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Microsoft's Chief Financial Officer (CFO), Amy Hood, has reiterated the company's forecast that its suite of generative artificial intelligence (AI) tools will reach a revenue milestone of $10 billion faster than any other business in the software industry's history.
Speaking at the Goldman Sachs Communacopia & Technology Conference in San Francisco, Hood expressed confidence in the opportunity presented by AI enterprise software. She mentioned that there is a significant demand from customers for such products. In response, Microsoft has already unveiled a range of AI-driven offerings, one of which is the co-pilot feature priced at $30 per user per month for Microsoft 365 office suite users.
Hood highlighted that the customer feedback regarding the 365 co-pilot has been overwhelmingly positive. In fact, she specifically mentioned how the system has transformed her own work process by simplifying tasks like changing fonts across a 40-page presentation.
She emphasized that feedback directly influences pricing decisions, with the aim of providing value to customers. The price is determined based on the perceived efficiency and effectiveness of the product. To earn a place at the top of organizations' IT budget list, the AI tool must deliver tangible improvements in employees' work lives.
Hood also mentioned the immense market potential for the 365 co-pilot, highlighting that it caters to a user base of approximately 160 million Microsoft 365 users.
With its suite of AI tools and a receptive customer base, Microsoft is poised to make history by achieving unprecedented revenue growth in the software industry.
Microsoft Azure and the Optimization Trend
Microsoft Azure and other cloud providers have been experiencing a slowdown in growth due to the recent "optimization" trend. According to Hood, this trend is simply a normal part of managing large cloud workloads, as customers strive to maximize efficiency. The challenge for Microsoft lies in encouraging customers to reinvest their savings into new workloads. However, Hood is optimistic as the company is starting to surpass some of the major optimization periods, which will likely lead to better growth in the coming quarters.
Embracing Long-Term Beliefs in Tech Growth
When asked about the macroeconomic outlook, Hood emphasized that Microsoft remains a long-term believer in the growth of the tech industry. She predicts that IT spending as a percentage of gross domestic product will eventually double from its current standing. Hood added that the company focuses on what they can control, which includes gaining market share and staying competitive.
The Success of Starfield Game
Hood also mentioned the successful launch of their new game, Starfield. On its very first day, the game attracted one million concurrent users, indicating a promising start. She expressed great optimism about the title and its potential for continued success.
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