Microsoft's platform for AI builders takes shape

Welcome to Runtime! Today: why experiments with enterprise AI apps are increasingly moving outside corporate walls, how a really weird glitch almost took down the internet, and this week's enterprise moves.

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SEATTLE — While consumer-oriented AI devices and apps still feel like a solution looking for a problem, business customers have different needs and expectations when interacting with their suppliers. Now that companies have had over a year to kick the tires on enterprise AI app-building services, this could be the year that businesses who preferred to keep those initial experiments in-house gain the confidence to change how they interact with customers.

That's according to Microsoft's John Montgomery, corporate vice president for program management in Azure AI. "I would say a year ago, most of the builds that we were seeing were inward facing. Now we're increasingly seeing ones … where they are very much customer-facing," he said in an interview at Microsoft Build.

• That's consistent with what IT leaders told Runtime over the past year, when there were a lot of pilot projects and internal testing aside from the adoption of a few slam-dunk tools like GitHub Copilot.
• Lots of companies have been talking about using generative AI technology to summarize meetings or review contracts, a scenario where if something goes wrong it's correctable and there's no impact on a customer.
• But Vodafone recently used Azure OpenAI to improve its TOBi virtual assistant, and it has been able to quickly understand which issues customers need resolved 50% better than an earlier version.
• H&R Block is currently working with Azure OpenAI to build a new service that could "basically take your shoebox of receipts and forms and scan them in and extract the info, or take the PDFs and extract all the relevant information and populate your tax forms," Montgomery said.

However, companies like Vodafone and H&R Block "are the most sophisticated customers," he said. If Microsoft expects to see its AI investments pay off, it will need to get the rest of the corporate world to roll out external-facing AI apps without fear of damaging their relationships with customers.

• Early generative AI adopters preferred to work directly with the foundation models and manage everything themselves, Montgomery said, sort of akin to how early cloud infrastructure adopters got started 15 years ago with basic compute and storage services.
• But there are a lot of companies with plenty of money that lack the skills required to handle that kind of chore effectively, and are willing to pay their infrastructure provider to do more of the heavy lifting.
• Now that Azure AI Studio — which does a lot of that heavy lifting — is generally available as of this week at Build, Microsoft expects the companies that are interested in AI but need help building safe and reliable apps to enter the chat.
• Azure AI Studio also makes it easier for companies to work with several different models as part of their application, Montgomery said, which could make it easier for mere mortals to adopt low-cost or open-source foundation models.

Microsoft had "a couple hundred" customers using AI in production in January 2023, when Azure Open AI became generally available, Montgomery said. Now it has 53,000 customers using its AI services across Azure, which is incredible growth but a relatively small portion of its business: for example, Satya Nadella said on its last earnings call that 330,000 Microsoft customers used AI tools across its Power Platform.

• As foundation models mature and competition to OpenAI gets real, it seems likely that a lot of enterprise AI customers will choose their AI provider based on the strength of the tools they can use to create AI applications.
• Microsoft has a strong position with developers thanks to widely used tools like GitHub and Visual Studio Code, and will need to build, maintain, and improve similar tools for AI developers to keep its advantage.

Your roots are showing

No one seems to understand why a crucial link in the system that allows computers to find each other on the internet fell out of sync with its partners for several days this week, which could have made the whole thing difficult to use if left unchecked. Ars Technica has a detailed overview of the problem, which involved one of the 13 root servers at the lowest levels of the internet.

Those 13 servers help operate the DNS protocol, which allows your computer to find the specific server that hosts runtime.news when you type it into a browser. For some reason, one of those 13 servers operated by Cogent stopped updating its records as changes were made to the other 12 servers, a process that in normal times is pretty much instantaneous.

The slow root server was a whole three days behind the other 12, according to the engineer who first flagged the issue on Tuesday, which means it missed a lot of changes. The issue was fixed by the end of the day on Wednesday, and it looks like the glue that holds the popsicle sticks together at the core of the modern internet will make it through the holiday weekend.

Enterprise moves

Luis Blando is the new chief product and technology officer at OutSystems, joining the low-code company after four years at Proofpoint.

Chris Conley is the new chief revenue officer at Evocative, following several years in sales roles at data-center operations rival Centersquare.

Krishna Rao is the new chief financial officer at Anthropic, after serving in a similar role for Fanatics Commerce.

The Runtime roundup

Nvidia made a lot of money.

Snowflake also enjoyed a strong quarter, beating Wall Street expectations and raising its guidance for the full year.

But Workday cut its expectations for yearly subscription revenue, citing weaker-than-expected hiring among its customers and therefore less demand for new seats.

Canva launched an enterprise version of its design tool, which comes with storage and security features as well as indemnification for projects generated with its AI tools.

Ascension continues to grapple with a ransomware attack from earlier this month, with delays in patient treatment and record-keeping on paper, according to The New York Times.

Thanks for reading — Runtime is off for the holiday weekend, see you Tuesday!