Microsoft announced at its 2024 quarterly earnings call that Teams Premium has now exceeded three million seats.
Satya Nadella, Chair and CEO at Microsoft, dropped a few of the big-name companies that have adopted Teams Premium: “Microsoft Teams has become essential to how hundreds of millions of people meet, call, chat, collaborate, and do business. We once again saw year-over-year usage growth.
“Teams premium has surpassed 3 million seats, up nearly 400% year over year as organisations like dentsu, Eli Lilly, and Ford, chose it for advanced features like end-to-end encryption and real-time translation.”
That is quick progress when you consider that it was only in October last year that Microsoft revealed that Teams Premium had reached ten thousand paying customers.
Overall, the technology giant’s revenue for the quarter was over $64 billion, representing a growth of 15 percent. For the year, it made more than $245 billion, which is a 16 percent increase.
Office Commercial products and cloud services revenue increased 12 percent, driven by Office 365 Commercial revenue growth of 13 percent.
Yet, in spite of these positive results, shares in Microsoft fell nearly three percent in after-hours trading following the revelation that Azure was struggling to meet AI demands at a time of market uncertainty surrounding AI investments.
AI Bubble Concerns
The concern is that tech companies are now plowing their time and resources into AI, but this shotgun approach to innovation has not always translated onto the bottom line as investors had initially hoped, having been buoyed into action because of an AI hysteria sweeping the industry.
The major UK news publication, The Guardian, published an article today quoting Dan Coatsworth, Investment Analyst at AJ Bell, an investment platform: “Euphoria around AI is now at risk of spluttering if more people ask when companies are going to generate positive returns from the significant investments made to support artificial intelligence technology. It’s no longer good enough to simply say AI will be deployed.
“There is a fear that companies might take their foot off the pedal in terms of AI investments if there is more focus on the financial returns, meaning the AI enablers like Nvidia and Microsoft might lose the tailwind that has sent them to the moon in recent years.”
Just because the financial payoffs have not come as thick and fast as some would have hoped, that does not necessarily mean that the technology itself is somehow inadequate.
In fact, there has been an endless stream of AI innovations across all sectors, from healthcare and banking to UCaaS and contact center systems.
Yet companies choosing to throw money at AI without clear, market-tested use cases may need to take a step back to ensure that their investments in AI are sustainable.
Presumably, Nadella was trying to reassure investors that it was indeed taking a targeted approach to AI innovation with his opening remarks:
“At the end of the day, GenAI is just software. It is really translating into fundamental growth on what has been our M365 SaaS offering with a newer offering that is the Copilot SaaS offering, which today is on a growth rate that’s faster than any other previous generation of software we launched as a suite in M365.”
Meta has also had to change tack recently, having made successive losses in the billions through its AI research arm, Meta AI. The company’s CEO, Mark Zuckerberg, announced that it would decrease its expenditure in this area while also defending the work it is doing.
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