How Microsoft’s Artificial Intelligence (AI) Rebrand Will Expand Market Potential

Whether it’s news media or earnings reports, artificial intelligence (AI) technology is infiltrating the brand identity of every major company. This trend makes sense considering predictions that the AI ​​market will reach $2.5 trillion by 2032. But could too many AI-branded products confuse consumers and limit adoption? appear microsoft (MSFT -1.07%) There might be an answer.

The tech giant recently became the world’s largest company by market capitalization, but it appears there’s plenty of room for growth thanks to AI. This is because Microsoft invested more than $10 billion in OpenAI and rapidly expanded its AI product portfolio.

It launched in February 2023 with Bing AI, based on OpenAI’s GPT-4 large-scale language model. This approach aimed to provide users with a personalized search engine experience. By incorporating AI into its search engine, Microsoft has improved its functionality while testing consumer preferences. Bing AI is then tailored to provide a summary of search results and provide users with a more concise yet informative experience.

A little over a month later, Microsoft began offering Copilot AI as part of its Office 365 software suite. However, this marketing perspective seemed confusing because Microsoft also offers Azure OpenAI as a business-focused system. That said, throughout 2023, Microsoft offered three AI platforms with overlapping user bases, all powered solely by variants of OpenAI’s GPT-4 language model.

Microsoft’s history of product marketing failures

Now you might be wondering what the problem is with the various products. More products usually mean more revenue, but the problem isn’t variety. This is due to the lack of a unified AI presence that can attract general users and expand the technology beyond business applications.

For example, OpenAI’s ChatGPT currently captures 60% of general AI usage. As ChatGPT continues to grow in popularity, consumers tend to trust it more than other AI models due to word of mouth. This is similar to: alphabetGoogle revolutionized search and navigation in the 2000s.

Google launched its first search engine in 1998, and it took Microsoft eight years to respond with its search engine, LiveSearch. This engine eventually became Bing, but by the time Microsoft rebranded in 2008, it was already too late and Google had taken over the market. That same year, Google launched its Chrome browser, which exponentially increased its market share and decimated Microsoft’s Internet Explorer user base. This move has led to incredible stock price growth since Alphabet’s IPO in 2004.

Possibility

The good news for Microsoft is that it is eligible to share in the OpenAI revenue share. So even if OpenAI becomes a huge success and its own product fails, the tech giant doesn’t lose anything, at least in the short term. (Microsoft is also doing a lot of co-branding work with OpenAI, including offering OpenAI tools on Azure.)

Many of today’s technologies could be replaced by AI in the next few years, which could significantly change the way we use software. Google’s search engine may become obsolete if people prefer to use AI to answer their questions. As such, Microsoft has an opportunity to overcome its past loss of consumers to competitors, but only by providing the most efficient and efficient AI experience.

To achieve this strategy, Microsoft has already begun consolidating its AI models under one brand, with Bing AI becoming part of Copilot. By shifting to marketing AI services as a model, companies will be able to attract more attention to their products.

Microsoft also has a recipe for making Copilot a household name. Thanks to Microsoft’s strong control over the everyday software that almost every working professional uses on their computers, Microsoft’s AI already has a huge user base, whether you know it or not. More than 1.2 billion people rely on Office 365 for their daily work. This brings Microsoft’s new brand, Copilot AI, to life before your eyes every day.

Our special business relationship with the platform will allow users to become more accustomed to using Copilot outside the office. The benefits of this scale also allow Microsoft to leverage this database of users to train AI models, enabling faster iteration and introduction of new features.

The partnership between Microsoft’s user database and OpenAI’s language models allows us to offer services beyond subscription-based services using regular AI platforms. Instead, Microsoft can develop a model tailored to the needs of individual enterprise customers.

For the average consumer, Microsoft could potentially apply the same strategy to make its personal assistant a perfect fit for the user. These products may reduce your revenue from Google’s search engine. This is because individuals may prefer using personalized AI rather than finding answers on Google. For reference, Google earned $175 billion in search revenue in 2023. Microsoft doesn’t need to acquire a huge stake to have a significant impact on its $228 billion in revenue.

If Microsoft plays its AI card right and continues to specialize in the capabilities its AI products provide, the integrated experience could lead to a surge in sales. The era of “Googling” may be coming to an end as the era of “Copiloting” approaches. This benefits Microsoft and its investors, as it seems the new king of technology has no choice but to rise.