This is what Microsoft intends to do with ChatGPT


San Francisco, Dusseldorf With the cloud service Azure and the Internet search Bing Microsoft in direct competition with Google. The participation in the AI ​​chatbot “ChatGPT” could have given the group an important advantage. In any case, CEO Satya Nadella is hoping for a boost, especially for Azure, 14 years after its market launch. “The age of artificial intelligence has arrived, and Microsoft is driving it forward,” Nadella said at the presentation of the quarterly figures one day after the deal was announced.

so far have Microsoft its cloud services are constantly being expanded – and after years of work in the background, completely new applications can now be presented. “We have the most powerful AI supercomputing infrastructure in the cloud,” Nadella said.

He specifically mentioned the partnership with Open AI. The day before, Microsoft had announced a billion-dollar investment in the San Francisco-based company – and gained access to its chatbot.

With ChatGPT, Open AI presented a language program that can understand natural language and generate complex texts on command. The DALL-E application generates images based on text input. Corporate customers use these solutions directly in their business processes, as Nadella emphasized: “More than 200 customers from KPMG to Al Jazeera are already using it.”

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Clattering is part of the business. But pundits like Hargreaves Lansdown analyst Sophie Lund-Yates agree with Nadella. The artificial intelligence business is still in its infancy, but Microsoft is well positioned. “The ChatGPT agreement could also be a game changer for Microsoft,” said Lund-Yates.

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There are numerous promising uses such as the widespread “office” with annual sales of around 45 billion dollars. In the future, the AI ​​model could be integrated into applications such as the Outlook e-mail program, the Teams video conference system or the Word writing program. The AI ​​model could make suggestions there on how to finish sentences or phrase them better and more comprehensibly, translate them into another language, and write them grammatically correctly.

How realistic is an attack on Google?

Google has dominated the Internet search market for years – and makes a lot of money with online advertising. Google has a market share of around 93 percent, while competitors such as Microsoft and Bing only hold just over three percent.

Now some experts are talking about a possible change in the market structure through ChatGPT. With the help of the chatbot, Microsoft could build Bing in such a way that users can make search queries like a human and receive full answers instead of a list of links. “Google could be just a year or two years away from total disruption,” Paul Buchheit said weeks ago. His word carries weight, the computer scientist worked for Google for a long time and is the father of Gmail.

However, that is far from clear. For example, ChatGPT still makes many mistakes, which often go to the absurd and are nevertheless presented with conviction – this is known among experts as “AI hallucination”. In the future, not all search queries will be made using the ChatGPT pattern. For example, if you want to know where a particular pharmacy is located, you don’t want to read an essay about it.

The Azure cloud service is being upgraded

But the participation in ChatGPT Microsoft could also help in the cloud business in the competition with Google. With a market share of 21 percent, Microsoft Azure is the undisputed second place after Amazon’s AWS. However, Google Cloud wants to catch up with eleven percent and has recently convinced customers with its cloud-integrated AI applications.

>> Read here: This is how Microsoft’s billion-dollar hope ChatGPT works

With ChatGPT, Microsoft is now putting a stop to that – and wants more. “It’s a declaration of war,” says Saskia Pauly, Managing Partner of industry consultant Cloudtone. Not only do customers get access to Open AI, Microsoft also demonstrates competence in a previous Google domain. “This allows Microsoft to say to customers: If we can run Open AI on Azure, then so can your machine learning model,” says Pauly.

The software manufacturer has the necessary money and the depth of integration with customers to market powerful AI on a large scale, says Eric Sobolewski, who is responsible for data and technology strategy at the digital agency TLGG.

A race begins

“Almost everyone in business is a Microsoft customer in some form, and almost everyone will soon be able to experiment cheaply with ChatGPT and other systems,” says the data specialist.

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The cloud business is a growth driver. Microsoft’s intelligent cloud business, which includes Azure, grew 18 percent to $21.5 billion in the most recent quarter. Azure revenue increased 31 percent. Although growth was significantly slower than in the previous quarters, analysts had expected numbers to be much weaker.

The field of “generative AI”, which can generate texts, images or program codes, does not belong to the group alone: ​​Google and Meta, for example, are also working intensively on the technology. It is therefore quite possible that the software manufacturer will soon have competition.

According to data specialist Sobolewski, it can be expected that managers and companies will soon be posting numerous examples of how they use the technology via LinkedIn and Twitter. “People want to show that they can use artificial intelligence,” says Sobolewski. For the data expert, it is not yet clear what influence the new technology will have on the economy – apart from marketing.

ChatGPT distracts from weak quarter

It is crucial to incorporate AI into the provision of services and production processes. This is not trivial: According to the expert, for example, organizations need a strategy to collect and process the necessary data. And they have to deal with regulatory issues. “Here I see the biggest blocker, especially in Germany.”

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In presenting the quarterly numbers, Nadella was clearly trying to present investors with a new growth story. Because the past quarter was mixed for the software house.

Nadella posted the slowest growth in six years, with revenue growing 2 percent to $52.7 billion in the final quarter of last year. In the three months ended December, net income fell 12 percent year over year to $16.4 billion. Microsoft missed analyst expectations with both values.

Microsoft was hit particularly hard in the PC business, where revenue fell 19 percent and operating income fell 47 percent. During the corona pandemic, business had grown strongly when many people worked from home and bought new computers for it.

But this special effect is over. According to the consulting firm Gartner, global sales of laptops and desktop PCs, which had increased sharply during the corona pandemic, fell by almost 29 percent at the end of 2022.

This hits Microsoft directly. The company produces computers itself. At the same time, with Windows, it is the dominant operating system. The number of Windows licenses installed on new computers collapsed by 39 percent. And Microsoft voted its investors on continued weak sales figures.

More: Microsoft is investing “multi-billions” in ChatGPT makers Open AI



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