[ChuckMcM]

I expect this is the crux of the problem.

There aren't any "AI" products that have enough value.

Compare to their Office suite, which had 100 - 150 engineers working on it, every business paid big $$ for every employee using it, and once they shipped install media their ongoing costs were the employees. With a 1,000,000:1 ratio of users to developers and an operating expense (OpEx) of engineers/offices/management. That works as a business.

But with "AI", not only is it not a product in itself, it's a feature to a product, but it has OpEx and CapEx costs that dominate the balance sheet based on their public disclosures. Worse, as a feature, it demonstrably harms business with its hallucinations.

In a normal world, at this point companies would say, "hmm, well we thought it could be amazing but it just doesn't work as a product or a feature of a product because we can't sell it for enough money to both cover its operation, and its development, and the capital expenditures we need to make every time someone signs up. So a normal C staff would make some post about "too early" or whatever and shelve it. But we don't live in a normal world, so companies are literally burning the cash they need to survive the future in a vain hope that somehow, somewhere, a real product will emerge.

[ryandrake]

For most software products I use, if the company spent a year doing nothing but fixing P2 bugs and making small performance improvements, that would deliver far, FAR more value to me than spending a year hamfistedly cramming AI into every corner of the software. But fixing bugs doesn't 1. pad engineer's resumes with new technology, or 2. give company leadership exciting things to talk about to their golfing buddies. So we get AI cram instead.

[shigawire]

I think it is more externally driven as well, a prisoners dilemma.

I don't want to keep crapping out questionable features but if competitors keep doing it the customer wants it -- even if infrastructure and bug fixes would actually make their life better.

[rurp]

I strongly felt this way about most software I use before LLMs became a thing, and AI has ramped the problem up to 11. I wish our industry valued building useful and reliable tools half as much as chasing the latest fads and ticking boxes on a feature checklist.

[sownkun]

This is exactly what I was thinking about my current place of employment. Wouldn't all of our time be spent better working on our main product than adding all these questionably useful AI add ons? We already have a couple AI addons we built over the years that aren't being used much.

[antonkochubey]

To you – yes. But have you thought about the shareholders?

[zuminator]

100% agree. Office and Windows were hugely successful because they did things that users (and corporations) wanted them to do. The functionality led to brand recognition and that led to increased sales. Now Microsoft is putting the horse before the cart and attempting to force brand recognition before the product has earned it. And that just leads to resentment.

They should make Copilot/AI features globally and granularly toggleable. Only refer to the chatbots as "Copilot," other use cases should be primarily identified on a user-facing basis by their functionality. Search Assistant. Sketching Aid. Writing Aid. If they're any good at what they do, people will gravitate to them without being coerced.

And as far as Copilot goes, if they are serious as me it as a product, there should be a concerted effort to leapfrog it to the top of the AI rankings. Every few weeks we're reading that Gemini, Claude, ChatGPT, or DeepSeek has broken some coding or problem-solving score. That drives interest. You almost never hear anything similar about Copilot. It comes off as a cut-rate store brand knockoff of ChatGPT at best. Pass.

[Suppafly]

>Now Microsoft is putting the horse before the cart and attempting to force brand recognition before the product has earned it. And that just leads to resentment.

I'm surprised that they haven't changed the boot screen to say "Windows 11: Copilot Edition".

[Melatonic]

I thought Copilot was just ChatGPT - isn't that the whole point of Microsoft's massive investment in OpenAI ?

[mbreese]

I think this is a really good take, and not one I’ve seen mentioned a lot. Pre-Internet (the world Microsoft was started for), the man expense for a software company was R&D. Once the code was written, it was all profit. You’d have some level of maintenance and new features, but really - the cost of sale was super low.

In the Internet age (the likes of Google and Netflix), it’s not much different, but now the cost of doing business is increased to include data centers, power, and bandwidth - we’re talking physical infrastructure. The cost of sale is now more expensive, but they can have significantly more users/customers.

For AI companies, these costs have only increased. Not only do they need the physical infrastructure, but that infrastructure is more expensive (RAM and GPUs) and power hungry. So it’s like the cost centers have gone up in expense by log-units. Yes, Anthropic and OpenAI can still access a huge potential customer base, but the cost of servicing each request is significantly more expensive. It’s hard to have a high profit margin when your costs are this high.

So what is a tech company founded in the 1970s to do? They were used to the profit margins from enterprise software licensing, and now they are trying to make a business case for answering AI requests as cheaply as possible. They are trying to move from low CapEx + low OpEx to and market that is high in both. I can’t see how they square this circle.

It’s probably time for Microsoft to acknowledge that they are a veteran company and stop trying to chase the market. It might be better to partner with a new AI company that is be better equipped to manage the risks than to try to force a solo AI product.

[pjc50]

> cost of doing business is increased to include data centers, power, and bandwidth

Microsoft Azure was launched in 2010. They've been a "cloud" company for a while. AI just represents a sharp acceleration in that course. Unfortunately this means the software products have been rather neglected and subject to annoying product marketing whims.

[kalap_ur]

Yeah. Hyperscalers who are building compute capacities became asset heavy industries. Today's Google, MSFT, META are completely different than 10 years ago and market has not repriced that yet. These are no longer asset light businesses.

[red-iron-pine]

ITT: we assume that "computer rooms", mainframes, and other dev tools weren't a thing for software companies pre-cloud

[PeterStuer]

They bet the company on AI. If their AI push fails, everything else does not matter anymore. What you are seeing is desperation and Hail Marys.

My guess is every team's metric is probably reduced to tokens consumed through the products owned.

[red-iron-pine]

take it a step further: the global market is stagnant, and the big gains of the 90s-2010s are gone.

you either hail mary AI or you watch your margins dwindle; captialism does not allow for no-growth.

[saidinesh5]

> But with "AI", not only is it not a product in itself, it's a feature to a product, but it has OpEx and CapEx costs that dominate the balance sheet based on their public disclosures. Worse, as a feature, it demonstrably harms business with its hallucinations.

I think it depends on how the feature is used? I see it as mostly as yet another user interface in most applications. Every couple of years I keep forgetting the syntax and formulas available in Excel. I can either search for answers or describe what i want and let the LLM edit the spread sheet for me and i just verify.

Also, as time passes the OpEx and CapEx are projected to reduce right? It maybe a good thing that companies are burning through their stockpiles of $$$ in trying to find out the applicability and limits of this new technology. Maybe something good will come out of it.

[bunderbunder]

The thing about giving your application a button that costs you a cent or two every time a user clicks on it is, then your application has a button that costs you a cent or two every time a user clicks on it.

[GorbachevyChase]

To be fair. MS Office product defects should be regarded just as harmful as hallucinations. Try a lookup in excel on fields that might have text.

[Bombthecat]

For coding,ai is amazing and getting better.

Spell checking is also good, grammar better then me lol

And pumping out fake news and propaganda, way worth it when you do it

[anthonypasq]

Your premise that the leaders of every single one of the top 10 biggest and most profitable companies in human history are all preposterously wrong about a new technology in their existing industry is hard to believe.

AI is literally the fastest growing and most widely used/deployed technologies ever.

[ChuckMcM]

Yup, I've been here before. Back in 1995 we called it "The Internet." :-) Not to be snarky here, as we know the Internet has, in fact, revolutionized a lot of things and generated a lot of wealth. But in 1995, it was "a trillion dollar market" where none of the underlying infrastructure could really take advantage of it. AI is like that today, a pretty amazing technology that at some point will probably revolutionize a lot of things we do, but the hype level is as far over its utility as the Internet hype was in 1995. My advice to anyone going through this for the first time is to diversify now if you can. I didn't in 1995 and that did not work out well for me.

[toomuchtodo]

> Your premise that the leaders of every single one of the top 10 biggest and most profitable companies in human history are all preposterously wrong about a new technology in their existing industry is hard to believe.

Their incentives are to juice their stock grants or other economic gains from pushing AI. If people aren't paying for it, it has limited value. In the case of Microsoft Copilot, only ~3% of the M365 user base is willing to pay for it. Whether enough value is derived for users to continue to pay for what they're paying for, and for enterprise valuation expectations to be met (which is mostly driven by exuberance at this point), remains to be seen.

Their goal is not to be right; their goal is to be wealthy. You do not need to be right to be wealthy, only well positioned and on time. Adam Neumann of WeWork is worth ~$2B following the same strategy, for example. Right place, right time, right exposure during that hype cycle.

Only 3.3% of Microsoft 365 users pay for Copilot - https://news.ycombinator.com/item?id=46871172 - February 2026

This is very much like the dot com bubble for those who were around to experience it.

https://old.reddit.com/r/explainlikeimfive/comments/1g78sgf/...

> In the late 90s and early 00s a business could get a lot of investors simply by being “on the internet” as a core business model.

> They weren’t actually good business that made money…..but they were using a new emergent technology

> Eventually it became apparent these business weren’t profitable or “good” and having a .com in your name or online store didn’t mean instant success. And the companies shut down and their stocks tanked

> Hype severely overtook reality; eventually hype died

("Show me the incentives and I'll show you the outcome" -- Charlie Munger)

[reaperducer]

Your premise that the leaders of every single one of the top 10 biggest and most profitable companies in human history are all preposterously wrong about a new technology in their existing industry is hard to believe.

It's happened before.

Your premise that companies which become financially successful doing one thing are automatically excellent at doing something else is hard to believe.

Moreover, it demonstrates both an inability to dispassionately examine what is happening and a lack of awareness of history.

[datsci_est_2015]

I find it very easy to believe. The pressures that select for leadership in corporate America are wholly perpendicular to the skills and intelligence for identifying how to leverage novel and revolutionary technologies into useful products that people will pay for. I present as evidence the graveyard of companies and careers left behind by many of those leaders who failed to innovate despite, in retrospect, what seemed to be blindingly obvious product decisions to make.

[rightbyte]

The product is the stock price, not Office or Windows. From that perspective they are doing it right.

[pjc50]

> top 10 biggest and most profitable companies in human history are all preposterously wrong

There's another post on the front page about the 2008 financial crisis, which was almost exactly that. Investors are vulnerable to herd mentality. Especially as it's hard to be "right but early" and watch everyone else making money hand over fist while you stand back.

https://news.ycombinator.com/item?id=46889008

[ajkjk]

every time these companies make a mistake and waste billions of dollars it is well-publicized. so there is plenty of data that they are frequently and preposterously wrong.

[bandrami]

Were you around in 2008?

[vor_]

This industry has seen several bubbles in its existence. Many previously top companies didn't even survive them.

[6510]

The mistake is simple. It is like the difference between giving you many tools to use vs making you the tool.

https://www.youtube.com/watch?v=LRq_SAuQDec

[xyzsparetimexyz]

Doesn't matter what the leaders think if the users hate it and call it slop

https://futurism.com/artificial-intelligence/microsoft-satya...