The age of AI, modern work to gaming: Key highlights of Satya Nadella’s annual letter

Microsoft CEO and chairman Satya Nadella wrote his annual letter titled ‘‘Relevance and reinvention‘‘ for shareholders, colleagues, customers, and partners on October 25. In it, he discussed his company’s fiscal year 2024.

“We entered our 50th year as a company and the second year of the AI platform shift,” he wrote, and reflected on how Microsoft has remained a consequential company decade after decade in an industry with no franchise value.

He said his firm moved from talking about AI to helping its customers translate it into real outcomes this year. “Financially, the year was also marked by record performance. We delivered over $245 billion in annual revenue, up 16 percent year-over-year, and over $109 billion in operating income, up 24 percent,” he added.

Here are key highlights from Satya Nadella’s annual letter

-The age of AI – “If we go back 70 years to the beginning of modern computing, our industry has had two dreams: First, can computers understand us instead of us having to understand computers? And second, as we digitize more of the world—including people, places, and things—can computers help us reason, plan, and act more effectively using all that information? Over the past year, we have had breakthroughs on both fronts.”

Like Moore’s Law drove the information revolution, the scaling laws of deep neural networks (DNN) and transformers drive today’s AI revolution.

-Infrastructure: This year, we expanded our cloud and AI capacity, announcing new investments across five continents. These are long-term assets to drive new growth for the next decade and beyond and ensure communities around the world have access to the computing they need to drive economic growth in this new era.

-Data and AI: AI models are now key building blocks for every application. With Azure AI, we are building out the app server for the AI age, providing access to the most diverse selection of models to meet customers’ unique cost, latency, and design considerations. We offer leading frontier models, thanks to our strategic partnership with OpenAI. With Phi-3, which we announced in April, we offer a family of powerful, small language models.

And, with Models as a service, we provide API access to third-party models, including the latest from Cohere, Meta, and Mistral. In total, we have over 60,000 Azure AI customers, up nearly 60 percent year-over-year. This year, we also announced a partnership with G42, which will run its AI applications and services on our cloud, as we collaborate to bring our latest AI technologies to the United Arab Emirates and other countries.

-Modern work: Microsoft 365 Copilot is becoming a daily habit for knowledge workers, transforming their work, workflow, and work artefacts. Adoption has been faster than any other new Microsoft 365 suite. Employees at nearly 60 percent of the Fortune 500 now use Copilot to complete tasks faster, hold more effective meetings, and automate business workflows and processes.

-Business applications: We’re using this AI moment to redefine our role in business applications, too. Dynamics 365 once again took a share, as organizations use our AI-powered apps to transform their marketing, sales, service, finance, and supply chain functions. We are expanding our total addressable market by integrating Copilot into third-party systems as well. Our new Dynamics 365 Contact Center infuses generative AI throughout the contact centre workflow in a customer’s existing CRM.

-Devices & creativity: This year, we introduced an entirely new category of Windows PCs engineered to unleash the power of distributed AI across the cloud and edge. Copilot+ PCs are the fastest, most AI-ready Windows PCs ever built. They include a new system architecture designed to deliver best-in-class performance and breakthrough AI experiences. And we are working across our entire ecosystem to bring these to life, including with AMD, Intel, and Qualcomm, along with our OEM partners.

-Gaming: We are bringing great games to more people on more devices. With our acquisition of Activision Blizzard King, which closed in October 2023, we’ve added hundreds of millions of players to our ecosystem. We now have 20 franchises that have generated over $1 billion in lifetime revenue—from Candy Crush, Diablo, and Halo, to Warcraft, Elder Scrolls, and Gears of War. And with Xbox cloud gaming, we continue to innovate to offer players more ways to experience the games they love—where, when, and how they want. Finally, we brought four of our fan-favourite titles to Nintendo Switch and Sony PlayStation for the first time, as we continue to extend our content to new platforms.

Concluding the letter, Nadella said, this is a consequential time for his company, the industry, and the world. “Ultimately, our mission requires that we translate technology into empowerment for everyone, into real-world impact. At the end of the day, that’s what really matters.”