As Microsoft approaches Build, it's faced with the challenge of having AI integrated throughout its offerings and dealing with issues related to its paying customers.

      The company's developer conference kicks off in San Francisco, where another wave of AI tools is anticipated, framed by the uncomfortable reality that few users are paying for Copilot. Microsoft launched its annual Build developer conference on Tuesday, with Satya Nadella expected to deliver a keynote at 9:30 AM Pacific. All indications suggest that the focus will be on integrating artificial intelligence into as many of its products as possible.

      The conference takes place on June 2 and 3, both in-person and online, and is targeted directly at the developers Microsoft requires to enhance its platforms. The overarching direction is clear. Over the past year, Microsoft has been redefining Windows not as a passive operating system but as a host for AI tools and agents, and Build is where it engages the developers who will create for that vision.

      Latest updates from the EU tech landscape, a story from our seasoned founder Boris, and some dubious AI-generated art. It's free and delivered to your inbox every week—sign up now! In the lead-up to the event, reports, including those from Reuters, pointed to new AI tools for PC and cloud as the focal point, marking the latest step in a strategy that Nadella has pursued with determination since the company's partnership with OpenAI began.

      When interpreting the specifics revealed on stage, it’s essential to reference official Microsoft announcements rather than the unusually speculative previews this year. The tension of the event stems less from the technology itself and more from user adoption. During its latest earnings call in late January, Microsoft announced it had 15 million paid subscriptions for Microsoft 365 Copilot. While this figure is impressive, it pales in comparison to the reported 450 million commercial Microsoft 365 seats, leading to a conversion rate of roughly 3.3%.

      Nadella informed investors that Copilot was “becoming a true daily habit,” citing a tenfold increase in daily active users year-over-year. However, the disparity between those who can use Copilot and those who actually pay for it remains a significant challenge in Microsoft's AI narrative. The company has been addressing this gap in ways that complicate the upbeat tone of the keynote. Earlier this year, it began allowing users and admins to remove Copilot from Windows 11 altogether, acknowledging the many who preferred not to have it included. Simultaneously, it has been expanding its own MAI model family, widely seen as a move to reduce reliance on OpenAI for the intelligence powering Copilot.

      Thus, Build serves both as a showcase and a sales pitch. Microsoft possesses the distribution, cloud resources, and developer base that few competitors can rival, along with a product that millions have access to yet choose not to purchase. The keynote will emphasize what AI can currently achieve in Windows and Azure. The crucial question that the announcements seek to address is whether developers, along with their customers, will find it worthwhile to pay for these services. The conference will reveal what Microsoft is creating, but it won't alone determine who is willing to buy.