Microsoft debuts ‘Copilot+’ PCs with AI features

Microsoft (MSFT.O) launched a new line of AI-driven personal computers called “Copilot+” PCs, aiming to integrate advanced technology across its product range and rival Alphabet (GOOGL.O) and Apple (AAPL.O). The announcement was made by CEO Satya Nadella at an event in Redmond, Washington, featuring models from manufacturers like Acer (2353.TW) and Asustek Computer (2357.TW).

With shares nearing record highs due to investor optimism about AI’s potential for profit growth, Microsoft introduced laptops starting at $1,000, shipping from June 18. These PCs can handle more AI tasks without relying on cloud data centers. A notable feature, “Recall,” helps users find previously accessed files and browser tabs. Additionally, the Copilot voice assistant acts as a real-time virtual coach, as demonstrated with the “Minecraft” video game.

Yusuf Mehdi, head of consumer marketing at Microsoft, anticipates the sale of 50 million AI PCs over the next year. He highlighted that faster AI assistants on PCs present a compelling reason for upgrades. Despite a 15% decline in global PC shipments to 242 million last year (per Gartner), Microsoft expects its new AI PCs to constitute about one-fifth of all PC sales.

Analyst Ben Bajarin from Creative Strategies noted the challenge in convincing consumers that the enhanced device experience justifies the new Copilot+ category. This marketing strategy is similar to the 2011 “Ultrabook” category, which promoted thin-form Windows laptops against Apple’s MacBook Air.

Microsoft also announced the upcoming integration of GPT-4o technology from OpenAI into Microsoft Copilot. Additionally, a new generation of Surface Pro tablets and Surface Laptops with Qualcomm (QCOM.O) chips, based on Arm Holdings’ (O9Ty.F) architecture, was introduced. A technology called Prism will enable software compatibility between Intel, AMD, and Arm chips.

Outcome

Demonstrations showed Microsoft’s devices outperforming Apple’s, particularly in running Adobe (ADBE.O) photo editing software. Apple’s new AI-focused chip, expected in future laptops, was also noted. Qualcomm’s Snapdragon X Elite chips, featuring a neural processing unit for AI applications like Copilot, were highlighted.

The event preludes Microsoft’s annual developer conference, emphasizing its lead in creating consumer-ready AI tools. This advantage stems from its partnership with OpenAI, positioning it ahead of Alphabet in the competitive AI landscape. Recently, both OpenAI and Alphabet’s Google showcased advanced AI technologies for voice interactions, a challenge for AI voice assistants.

The PC market has felt increasing pressure from Apple, which switched to custom Arm-based chips from Intel, enhancing Mac computers’ battery life and performance. Since 2016, Microsoft has partnered with Qualcomm to transition Windows to Arm designs, with Qualcomm’s exclusivity on Windows devices ending this year.