FILE PHOTO: Judson Althoff, CEO of Microsoft’s commercial business, appears during an interview in San Francisco on January 27, 2017.
David Paul Morris | Bloomberg | Getty Images
Microsoft is investing $2.5 billion in a new group focused on helping customers with AI implementations, becoming the latest technology company to dedicate significant resources to help companies understand and adopt new artificial intelligence technologies.
With the new company called Microsoft Frontier Co., the software provider said Thursday it will integrate 6,000 employees with customers in a practice that has become known as “forward deployed engineering.” The department will include existing Microsoft FDEs, technical consultants, support staff and sales representatives with experience in specific industries. Rodrigo Kede Lima, who led Microsoft’s Asian business, will be its president.
The announcement comes two days after its cloud rival Amazon said it is putting $1 billion into an FDE initiative to support fast-moving AI projects. Leading AI labs Anthropic and OpenAI both founded FDE groups in May and have been working with private equity firms, banks and consulting firms.
Along with its technology peers, Microsoft has poured tens of billions of dollars into building data centers that run generative AI models. Microsoft has also released a number of AI services, with mixed results. The AI assistant Microsoft 365 Copilot hasn’t reached anywhere near ubiquitous adoption in the business world, and the coding agent GitHub Copilot has ceded market share to newer entrants.
Microsoft shares have plunged 21% this year, by far the worst performance among mega-cap tech companies. One concern on Wall Street is that AI models that produce code quickly could threaten mature software companies.
Judson Althoff, CEO of Microsoft’s commercial division, said the FDE effort comes from a recognition that “customers are in very different places right now trying to really understand AI.”
“Are they starting with an OpenAI model or an Anthropic model or a family of models?” Althoff said in an interview. “Are they taking a technology-first mindset into account? How are they looking at their existing business processes and operations?”
Althoff praises the provider of data analysis software Palantir with the popularization of the FDE job title. The U.S. military, which maintains troops stationed abroad, has long relied on Palantir’s software, and the company sent FDEs to U.S. bases in Afghanistan, according to the prospectus for its 2020 direct listing.
Earlier this year Accenture and EY both announced plans to partner with Microsoft on AI-centric FDE programs.
Compared to Palantir, Microsoft supports “more models, we support more connectors to data, more integrations with open systems of record,” Althoff said.
Microsoft has been providing support and implementation services to its customers for years. The company generated about $2.1 billion in business and partner services revenue in the March quarter, up 2.5% year over year.
Althoff said the company has found the most success when it takes a “very methodical approach to working with customers to build an intelligence platform” that protects their intellectual property and allows them to leverage “every model in the ecosystem.”
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