Microsoft understands that AI is more than a Copilot button

Microsoft has once again shaken up its management. Pavan Davuluri, who has been heading the Surface division since September, now also heads the Windows team. The two divisions were separated last September after the previous head of both divisions suddenly left for Amazon. That these are now being put back together, as well as the arrival of some AI heavy hitters to the company, shows that Microsoft is doing everything it can to get the Windows platform ready for the arrival of AI PCs.

With Panos Panay’s departure to Amazon last year, Microsoft decided to separate the leadership of the Windows and Surface divisions. The company put Pavan Davuluri on Surface and appointed Mikhail Parakhin as chief of a new “Windows and Web Experiences” team. The latest change means Davuluri will basically do what Panay did before his departure. He already has extensive experience in the Surface department, where he has been general manager for eight years.

And Parakhin? According to a memo from Rajesh Jha, Microsoft’s head of ‘Experiences and Devices’ in possession by The Verge, he has decided to “explore new roles”.

Bing, Copilot and Edge

Parakhin currently reports to Kevin Scott, Microsoft’s chief technology officer. The Verge suggests that the “new roles” he is exploring may well be outside the company. This possibility is not officially mentioned in the memo at all, however. Previously, Parakhin worked on Bing Chat, the precursor to Copilot, after which he took on general engineering responsibilities, including revamping the Edge browser.

Over the past year, Parakhin has been quite prolific on X, answering questions about Microsoft’s AI assistant, Copilot and its use in Edge. He also showcased new features of various Windows applications, not shying away from a personal touch now and again.

Microsoft brings in AI expertise

The shift comes barely a week after Microsoft announced the arrival of Mustafa Suleyman, co-founder of AI tools DeepMind (Google) and Inflection AI. He will lead a newly created AI division of Microsoft focused on consumer applications. This division will now include the Edge, Copilot and Bing teams.

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Additionally, Microsoft hired pretty much all of the management and staff of Inflection AI. As a result, the company has effectively been acquired without an official takeover or sale. As well as Suleyman, the company hired Karén Simonyan, also a co-founder of Inflection AI. He will work as chief scientist of the consumer AI division.

Microsoft compensated the now rather human capital-starved Inflection AI by paying $620 million to license its software and LLMs. The company also paid $30 million to settle all legal consequences of the unofficial acquisition.

Windows’ success on AI PCs is crucial

In his memo, Rajesh Jha announces the further integration of the Experience and Devices divisions, or the software and hardware divisions dealing with “silicon, systems, experiences and devices” around Windows. According to Jha, this allows Microsoft to take a “holistic” approach to the coming AI era without unwanted barriers between business units that deal with products and those that deal with software applications.

In other words, making the hardware and software as compatible as possible is crucial to both the success of Windows on AI PCs and these PCs themselves. The key to this success is primarily in Microsoft’s hands and means more than just adding a Copilot button on the new Surface laptops.

Copilot could indeed take over some of the tasks a browser or search engine would typically handle, in which case Microsoft finally has an answer to Google’s dominance in these areas. But above all, the company wants Windows as a whole to perform optimally on the AI PCs that will soon come to market in large numbers.

Microsoft seems well aware of that by now. The latest shifts at the management level, with a prominent role for high-profile AI experts and close collaboration between hardware and software teams, shows that awareness.

Also read: Will AI save the PC market from a third consecutive year of disaster?