Microsoft's (MSFT.US) Build developer conference will open on Tuesday, giving the company an opportunity to showcase its latest artificial intelligence (AI) projects. Earlier this month, OpenAI and Google (GOOGL.US) held high-profile artificial intelligence events.

In the artificial intelligence competition, one area where Microsoft has a clear advantage over other companies is that it has a Windows system, which allows the company to have a huge PC user base. Microsoft CEO Satya Nadella said in January this year that 2024 will mark artificial intelligence as “a first-class component of every personal computer.”

The company already provides the Copilot chatbot assistant in the Bing (Bing) search engine and provides paid services in the Office office software. Now, PC users will hear more about how artificial intelligence will be embedded in Windows and what they can do with their new AI PCs.

A few days before Build was released, at the Google I/O conference, the search giant unveiled its most powerful artificial intelligence model to date and showed how its Gemini artificial intelligence will work on computers and phones. Ahead of Google's event, OpenAI announced its new GPT-4O model. Microsoft is a major investor in OpenAI, and its CoPilot technology is based on the OpenAI model.

For Microsoft, the challenge is twofold: maintaining a prominent position in the field of artificial intelligence and boosting PC sales. After going through an upgrade cycle during the pandemic, PC sales have been sluggish for the past two years.

Morgan Stanley analyst Erik Woodring recently wrote in a report to investors on Dell (DELL.US) that he is still “optimistic about the recovery of the PC market” due to customer comments and recent “upward revisions” to the product configuration of the original laptop design manufacturer (ODM).

Tech industry research firm Gartner (Gartner) estimates that PC shipments increased 0.9% this quarter after years of downturn. Microsoft Chief Financial Officer Amy Hood said on the company's quarterly earnings call last month that PC demand was “slightly better than expected.” Microsoft's new artificial intelligence tools may provide businesses and individual users with another reason to upgrade their old computers, whether made by HP (HPQ.US), Dell, or Lenovo.

On April 26, the day after Microsoft announced its earnings report, analysts Bernstein wrote in a report to investors: “Although Copilot for Windows will not directly drive profits, we believe it should increase Windows usage, Windows stickiness, consumer preferences for more expensive and more powerful PCs (thereby bringing Microsoft more revenue per device), and possible search revenue.”

Although Microsoft will provide software to handle some artificial intelligence tasks sent to the Internet, Microsoft computers will use AMD (AMD.US), Intel (INTC.US), and Qualcomm (QCOM.US) chips to complete offline artificial intelligence work. This could include, for example, asking Copilot to summarize a recording with your voice without a connection.

What is an artificial intelligence computer?

The key hardware in an artificial intelligence PC is a so-called neural processing unit (NPU). NPUs surpass the capabilities of traditional central processing units (CPUs) and are specifically designed to handle artificial intelligence tasks. Traditionally, they have been used by companies like Apple (AAPL.US) to improve photo and video or voice recognition.

Microsoft has yet to say how capable AI PCs will be without an internet connection. However, Google's Pixel 8 Pro phone does not have a complete computer processor, but it can use Gemini Nano artificial intelligence to summarize and transcribe recordings, recommend SMS replies, etc.

Computers equipped with Intel's latest Lunar Lake chip and dedicated NPU are expected to hit the market by the end of 2024. Qualcomm's Snapdragon X Elite chip with NPU will be available in the middle of this year, while AMD's latest Ryzen Pro is expected to hit the market sometime this quarter. Intel said these chips can implement functions such as “real-time language translation, automatic reasoning, and enhanced gaming environments.”

Apple has been using NPUs for years, and recently highlighted this in the iPad Pro's new M4 chip. The M4 chip is expected to be introduced in the next generation of Mac computers sometime this year.

Windows on Arm (ARM.US)

Unlike Intel and AMD, Qualcomm offers chips based on arm architecture. A Microsoft conference will discuss “Windows on the Next Arm” and may discuss how Windows runs on Qualcomm chips and how it differs from Intel and AMD versions of Windows.

According to recent data from Canalys, Intel still controls 78% of the PC chip market, followed by AMD with a 13% share. In the past, when promoting computers based on Snapdragon arm processors, Qualcomm touted other advantages such as longer battery life, thinner design, and cellular connectivity. However, early versions of Qualcomm's chips were limited in terms of the services they provided to consumers. For example, in 2018, the company's Snapdragon 835 chip was unable to run most Windows applications.

Microsoft has since made improvements to Windows to handle traditional apps on Arm, but the problem persists. The company even has an FAQ page dedicated to computers running on ARM hardware.

AI in other fields

Microsoft will also host conferences such as “AI Everywhere” to discuss how to “accelerate the generation of artificial intelligence models” on devices running in the cloud. The “Azure AI Studio” conference will explore how developers can create their own Copilot chatbots, which could be similar to what Google and OpenAI did on Gemini and ChatGPT. Imagine, for example, a company creating a chatbot to help employees choose health benefits.