As Microsoft approaches Build, it faces a challenge with AI integrated throughout its offerings and a dilemma regarding paying customers.

      The company’s developer conference kicks off in San Francisco, where another wave of AI tools is anticipated, set against the uncomfortable backdrop of the low number of users who pay for Copilot. Microsoft launched its annual Build developer conference in San Francisco on Tuesday, with Satya Nadella scheduled to deliver a keynote at 9:30 a.m. Pacific, focusing on integrating artificial intelligence across its products as much as possible.

      The conference takes place on June 2 and 3, both in-person and online, aimed directly at the developers Microsoft relies on to enhance its platforms. The overarching direction is clear. Over the past year, Microsoft has been redefining Windows as a platform for AI tools and agents instead of merely a passive operating system, and Build serves as the venue to attract developers aligned with that vision.

      Reporting prior to the event, including insights from Reuters, highlighted new AI tools for PCs and cloud services as central to the agenda, continuing a strategy that Nadella has been vigorously pursuing since the company partnered with OpenAI. The specifics revealed during the event should be viewed in light of Microsoft’s official announcements rather than the speculative discussions that have been particularly abundant this year.

      The tension of the event arises not from the technology itself but from user adoption. During its most recent earnings call in late January, Microsoft reported having 15 million paid subscriptions for Microsoft 365 Copilot. This figure seems impressive until compared to the 450 million commercial Microsoft 365 licenses also reported, translating to a conversion rate of approximately 3.3%.

      Nadella mentioned to investors that Copilot was “becoming a true daily habit,” noting a tenfold increase in daily active users year over year, but the disparity between users who can utilize Copilot and those who actually pay for it remains a significant challenge in Microsoft’s AI narrative.

      In response to this gap, the company has taken actions that somewhat complicate the optimistic framing of the keynote. Earlier this year, it allowed users and administrators to completely uninstall Copilot from Windows 11, acknowledging the wishes of many who prefer not to have it pre-installed. Simultaneously, it has been expanding its own MAI model family, a move widely interpreted as a strategy to reduce reliance on OpenAI for the technology powering Copilot.

      Thus, Build serves both as a showcase and a sales pitch. Microsoft possesses the distribution, cloud capabilities, and developer community that few competitors can rival, along with a product that millions have access to but choose not to purchase. The keynote will focus on the capabilities of AI within Windows and Azure.

      The real question that the announcements aim to address is whether developers, and the customers they serve, will find it worthwhile to pay for these offerings. While the conference will showcase what Microsoft is developing, it won’t, by itself, determine who will actually make a purchase.