using its monopolistic position. Now, with the promotion of Copilot, a similar pattern seems to be emerging. When 96.7% of users chose to say "no" to AI, it means that Microsoft has not addressed users' real pain points, but has merely been unilaterally piling on technology and features.
Ironically, while Microsoft's multi-billion dollar AI computing infrastructure enabled OpenAI's rise, OpenAI is now preparing to bypass Microsoft and establish direct supply relationships with top-tier enterprise clients. If Microsoft cannot quickly establish irreplaceable, exclusive AI applications within the Windows and Office ecosystem, it may ultimately become nothing more than a "large-scale computing power manufacturer" providing basic power in this epic battle of generative AI, once again missing the opportunity to dominate the era.
