Microsoft appears all in on artifical intelligence (AI), whether as an update to Windows 11 or a future "Windows 12" platform.

During the Consumer Electronics Show (CES) earlier this month, Microsoft Chief Product Officer Panos Panay said AI is "the defining technology of our time" and would play a significant role in the future development of Windows.

"It's like nothing I have ever seen before," Panay said during AMD's CES keynote session. "It's transforming industries, it's improving our daily lives on many ways. Some of it you see, some of it you don't see. And we are right now, right this moment, at an inflexion point. This is where computing from the cloud to the edge is becoming more and more intelligent, more personal, and it's all done by harnessing the power of AI."

He also discussed AMD's new Ryzen 7040 series chips, which feature the first dedicated AI hardware in an x86 processor, and how that hardware platform would help Microsoft usher in the next generation of AI-powered software.

AMD Chair and CEO Lisa Su on stage at CES showing a Ryzen chip with native AI.

Windows 11 already has aspects of AI built into it in areas such as system management, search optimization, speech recognition and dictation, grammar correction, and even media-enhancing features such as noise suppression and camera image processing. Most of those features, however, are enabled through cloud services. For example, searches via Bing initiated on a Windows desktop are processed in the Microsoft cloud, as are video and audio searches, processing, modifications, and relevance to other data, according to Jack Gold, principal analyst at J. Gold Associates.

"The question is, what does an AI accelerator within the CPU provide Windows that could increase automation and performance? If you could accelerate those AI functions on the desktop, you might be able to run those functions if the data is also local," Gold added.

Currently, PCs lack the dedicated processor for neural processing, meaning they have to piggyback on the GPU or run on the main CPU.  This, in turn, has limited how far companies such as Microsoft have been willing to push the limits on local AI processing. 

"Over the next couple of years, I expect an AI engine to become as common in PCs as an embedded GPU," said Stephen Kleynhans, a vice president of research at Gartner. "At that point, Microsoft and others will get much more aggressive about finding new ways to leverage it. My guess is that many of the AI enhancements will run behind the scenes, and we won't really notice them directly.

"It is often said that the best CGI in a movie is the stuff the audience doesn't realize is CGI," Kleynhans added. "Well, the same will be true about AI enhancements."

Coaching and tech support will also become more AI empowered. Microsoft, PC OEMs, and corporate IT groups will use it to lower the ongoing costs of supporting users, improve user experiences, and likely improve security, Kleynhans said.

"Who knows, maybe Cortana will make a comeback!" he said.

Another advantage to having AI functionality in a CPU is that fewer functions would have to be offloaded to the cloud for processing, requiring less data bandwidth and delivering lower latency in getting results.

It also means reduced load on cloud processors "that can then go off and do other things," Gold said. "It also potentially means less personal, sensitive information needs to leave your machine, helping with privacy."

Over the next year or two, Gold believes users will see incremental AI increases in Windows 11, as well as the addition of AI APIs so applications and third parties can use them.

"Search is an obvious one, but also video processing, natural language processing, machine automation. They are all areas for AI enhancements," Gold said. "Perhaps next-gen AI-powered Windows 12 is Microsoft's bigger master plan that explains the recent rumors of the company's interest in acquiring OpenAI and integrating ChatGPT with Bing."

One issue Microsoft will need to deal with is that not all chips will have AI acceleration -at least, not in the short term. And since Windows has to run on all kinds of processors, from lower-end Pentium to Core i9 on Intel (and the equivalent on AMD), the company will need to make sure any enhanced AI features run across all versions of Windows.

"They don't want to start diverging on multiple Windows versions," Gold said.

Uptake of the Windows 11, which was launched in October 2021, had reached only about 17% by December 2022, according to web traffic analysis site StatCounter. Meanwhile, Windows 10 use dropped to 68% during the same period.

(Microsoft announced last week it will stop offering Windows 10 Home and Windows 10 Pro for sales via its website after Jan. 31, 2023.)

In some ways, Windows 11 has been the victim of bad timing, in that it started to mature in the market just as PC sales started to decline, according to Kleynhans.

"As with any new OS release, most people will get it first through the purchase of new hardware. Out of caution, businesses will even postpone that, downgrading new machines to the older OS for some period," he said.

"The good news is that we are seeing most enterprises wrapping up their initial planning and testing and are moving into pilots," Kleynhans said. "We expect that within the next quarter or so, new corporate purchases, such as they are, will mostly come in with Windows 11 and stay that way. IT professionals don't want to be facing a crunch in 2025 and are trying to be more proactive with getting Win 11 deployed, but there is no rush."

Regardless of current uptake, there will be future versions of Windows. As to whether any will be called Windows 12, that depends on the whims of Microsoft's marketing division, Kleynhans said.

In October, Microsoft confirmed it would be changing the cadence of OS updates. Large updates would take place every three years, but periodically the company will add new features and experiences in Windows 11, similar to the company's  "feature experience packs" in the past. Those smaller, more frequent changes will be called "Moment" updates, Microsoft said.

"This really isn't all that different or new as this was the way the Long Term Servicing and Server releases were handled," Kleynhans said. "Tacking a public name on a version has a number of implications for the market, but it's mostly useful for the consumer market where 'new and improved' helps sell new PCs. For the corporate market, the updates will continue to come once a year."