Before we start, maybe you can let our audience globally know what the commercial business leg of Microsoft is.
Yeah, it's not the most self-explanatory title, is it? So broadly speaking, you can think of Microsoft being in two businesses. One that we sell to consumers and the other where we sell to businesses around the world. So I'm responsible for our product strategy, marketing, sales, service support for everything that we deliver to businesses around the world, large and small, and governments as well.
And you're a veteran in the industry. Can you share with your experience how you saw the evolution of AI penetrating business and the core of commercial business?
Sure. It's been an exciting couple of years. I would say you rewind back three years ago when we first started demoing generative AI in our products. And most of the world thought it was a series of parlor tricks. You know, hey gosh, maybe this can generate my holiday cards, but it will never really amount to anything in business. To, you know, fast forward ahead and everybody thought the AI robots were going to take over the world. And, you know, there's a lot of fear and concern over gosh, Microsoft, how can you help? To today, clients show up at our briefing centers around the world with 400 big ideas of all of the things that they think they can get done with AI. If they've talked to an advisory firm, they have 900 big ideas of all of the things they think they can get done with AI. And you know, frankly, not all of them make a ton of sense. And so we spend a lot of our time helping customers navigate the applied use of AI across the enrichment of the employee experience, customer engagement, the reshaping of business processes and bending the curve on innovation. So deeply rooted in industry work, government work and supporting our clients around the world.
One thing that is excellent in my opinion and my very biased opinion being a scientist myself is the fact that Microsoft Research has a very important role in the company in bringing innovation and then the company takes this innovation that comes from hardcore scientific research into people's lives.
That's right. So I think it's maybe worth breaking that down for everyone because I think a lot of folks are attuned to how AI can be used to write software and we of course do that across our portfolio products. AI is responsible for roughly 35% of all of the products we produce today, how they're documented, how they're tested. But as you state, it goes well beyond the production of software and into the applied use in science and discovery. So all of our work in quantum computing for example, most of that research has been AI-forward research in terms of the molecular discovery, breaking through on new states of matter, all of that has been AI-driven in its pursuit and that same concept takes itself broadly across other industries we serve from healthcare and life sciences to agriculture to industrial design. The applied use of AI connected to human ambition to unlock all kinds of growth is where we've been focused.
Last year on this very stage we had Deep Cup and we had Peter Lee from Microsoft presenting two very different aspects of a company. What were the landmarks last year for Microsoft leading to this very exciting 2026?
I think the biggest breakthrough has been around the work with agents. We spent the first couple years of our journey getting AI assistants into the hands of so many of our customers around the world. Our Copilot product is used very broadly now. But Copilot in and of itself is meant to just be a gateway into broader AI solutions. You can think of it as the assistant that can help you in your daily tasks and what you get done as an individual. The real unlock is connecting agents into the business processes that matter most. Whether that's, you know, running a public institution or running a large business. AI can serve to reshape a process from left to right. If you have agents doing the work first and then involving human expertise in a guided capacity, it can really help dramatically improve the production function of any business both in terms of efficiency as well as net yield and product design. And so for us connecting agents back into the Copilot experience so that you know humans can be at the center of driving that production function with all kinds of new yield is where we've seen a tremendous amount of development this year. So it's kind of been the year of agents. And then the other thing that has really been a big part of our work is the trust foundation for AI. Everyone wants to know the ROI associated with AI and everyone wants to understand broadly what AI is doing in their environment. Is it generating positive outcomes or is there a bunch of random acts of innovation happening inside of an organization? So earlier, well I guess sort of towards the end of last calendar year in November we launched a product called Agent 365 which is designed to provide an observability platform for everyone to understand how AI is being used in your environment whether it's being built on the Microsoft platform or any other platform. You can observe how AI is doing work inside your environment. You can register it and give it a namespace the same way you would to an employee. But more importantly you can provide governance and controls and security posture across any AI asset in your environment so that you can make sure that it is providing the outcomes that you expect and not frankly straying the course of how you've designed it to be implemented.
A year ago agents were buzzwords, they became a reality, a workplace reality and now we see job descriptions where people are asked to be able to manage AI agents. That's a big difference. One thing is that you not only develop the product, sell the products, but you also use the product in your own practice on a daily activity of your work, right?
Yeah, exactly. I mean, one of the fun things we did this past year was we actually created an AI agent of me. So there's a thing called Agent J running around Microsoft.
You get along with your own agent.
Yeah, but it's kind of creepy to talk at something that has your own voice talking back at you. But the experiment was quite a positive one both in terms of business impact as well as just the cultural shift and getting people to be immersed in using AI because we basically trained this thing on a decade's worth of information about me. Every email I've sent, every Teams conversation I've had, every business coaching session I've given, every presentation I've given publicly or internal to the company, we trained it on my voice. We had my family and people closest to me poke at it to try to break it and ask it all kinds of questions it shouldn't answer. And then we released it out inside the company. And so one, it serves to train all of my people. It democratizes the experience so that even a new hire who wants to ask a question of the CEO can be given direct information about the strategy of the company, the latest products that we're taking to market, receive coaching sessions on how to address concerns with their customers. And it also I think culturally was a leap forward to us because I think for those who are afraid of AI taking over their jobs or somehow taking their identity and what is most important to them, for me as a leader to basically say, 'Hey, listen, I'm going to be vulnerable here and put this thing out in the wild.' And I'm not at all concerned about the things that it's going to do on my behalf because it actually frees me up to do a lot more inside of the company.
