AI Trends: Rapid Adoption, Security Hurdles, and Microsoft’s Ad-Supported Office Strategy

[00:00:02] It's Tuesday, February 25th, 2025, and I'm Dave Solvel for Things to Know Today. AI's real hurdle is not cost, but security and adoption. Clawed 3.7, Gemini Code Assist and deep research, more AI-free tools push out into the market. Microsoft's free Office Test, a smart move or ad-filled trap. And Apple bets on partners, again, a new program targeting businesses and education.

[00:00:30] This is the Business of Tech. So let's explore some of the new AI trends. Charles Rubenfeld highlights the rapid adoption of AI, featuring insights from a Charts and Tarts event attended by key tech leaders. Notable trends include the plummeting costs of AI, with the performance of models like GPT-4 now costing nearly 1,000 times less than just 18 months ago, facilitating broader integration into products.

[00:00:58] A survey indicated that 39% of the U.S. population were monthly users of AI as of August 2024, surpassing the early adoption rates of personal computers and the Internet. The report emphasizes that while some view AI adoption as slow, it's actually advancing faster than many previous innovations.

[00:01:17] Furthermore, consulting firms are playing a crucial role in assisting businesses with their AI strategies, with Accenture reporting that generative AI now makes up 6% their total business. And since listeners love use cases, the New York Times has embraced artificial intelligence tools in its newsroom to assist staff with editing, summarizing, and writing tasks. In a recent internal email, the publication confirmed the rollout of a new AI tool named Echo, which will help summarize articles and briefings.

[00:01:46] The staff will receive training on AI usage, with new editorial guidelines emphasizing that while AI can assist in generating promotional content and summaries, human journalists must oversee and be accountable for the final product. The Times has also introduced several other AI tools, such as GitHub Copilot for programming and Google Vertex AI for product development.

[00:02:07] And in fact, big businesses are still hesitant about adopting artificial intelligence agents, according to a recent survey conducted by the Wall Street Journal at its CIO Network Summit. The survey revealed that 82% of respondents are either experimenting with AI agents or not considering them at all, primarily due to concerns about the accuracy of current AI technologies and the lack of sufficient security measures to protect data, with 29% expressing distrust. Why do we care?

[00:02:36] So businesses are clearly investing in AI expertise, meaning IT consultants and providers that offer AI strategy, implementation, and governance services will seek growing demand. Security and accuracy concerns remain a barrier. Service providers who can build AI security frameworks, ensure compliance, and reduce AI risks will have an edge. And AI isn't replacing jobs yet, it's augmenting them. The Times' approach shows how AI is being integrated as a tool, not a full automation solution.

[00:03:04] Companies hesitant about AI adoption may be more open to AI-powered augmentation strategies. But costs are seemingly no longer a blocker, but usability is. Now that AI is cheap, the challenge shifts to making it reliable and practical for use cases. This episode is supported by Comet Backup. Are you seeking a fast, secure, and flexible backup solution? Comet Backup empowers you to manage all your backups from a simple, centralized platform.

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[00:04:01] Get $100 free credit when you sign up with the promo code MSPRADIO. Start running backups in 15 minutes or less with Comet Backup. And we'll do the AI product stuff. Anthropic has launched Clawed 3.7 Sonnet, its first hybrid reasoning AI model designed to tackle complex problems more efficiently than previous versions.

[00:04:23] The model excels in areas such as mathematics and coding and is available starting yesterday through the Clawed app, Anthropics API, Amazon Bedrock, and Google Clouds Vertex AI. It costs $3 per million input tokens and $15 per million output tokens, the same as its predecessor. In conjunction with the new model, Anthropics has introduced a coding tool called Clawed Code, which functions as an active collaborator capable of editing files and managing code on GitHub.

[00:04:52] Clawed 3.7 Sonnet has demonstrated significant improvements in coding, finance, and legal tasks and offers a more current knowledge base with a cutoff date of October 2024. And ChatGPT claims it has surpassed 400 million weekly active users, marking a substantial increase from 200 million reported in August of 2024. Google has announced that its AI coding tool, Gemini CodeAssist, is now available for free to individual users worldwide.

[00:05:20] Launched in public preview, the tool aims to assist solo developers, students, hobbyists, and startups by providing coding help without the need to switch between different windows or sources. The tool supports 38 programming languages and can be installed in popular development environments such as Visual Studio Code and JetBrains. Perplexity claims their tool excels at various expert-level tasks, taking approximately 2-4 minutes to generate an answer by performing numerous searches and analyzing hundreds of sources.

[00:05:50] The company asserts that it outperforms rivals on a specific benchmark, achieving an accuracy score of 21.1%, although this is still lower than that of OpenAI's deep research. And the Allen Institute for AI and Contextual AI has launched OLMOE, a compact artificial intelligence model that allows developers to explore AI applications on iOS devices.

[00:06:13] The model is compatible with the iPhone 15 Pro and newer, as well as M-Series iPads and Macs, with smaller versions planned for older devices shortly. OLMOE can process over 40 tokens per second, designed for efficient text processing while safeguarding user privacy, since all data stays on the device and is erased after each session.

[00:06:40] OLMOE can be used to be a good, as well as M-Series iPads and Macs, with a lot of other features in the device. And in Microsoft Moves, Microsoft is preparing for the launch of OpenAI's upcoming models, GPT-4.5 and GPT-5. Sources indicate that Microsoft is readying server capacity for these new models, with GPT-4.5 expected to launch within weeks and GPT-5 expected by late May.

[00:07:09] The company has also recently canceled several leases for artificial intelligence data center capacity in the U.S., reflecting growing skepticism among investors regarding the substantial investments made by major technology companies in AI. A report from brokerage TD Cohen indicates a potential oversupply of AI computing resources at Microsoft, raising concerns that companies may be overestimating long-term demand for AI. Why do we care?

[00:07:36] The stories raise critical strategic questions. Where is the real revenue in AI? If OpenAI, Google, and Anthropik are all offering free or low-cost AI services, and it's all very expensive, will businesses ever pay a significant amount for AI-driven solutions? Is Microsoft overextending an AI? If Azure-based AI infrastructure isn't generating expected demand, their AI-first strategy could face challenges. Or are they smart to start pulling back from these massive capital expenditures?

[00:08:05] And will AI tools replace traditional development? Coding tools like Claude Code, Gemini Code Assistant, Copilot could change how developers work but not eliminate the need for skilled engineers. The AI hype is real, but sustainable business models are still in question. While AI tools are improving, IT service providers should focus on solutions with clear, long-term business value rather than chasing trends.

[00:08:33] Microsoft is currently testing a free version of its Office applications for Windows, which includes advertisements. Previously, users needed to subscribe to Microsoft 365 to access the full desktop version. The ad-supported version has recently appeared in India, allowing users to utilize popular applications like Word, Excel, and PowerPoint without a subscription fee. However, this version features ads on the sidebar and includes limitations in functionality, such as an absence of certain tools in Word or Excel.

[00:09:03] Notably, users are required to store documents on OneDrive as local filed storage is disabled. Although a Microsoft spokesperson indicated that there are currently no plans to launch this version widely, the company has made significant adjustments to its Office applications to accommodate ads, suggesting that it may expand to more markets in the future. Why do we care? So, ad-supported Office for Windows marks a shift in monetization strategy, blending free access with advertising.

[00:09:32] The test, currently in India, suggests Microsoft is exploring new ways to reach users who might not subscribe to Microsoft 365. By offering a free desktop version of Word, Excel, and PowerPoint, Microsoft could attract more users into its ecosystem, particularly in price-sensitive markets. The requirement to store files on OneDrive is also notable. It locks users into Microsoft's cloud services, reinforcing the company's push toward a subscription and cloud-driven model rather than traditional software licensing.

[00:10:02] If widely implemented, this could drive higher adoption of OneDrive and boost user dependency on Microsoft's ecosystem. I'm torn. This could be a micro-business-savvy opportunity for providers if it moves beyond India, or could be gross lock-in and ad-filled workspaces. Apple is set to launch a new partner program this fall, designed to enhance collaboration with businesses across various sectors, including enterprise and education.

[00:10:30] The program will feature four categories of partners, from traditional resellers to those focused on services, such as the Apple Premium Business Partner and Apple Premium Education Partners. The revamped program includes the Apple Professional Academy, which offers online training and resources for partners. Apple aims to support and partner growth with new tools and a partner discovery tool to connect customers with suitable service providers.

[00:10:56] The company reported a record high of 2.3 billion products deployed globally, with its personal computer sales reaching $8.9 billion, reflecting a 16% growth. Why do we care? I've seen this movie before. In fact, I was in it when Apple did a big channel push a number of years ago. They clearly have another thought on pushing into the channel. This is an opportunity to do something with Apple for companies who can ride their current enthusiasm.

[00:11:25] I won't consider it a long-term strategy until they stick with it. Are you ready to get your brand in front of the tech leaders shaping the future of managed services? Here at the Business of Tech, we offer flexible sponsorship opportunities to meet your needs, whether it's live show sponsorship, podcast advertising, event promotion, or custom webinars.

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