File photo: Microsoft Commercial Operations CEO Judson Althoff appears during an interview in San Francisco, January 27, 2017.
David Paul Morris | Bloomberg | Getty Images
microsoft has invested $2.5 billion in a new group focused on helping clients adopt AI, becoming the latest technology company to commit significant resources to helping companies understand and adopt emerging artificial intelligence technologies.
In the new venture, called Microsoft Frontier Co., the software vendor announced Thursday that 6,000 employees will be embedded with clients in a practice known as forward deployment engineering. This department includes existing Microsoft FDEs, technical consultants, support staff, and sales representatives with specific industry experience. Rodrigo Quede Lima, who has led Microsoft’s Asian operations, will be appointed president.
This announcement comes two days after Cloud Rivals Amazon The company said it is committing $1 billion to the FDE initiative to support its fast-paced AI efforts. Leading AI labs Anthropic and OpenAI both formed FDE Group in May, partnering with private equity firms, banks, and consulting firms.
Microsoft, like its peers, has spent tens of billions of dollars building data centers to run generative AI models. Microsoft has also released various AI services, with mixed results. The Microsoft 365 Copilot AI assistant has not yet caught on in the business world, and the GitHub Copilot coding agent is ceding market share to new entrants.
Microsoft’s stock price has fallen 21% this year, making it the worst performer among mega-tech companies. One concern on Wall Street is that AI models that rapidly compose code could threaten mature software companies.
Judson Althoff, CEO of Microsoft’s commercial business, said FDE’s work was born out of a recognition that “customers are in a very different place right now, trying to really understand AI.”
“Do you snap to one model from OpenAI, one model from Anthropic, or a family of models?” Althoff said in an interview. “Are they coming at it from a technology-first mindset? How are they looking at their existing business processes and operations?”
Althoff praises data analytics software vendors Palantir By popularizing the job title FDE. The U.S. military, which continues to have forward-deployed troops overseas, has long relied on Palantir’s software, and the company deployed FDEs to U.S. military bases in Afghanistan, according to a 2020 prospectus for the direct listing.
At the beginning of this year, Accenture and EY have both touted plans to partner with Microsoft on an AI-focused FDE program.
Althoff said that compared to Palantir, Microsoft “supports more models, supports more connectors to data, supports more integrations with open systems of record.”
Microsoft has been providing support and implementation services to customers for many years. The company generated approximately $2.1 billion in revenue from enterprise and partner services in the March quarter, an increase of 2.5% year over year.
Althoff said the company has had its greatest success when it has taken a “very systematic approach to working with customers to build intelligence platforms,” protecting customers’ intellectual property and allowing customers to take advantage of “any model in the ecosystem.”
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