Navigating Economic Shifts: AI Investments, Layoff Trends, and Rate Cuts

[00:00:02] It's Monday, September 23, 2024, and I'm Dave Soltful, three things to note today.

[00:00:07] Lower Layoffs AI Investments & Rate Cuts, IT providers are positioned for expansion.

[00:00:13] Sequoia Bugs AI Expansion & Hot Patching, how Apple & Microsoft are reshaping IT Management & Microsoft

[00:00:20] It provides three-mile island for AI Energy needs, a mid-regulatory and subsidy debate.

[00:00:27] This is the Business of Tech.

[00:00:30] While Happy Monday, this means it's time to examine broader market conditions to understand

[00:00:36] what our customers are feeling.

[00:00:38] The Federal Reserve implemented a half-point interest rate cut described as a monetary

[00:00:43] policy Mulligan to make up for not beginning a rate-cutting cycle in July.

[00:00:49] Fed officials project quarter-point rate adjustments will be made at the two remaining policy

[00:00:54] meetings this year, and four more quarter-point cuts will be made in 2025.

[00:01:00] The unemployment rate is currently 4.2% up from 3.7% at the start of the year.

[00:01:07] Fed projections anticipate unemployment increasing slightly to 4.4% in Q4 2024 and remaining

[00:01:14] of that level through the end of 2025.

[00:01:17] Chargerone Powell emphasized that the U.S. economy is in good shape growing steadily

[00:01:22] with inflation coming down and a strong labor market.

[00:01:26] According to an analysis by Axios, layoffs have decreased as companies are more reluctant

[00:01:31] to let go of workers, learning from past experiences during the pandemic.

[00:01:36] In 2024, average monthly layoffs were 1.6 million, lower than the 1.9 million in 2019.

[00:01:43] This trend may continue to anticipate at labor shortages and various sectors.

[00:01:49] While economic conditions could prompt future layoffs, companies are currently more cautious

[00:01:53] compared to previous downturns.

[00:01:56] I also noted an analysis in business and cider citing how America is significantly investing

[00:02:01] in AI infrastructure, highlighted by a $30 billion fund from Microsoft and BlackRock

[00:02:07] to enhance data centers and energy supply.

[00:02:10] This initiative addresses the growing demand for AI capabilities and aims to reduce

[00:02:16] reliance on foreign sources, particularly amid geopolitical tensions.

[00:02:21] The fund is part of a broader strategy to ensure the U.S. maintains its competitive edge

[00:02:25] in the generative AI race with a focus on domestic production and infrastructure deployment.

[00:02:32] Why do we care?

[00:02:34] With lower borrowing costs, IT providers should be ready to support clients looking to invest

[00:02:39] in digital transformation and modernization efforts.

[00:02:42] This should be an excellent time to leverage those financial resources available to you,

[00:02:48] particularly in distribution. Given the tight labor market and the hesitant to

[00:02:53] around layoffs, companies are focused on getting the most out of their current workforce.

[00:02:58] IT services that enhance productivity, such as automation,

[00:03:01] managed services and remote work solutions, will continue to be in high demand.

[00:03:05] The substantial investment in AI infrastructure, clearly signals that AI will be

[00:03:10] a cornerstone of competitive strategy. IT providers should align their service portfolios

[00:03:15] to support AI adoption from consulting, to implementation and ongoing management.

[00:03:23] With as many breaches and security concerns as I report in this show,

[00:03:27] it should be obvious that cybersecurity is not just about technology,

[00:03:31] but also the human expertise needed to interpret and respond to complex threats.

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[00:04:11] Mac OS Sequoia, aka Mac OS 15 is causing issues with third-party security software

[00:04:17] from vendors like CrowdStrike and Microsoft, attributed to networking bugs.

[00:04:22] Users may face kind of activity problems and unsupported software alerts

[00:04:26] with Microsoft advising against upgrading. Apple has acknowledged the issues but has not provided

[00:04:32] a clear response. According to Microsoft, its issue is Mac OS's stealth mode,

[00:04:38] which stops a machine from responding to ping requests or connection requests

[00:04:42] from closed TCP or UDP networks. stealth mode has to be disabled in firewall settings

[00:04:48] to resolve the issue. And while I'm on Apple, Apple announced that its generative AI

[00:04:53] Apple intelligence will support additional languages, including German, Italian, Korean,

[00:04:58] Portuguese and Vietnamese in 2025. The feature will first launch an American English

[00:05:04] with the iOS 18.1 update. However, it will not be available in the EU or China at launch

[00:05:11] due to regulatory issues, although discussions are ongoing to address these challenges.

[00:05:16] On the Microsoft Security side, Microsoft has announced the public preview of hot patching

[00:05:21] for Windows Server 2025, which allows security updates to be installed without requiring a reboot.

[00:05:28] This feature aims to reduce the number of mandatory reboots from 12 to quarterly,

[00:05:33] enhancing efficiency and security. Hot patching is available through Azure Arc

[00:05:37] and will support both physical and virtual servers. However, updates outside the hot patch

[00:05:43] program will still require restarts. Pre-requisites for using hot patching include Windows

[00:05:49] Server 2025 data center evaluation and certain security updates installed.

[00:05:55] And Microsoft is officially depreciated Windows Server update services or WSUS,

[00:06:00] ceasing new feature development while maintaining current functionality and updates.

[00:06:05] WSUS introduced in 2005 allows IT administrators to manage updates across large networks.

[00:06:12] Microsoft encourages business to transition to cloud-based solutions like Windows Auto Patch

[00:06:17] and Microsoft Intune for update management. The change primarily affects enterprise

[00:06:22] environments and does not impact on users. And if you're not aware, Windows Auto Patch is a cloud

[00:06:28] service that automates updates for Windows Microsoft 365 apps, Microsoft Edge and Microsoft Teams

[00:06:33] enhancing security and productivity. That addresses challenges by closing security and

[00:06:38] productivity gaps, optimizing IT resources, minimizing on-prem infrastructure and reducing

[00:06:43] in user disruptions through careful rollout sequences. The services available for devices registered

[00:06:49] under business premium and A3 Plus licenses. I'm bringing it all together, Microsoft's new

[00:06:55] Windows app is now available on Windows, Mac OS, iOS, and the web with a public preview on Android

[00:07:01] and Chrome OS. It serves as a unified hub for managing Windows services like Windows 365 cloud PCs

[00:07:08] and supports multiple monitors and accounts switching features. The app will replace the existing

[00:07:14] Windows 365 and remote desktop apps, providing enhanced security and management for IT

[00:07:20] admins and customizable experiences for end users. Why do we care? Well, I felt that Apple

[00:07:27] bugs, so I know I care. But that said, I'm noting the trend towards mobile-style patch management

[00:07:33] and an embrace of auto upgrades. Hot patching, auto patch or the bundling of patches like

[00:07:38] mobile updates all driving to a much more automatic process. Combine that with the shift away from

[00:07:44] WSUS representing a broader industry trend towards cloud-based management with constrain-line

[00:07:51] update processes and enhanced security posture. So the world of patching continues to shift.

[00:07:58] Regarding AI investments, Microsoft plans to revive the dormant 3-mile island nuclear plant

[00:08:04] to meet its energy needs for artificial intelligence, purchasing 100% of its output for 20 years.

[00:08:12] Yes, that 3-mile island. This unprecedented deal aims to provide clean energy and support

[00:08:18] the tech industry's growing demand, but it faces regulatory hurdles and raises concerns about

[00:08:23] public subsidies. The project costing around $1.6 billion is contingent on federal tax breaks

[00:08:30] and could create significant local jobs while contributing to the power grid serving 65 million people.

[00:08:37] And in AI backlash, LinkedIn has suspended its use of UK user data for AI training,

[00:08:44] following backlash from users and digital rights groups who've criticized its opt-out policy

[00:08:49] as inadequate for protecting privacy. The company is reversed its decision and will not apply

[00:08:55] the policy in the UK, EU or Switzerland while dating its privacy policy to clarify how user data

[00:09:01] is used. The information commissioners office welcomed LinkedIn's change,

[00:09:05] emphasizing respecting user privacy rights in AI training. And a 3M study reveals that AI is

[00:09:12] significantly underutilized in UK workplaces, only 4% of adults use it daily despite 84% having

[00:09:18] used it at some point. While many recognized AI's potential to transform work, a mindset shift

[00:09:25] and clear regulations are needed to increase adoption. Most respondents expect AI to handle over

[00:09:31] 50% of their tasks in the next decade, highlighting the need for training and reassurance that AI

[00:09:36] will enhance productivity rather than replace jobs. The 2022 Re-evaluate Survey by Domino

[00:09:43] Data Lab reveals that while 97% of AI leaders commit to responsible AI, nearly half are under

[00:09:50] resource to implement effective governance, posing risks of regulatory violations and

[00:09:55] reputation damage. Responsible AI is now a top priority for 43% of leaders, yet 48% site

[00:10:02] resource constraints as a significant barrier. Organizations are focusing on frameworks to translate

[00:10:07] responsible AI principles into practice with key capabilities like logging, auditability and

[00:10:13] monitoring identified as critical for success. Why do we care? AI draws a lot of power and data

[00:10:19] centers are hungry for that. That said, consider the fact that much of our AI discussion revolves

[00:10:24] about it being on the edge as well requiring more advanced compute. So IT service providers should

[00:10:30] be prepared to discuss sustainable and energy efficient AI strategies with clients, especially

[00:10:35] these energy consumption becomes a critical consideration for large-scale AI deployments.

[00:10:41] There's also another case here of Europeans getting protections Americans don't

[00:10:45] based on regulatory compliance. Now, balance that with the findings which highlighted significant

[00:10:49] gap between AI's potential and its current usage driven by that lack of training, regulatory

[00:10:55] clarity and perhaps apprehension about job displacement. So highlight your role in helping

[00:11:00] organizations adapt to AI, not just through technology but fostering a cultural shift toward embracing

[00:11:07] AI's benefits. This can set your firm apart in a market still grappling with how to fully leverage

[00:11:13] AI.

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