The energy usage they're thinking is going to pretty significantly affect our planet and agents need more of it than any workload previously, but it's at a different unit of scale. What are you most excited about when the cost of intelligence approaches zero? You know, right now to tame either inflation or improve economic growth we need some help. Do you ever see a future in which the operating system is similar, where there's maybe no or very little underlying traditional code? Every layer of the tech stack has to be reimagined. You had previously said the software, the application layer is going to collapse down into agents. What does that mean for vertical SaaS companies?
All right, Satya, thanks for chatting with me. Congratulations on everything you announced at Build. Yeah, I had a few questions. You've overseen very successful major transitions at Microsoft: cloud, the adoption of open source, and now we're kind of in this next one with the rise of these incredibly powerful AI agents. How are you thinking about investing in that while also maintaining your current product suite and the major changes that are coming to it?
Yeah, first of all, thanks so much for being at our developer conference. You know, the way I think about it is, first you have to embrace what's new. And that's where I think even now that we're even two to three years in, depending on how you count, into this AI era and this agenting era, the patterns of what it means to build agents and build apps is becoming clearer. So you have to really go look at the tech stack that you built, maybe for a previous workload, now needs to be really thought up from first principles for the new workload. So take even the infrastructure layer. Obviously we're very proud of the fact that we have 70 regions of Azure all around the world. And then you say, wow, we now need to retrofit them or fit them to become AI factories. That's what you need to do. Turns out that if you take even an app like ChatGPT or Copilot, it definitely needs a lot of GPUs or AI accelerators, but it also needs everything else. It needs tons of storage both during training and inference. It needs a ton of regular compute, not AI accelerated compute, in order to be able to have the environments for agents. So interestingly enough, it turns out what we built over the last 15 years may be more relevant now because agents need more of it than any workload previously, but it's at a different unit of scale. So that's what we have to do at the infra layer. Same thing with data. Take data and say, well, data has always been about taking a database, schematizing people, places, things. But now you can bring the intelligence layer to the data, a reasoning engine straight in. One of the coolest demos we showed was this Postgres, which is so modular that you can now mix and match in your SQL query an LLM response. I mean, think about the query plan you can generate. So I feel that every layer of the tech stack has to be reimagined, but it also means we can take some of the best work we've done over the last 15 years and have it compound for our developers so they can get the benefits of it. So that's how we're thinking about it: how do we make sure we think about every layer of the tech stack from a first principles perspective for the new AI workloads that are being built, and then really stitch it together so that it meets the real world needs of customers.
Yeah, the end users, especially for products that people are so familiar with, Office 365, these products I assume are going to be changing so rapidly. So what is that acceleration? What change can we expect?
Yeah, it's a fascinating thing. If I look at Office, there are three modes of Microsoft 365. The first is the brand new mode, which is I have this new UI for AI which literally is this new scaffolding which has chat, search, notebooks as a place where I collect all these heterogeneous collections of data and do things like podcasts and audio overviews and all of that. I have agents, like these researcher and analysts, so these are things that I can delegate tasks to. And I even have the Copilot Studio, so I can build agents. So that's the new thing: I now have a UI for AI and agents. Here's the other interesting thing: Teams takes all of that into multiplayer mode. All of those agents are available to me in my channel, in my meeting. So Teams becomes the scaffolding in which all of the AI is now working with me in multiplayer mode. And the third mode is my heads down work. Just like in GitHub Copilot with VS Code I'm heads down coding away but I have agents that I can use, I'm heads down on an Excel spreadsheet and I have my Copilot chat right there. That is like having a data scientist next to me while I'm analyzing a spreadsheet. While I'm researching and writing a document, I have a researcher right there. The idea is we've turned every Office canvas into an IDE with chat, essentially, if you think about it that way. So in some sense, I feel like the value of even the M365 system now has gotten to be more compounded because of intelligence getting built into all of these layers.
So I want to continue on that note a little bit. You had previously said the software, the application layer is going to collapse down into agents. I made a video about it, called it 'SaaS is Dead'. It garnered a lot of attention, that was really cool, thoughts about it. But I want to hear the assertion: there's going to be the agent layer, and then under that there's going to be the grounded database that the agents can read and write from. What does that mean for vertical SaaS companies? How do they prepare themselves for this future?
Yeah, like all of us, I think the way to go about it is, even the demo we showed today, literally there was Dynamics 365 with essentially an MCP server that was used by Copilot Studio to orchestrate a multi-agent application that spanned CRM and many other systems of record, and then completed the orchestration of a complex business process. That seems to be here and now. I mean, it's clear as day that when you go about thinking about business process and business applications, you have to compose yourself into something like that. And so yeah, that will mean pretty radical change. If all you thought was, hey, I'm the system of record or system of engagement, and it's just about workflows on top of my data and that's the scope, that's just not going to persist. So I think we have to all be open to participating in what is this new orchestration layer in the agentic web that will essentially have multiple backends. Your SaaS application will be one backend. You better support something like MCP in order to be able to participate in the agentic web. And then maybe even something like NL Web could reduce the friction of all these connectors. Because if you think about enterprises, you have significant friction in how connectors work. Something like NL Web could be a massive change even inside the enterprise. So I feel like yes, I think SaaS applications we built may have to radically change in order to adapt themselves for this future.
And so these SaaS companies, do you think they're going to be curators of this ground truth data for their customers, and then the agents will be provided by platform companies like Microsoft?
Yeah, I mean, I sort of think about it like it's unclear to me exactly how it all shakes out, because in some sense all of us overstate the importance of one thing that we have today. But the reality is, when these platform shifts happen, the value will anyway get created somewhere else. So this is where, at the end of the day, what's the job to be done? The job to be done is to complete a business process. It's not about any one system of record and its curation, or it's not about any one agent or one workflow. It's about the entirety of it. So that to me is where the water is flowing, and the question is how do you flow with it, versus thinking that somehow I have this moat and I'm going to hold on to it, or I'm going to build some sort of facade around it which has an agent head or what have you, but it's not the comprehensive view of what the customer needs to get done.
Yeah, I really like that you said different types of agents are going to be talking together, different databases, it doesn't really matter, it's just an abstraction layer. So that all sounds really exciting. Another thing you mentioned, you had said in an interview that when you hire somebody as an employee, you're hiring them in the future and their basket of agents, which is fascinating to me. But I wanted to get some clarity on that because it seems like most likely the company, the employer, is going to want to own that IP, the agents, just like they would own traditional IP. So maybe you can add some clarity.
Actually, that's correct. In fact, what you said is sort of our view. If I look at even today's announcements, because what is the intellectual property of a company? Even the work product of any one of us at work is the company's property. And so that I think is going to be the case even with agents. And that's one of the fundamental reasons why we extended the rails, where you now agents have an Entra ID, you can manage conditional access for these agents just like you do with people inside of an organization. Purview, right, another super important thing. If agents are going to have access to data, it needs to be subject to the same data protection and data rights. And we are going to have security. By the way, you're going to manage the agent environment like an endpoint, so that's why Defender is going to make sure that there is no credential theft or what have you. So absolutely thinking of all the things we've done from identity management and security for people and their IT infrastructure is going to be done for agents and their IT infrastructure.
