The lessons from Microsoft’s startling comeback

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ChatGPT , Microsoft has become the go-to firm for AI tools. A year ago most observers would have said that was Alphabet, Google’s parent company, or Meta, Facebook’s parent. And ai may propel Microsoft higher still, helping it reclaim the crown as the world’s biggest company from Apple.

Its remarkable reinvention holds wider lessons for businesses. One is to be paranoid. When Steve Ballmer took over from Bill Gates in 2000, Windows was sacrosanct at the firm.

As a result, Microsoft failed to exploit big shifts in technology, such as the emergence of the smartphone and cloud computing. It could have easily gone the way of Kodak or BlackBerry. But under Mr Nadella, who was painfully conscious of the company’s laggardly status, Microsoft became hyper-alert to promising new technologies.

That prepared it to move quickly on ai. Another lesson is that firms do not need to do the inventing themselves. Microsoft has been adept at working out how to bundle and sell technologies created elsewhere.

At the event in New York the firm launched “Copilots", ChatGPT-like assistants, for various software offerings. At their core sit the capabilities of OpenAI’s tools combined with a cloud-computing business model pioneered by Amazon. Microsoft now wants to apply a similar formula to its gaming business.

It plans to combine its cloud technology with the gaming assets and expertise of Activision Blizzard, its acquisition of which seems more likely now that Britain’s trustbusters have signalled that they are happy with the deal. Compare this approach with that of invention-obsessed Google, which has made a cumulative operating loss of $24bn in its moonshot “Other Bets" business since 2018. Amazon, too, has invested heavily in technologies