This week Alphabet CEO Sundar Picahi assured investors that their long-term AI focus and investment (and a "commitment to innovation") "are paying off," reports the Associated Press. Alphabet's stock has already soared 20% this year, and it's "still thriving" as the company "navigates through a pivotal shift to AI and battles regulators..." Alphabet earned $26.3 billion, or $2.12 per share during the most recent quarter, a 34% increase from a year ago. Revenue rose 15% from the same time last year to $88.27 billion... The profits would have been even higher if Google wasn't pouring so much money into building up its AI arsenal in a technological arms race that includes other industry heavyweights Microsoft, Amazon, Apple, Facebook parent Meta Platforms and rising star OpenAI. The AI investments are the primary reason Google's capital expenditures in the past quarter soared 62% from the same time last year to $13.1 billion. The AI spending will likely stay at roughly the same level during the current October-December period, and the rise even higher next year, according to Anat Ashkenazi, Alphabet's chief financial officer.

But Ashkenazi also emphasized the Mountain View, California, company will act on cost-cutting opportunities in other areas to help boost profits. Alphabet already has trimmed its payroll from more than 190,000 worldwide employees early last year to about 181,000 workers now. In an example of how AI can perform tasks that once required human brainpower, Pichai said the technology is now writing more than 25% of the company's new computer coding.
After the results, investors sent Alphabet's stock price up 5% in extended trading, the article points out. "Both Alphabet's profit and revenue increased at a brisker pace than industry analysts anticipated, thanks primarily to a moneymaking machine powered by Google's ubiquitous search engine... [Google's digital search-engine ads earned $49.39 billion, 12% more than the same quarter of 2023.] And Google's cloud division is growing at an even more robust rate, thanks to demand for AI services. The cloud division generated $11.35 billion in revenue during the past quarter, a 35% increase from last year."

And meanwhile over at Microsoft, quarterly sales surged 16% to $65.6 billion, reports the Associated Press. But again, "the company sought to assure investors its huge spending on artificial intelligence is paying off." The company has spent billions of dollars to expand its global network of data centers and other physical infrastructure required to develop AI technology... As a result, AI-related products are now on track to contribute about $10 billion to the company's annual revenue, the "fastest business in our history to reach this milestone," CEO Satya Nadella said on a call with analysts Wednesday. [Though Microsoft "hasn't yet formally reported revenue specifically from AI products," the article notes later, with Microsoft instead saying it's infused AI and Copilot into all its business segments.]
Just in the last quarter, Microsoft spent $20 billion "mostly for its cloud computing and AI needs," the article points out.

But there's still making plenty of money... The software maker also reported an 11% increase in quarterly profit to $24.7 billion, or $3.30 per share, which beat Wall Street expectations for the July-September period... Leading in sales for the quarter was Microsoft's productivity business segment, which includes its Office suite of email and other workplace products, growing 12% to $28.3 billion. Microsoft's cloud-focused business segment grew 20% from the same time last year to $24.1 billion for the three months ending Sept. 30. Its personal computing business, led by its Windows division, grew 17% to $13.2 billion. A big part of that growth came from Microsoft's Xbox video game business, which was boosted by its purchase of game publishing giant Activision Blizzard a year ago.

Microsoft's gaming division is developing prototypes for a handheld gaming device that won't launch for "a few years," gaming chief Phil Spencer said Wednesday. In an interview with Bloomberg, Spencer said that while Microsoft is actively working on prototypes, the company will first focus on improving its Xbox app performance on existing portable devices and establishing hardware partnerships.

The gaming unit wants to be "informed by learning and what's happening now" before introducing its own device, Spencer said. "Longer term, I love us building devices," Spencer said, adding that Microsoft's team "could do some real innovative work."

Ars Technica's Samuel Axon reports on Microsoft's quarterly earnings: Some investors have been uneasy about the company's aggressive spending on AI, while others have demanded it. During this quarter, Microsoft reported that it spent $20 billion on capital expenditures, nearly double what it had spent during the same quarter last year. However, the company satisfied both groups of investors, as it revealed it has still been doing well in the short term amid those long-term investments. The fiscal quarter, which covered July through September, saw overall sales rise 16 percent year over year to $65.6 billion. Despite all that AI spending, profits were up 11 percent, too. The growth was largely driven by Azure and cloud services, which saw a 33 percent increase in revenue. The company attributed 12 percent of that to AI-related products and services.

Meanwhile, Microsoft's gaming division continued to challenge long-standing assumptions that hardware is king, with Xbox content and services posting 61 percent increased year-over-year revenue despite a 29 percent drop in hardware sales. [...] The company attributed 53 points of that to the recent $69 billion Activision acquisition.

Microsoft is seeking to boost its video games business with the release of the latest instalment of the Call of Duty franchise on Friday, pushing to increase subscription revenues through the new game to offset falling Xbox console sales. Financial Times: Black Ops 6 is the first of the best-selling series to be launched on the tech giant's Game Pass subscription service. It represents the biggest test of the company's gaming strategy [non-paywalled link] since its $75bn deal to acquire Activision Blizzard -- makers of Call of Duty -- received sign-off from regulators last year. Microsoft hopes that the release will help achieve its target of reaching 110mn Game Pass subscribers by 2030, a substantial rise from 34mn in February this year.

The company has shifted its focus towards its subscription games service as hardware sales have slowed in recent years. Xbox hardware revenue fell 13 per cent year-on-year in Microsoft's fiscal 2024, which ended in June. For the first time this year, subscribers to Game Pass, who can already access a growing library of Xbox titles for as long as they keep paying a monthly fee, will be able to access the latest Call of Duty without having to pay a traditional price of $70 or more for the packaged game. Microsoft is still making the game available to buy on PlayStation, after concerns from regulators during the Activision merger probe that it might make the title exclusive to its own platform.

Microsoft will offer direct game purchases through its Xbox app for Android starting November, following a U.S. court ruling against Google's app store monopoly. The move allows Microsoft to circumvent Google's revenue cut on in-app purchases and signals renewed focus on mobile gaming, bolstered by its recent $75.4 billion Activision Blizzard acquisition.

An anonymous reader shares a report: Per a recent update to Microsoft's Deprecated Windows features page, Legacy DRM services utilized by Windows Media Player and Silverlight clients for Windows 7 and Windows 8 are now deprecated. This will prevent the streaming or playback of DRM-protected content in those applications on those operating systems. It also includes playing content from personal CD rips and streaming from a Silverlight or Windows 8 client to an Xbox 360 if you were still doing that.

For those unfamiliar, "DRM" refers to Digital Rights Management. Basically, DRM tech ensures that you aren't stealing or playing back pirated content. Of course, piracy still exists, but these days, most officially distributed movies, TV shows, games, etc., all involve some form of DRM unless explicitly advertised as DRM-free. DRM does seem like harmless piracy prevention on paper. Still, it hasn't been all that effective at eliminating piracy -- and where it is implemented, it mainly punishes or inconveniences paying customers. It is an excellent example of DRM's folly. Now, anyone who had previously opted into Microsoft's legitimate media streaming ecosystem with Windows 7 and 8 is being penalized for buying media legitimately since it will no longer work without them being forced to pivot to other streaming solutions.

"A two-day AI Labor Summit between AFL-CIO leaders and Microsoft executives this week reflects the tech giant's revamped approach to unions," writes GeekWire, "which includes a pledge by the company to incorporate feedback from labor unions and their members into the development of artificial intelligence."

But just two days later, "Microsoft Gaming CEO Phil Spencer announced it was game over for the jobs of another 650 Microsoft staffers (on top of an earlier 1,900 employee staff reduction)," writes long-time Slashdot reader theodp, "cuts that Spencer made clear were related to Microsoft's $69B acquisition of Activision Blizzard in 2023." Interestingly, Microsoft's Smith in October 2023 affirmed a "groundbreaking neutrality agreement" with the Communications Workers of America union (CWA) — designed to go into effect if Microsoft was successful in its acquisition of Activision Blizzard — in which Microsoft acknowledged the rights of its employees to unionize and pledged to work constructively with any who did. At the same time, Microsoft made it clear that it hoped its employees wouldn't feel the need to form or join unions, saying they would "never need to organize to have a dialogue with Microsoft's leaders."

In July 2023, the AFL-CIO applauded Microsoft's Activision Blizzard acquisition and the Microsoft-CWA agreement, which AFL-CIO union federation president Liz Shuler said "sets a new standard for respecting workers' rights in the video game industry and the larger technology sector." And in December 2023, Shuler thanked Smith for Microsoft's "absolutely historic partnership" on AI and the Future of the Workforce, which Shuler suggested "can be mutually beneficial for workers, for businesses, and for our country as a whole."
Thursday the CWA union issued critical remarks about the layoffs at Microsoft Gaming (which were later retweeted by the @AFLCIO Twitter account).

"While we would hope that a company like Microsoft with $88 billion in profits last year could achieve 'long-term success' without destroying the livelihoods of 650 of our colleagues, heartless layoffs like these have become all too common."

Microsoft is laying off a further 650 staff from its gaming business, according to a memo sent by Xbox chief Phil Spencer to staff today, September 12. From a report: In the memo, Spencer said the roles affect mostly corporate and support functions, and were made "to organize our business for long term success." He clarified that no games, devices or experiences are being canceled and no studios are being closed as part of these cuts. These latest layoffs mean Microsoft has let go of 2,550 staff from its gaming business since acquiring Activision Blizzard for $69 billion in 2023. In his memo, below, Spencer makes it clear that the cuts are related to the acquisition.

Earlier today, Sony unveiled the $699.99 PlayStation 5 Pro -- a mid-generation upgrade model for the PlayStation 5 that requires a separate $79.99 disc drive if you want to play your physical games. As The Verge's Jay Peters writes, the announcement "may have marked the beginning of the end for game console disc drives." From the report: Microsoft is clearly eyeing the discless direction with Xbox as well. The more affordable Xbox Series S can't play discs, and there's a discless Series X in white that's set to launch later this year. Last year's giant Xbox leak revealed a cylindrical, "adorably all digital" Xbox Series X redesign too. That hasn't been announced as an official product, but it shows a disc-free future is on Microsoft's mind. It seems likely that Sony and Microsoft are testing the waters for going all-digital for the PlayStation 6 and the next generation Xbox -- or at least offering disc drives separately. It's like Apple removing the disc drive all over again.

But this time it's not just the people making the devices. Retailers are stepping back from physical media, too. Redbox is toast. Best Buy said last year that it would stop carrying physical movies, and Target recently confirmed that it would be all but ditching DVDs in its physical stores. I know movies aren't video games, but it doesn't seem like a big leap that brick-and-mortar stores might stop carrying physical video games down the line; UK retailer GAME has already ended video game trade-ins.

Microsoft is launching three new Xbox Series S / X console options in October. From a report: There's the $449.99 white discless Xbox Series X, a 2TB "Galaxy Black" special-edition Xbox Series X priced at $599.99, and a $349.99 1TB Xbox Series S. All three models will be available in the US on October 15th, with other markets to follow on October 29th.

The white coating on the exterior of this new discless Xbox Series X matches the "robot white" found on the Xbox Series S, Microsoft's smaller $299 console. While leaks of the white Xbox Series X hinted that Microsoft may upgrade the heatsink used to cool the console, the company hasn't detailed any hardware changes beyond the removal of the disc drive here.

Microsoft is notifying folks that its AI services should not be taken too seriously, echoing prior service-specific disclaimers. From a report: In an update to the IT giant's Service Agreement, which takes effect on September 30, 2024, Redmond has declared that its Assistive AI isn't suitable for matters of consequence. "AI services are not designed, intended, or to be used as substitutes for professional advice," Microsoft's revised legalese explains. The changes to Microsoft's rules of engagement cover a few specific services, such as noting that Xbox customers should not expect privacy from platform partners.

"In the Xbox section, we clarified that non-Xbox third-party platforms may require users to share their content and data in order to play Xbox Game Studio titles and these third-party platforms may track and share your data, subject to their terms," the latest Service Agreement says. There are also some clarifications regarding the handling of Microsoft Cashback and Microsoft Rewards. But the most substantive revision is the addition of an AI Services section, just below a passage that says Copilot AI Experiences are governed by Bing's Terms of Use. Those using Microsoft Copilot with commercial data protection get a separate set of terms. The tweaked consumer-oriented rules won't come as much of a surprise to anyone who has bothered to read the contractual conditions governing Microsoft's Bing and associated AI stuff. For example, there's now a Services Agreement prohibition on using AI Services for "Extracting Data."

An anonymous reader quotes a report from Ars Technica: Microsoft's revenue from Xbox console sales was down a whopping 42 percent on a year-over-year basis for the quarter ending in June, the company announced in its latest earnings report. The massive drop continues a long, pronounced slide for sales of Microsoft's gaming hardware—the Xbox line has now shown year-over-year declines in hardware sales revenue in six of the last seven calendar quarters (and seven of the last nine). And Microsoft CFO Amy Hood told investors in a follow-up call (as reported by GamesIndustry.biz) to expect hardware sales to decline yet again in the coming fiscal quarter, which ends in September. The 42 percent drop for quarterly hardware revenue -- by far the largest such drop since the introduction of the Xbox Series X/S in 2020 -- follows an 11 percent year-over-year decline in the second calendar quarter of 2023.

Microsoft no longer shares raw console shipment numbers like its competitors, so we don't know how many Xbox consoles are selling on an absolute basis. But industry analyst Daniel Ahmad estimates that Microsoft sold less than 900,000 Xbox units for the quarter ending in March, compared to 4.5 million PS5 units shipped in the same period. Overall, the reported revenue numbers suggest that sales of the Xbox Series X/S line peaked sometime in 2022, during the console's second full year on store shelves. That's extremely rare for a market where sales for successful console hardware usually see a peak in the fourth or fifth year on the market before a slow decline in the run-up to a successor. [...] Aside from hardware sales, Microsoft's gaming content and services revenue was up a healthy-sounding 61 percent year-over-year for the latest reported quarter. But a full 58 percent of that increase was the "net impact from the Activision acquisition," which you may remember cost the company $68.7 billion dollars.

merbs writes: Video games -- and the people who make them -- are in trouble. An estimated 10,500 people in the industry were laid off in 2023 alone. This year, layoffs in the nearly $200 billion sector have only gotten worse, with studios axing what is believed to be 11,000 more, and counting. Microsoft, home of the Xbox and parent company to several studios, including Activision Blizzard, shuttered Tango Gameworks and Alpha Dog Games in May. All the while, generative AI systems built by OpenAI and its competitors have been seeping into nearly every industry, dismantling whole careers along the way.

But gaming might be the biggest industry AI stands poised to conquer. Its economic might has long since eclipsed Hollywood's, while its workforce remains mostly nonunion. A recent survey from the organizers of the Game Developers Conference found that 49 percent of the survey's more than 3,000 respondents said their workplace used AI, and four out of five said they had ethical concerns about its use. "It's here. It's definitely here, right now," says Violet, a game developer, technical artist, and a veteran of the industry who has worked on AAA games for over a decade. "I think everyone's seen it get used, and it's a matter of how and to what degree. The genie is out of the bottle, Pandora's box is opened." The story adds: "At Activision, it was the same. 'A lot of 2D artists were laid off,' Noah says. The department was slashed. 'Remaining concept artists,' he claims, 'were then forced to use AI to aid in their work.' Employees, according to Noah, have been made to sign up for AI trainings, and its use is being promoted throughout the org."

The FTC says the across-the-board price increases that Microsoft recently announced for its Xbox Game Pass subscription service tiers represent "exactly the sort of consumer harm from the merger the FTC has alleged" when it sought to block Microsoft's merger with Activision. From a report: In a letter to the court posted as part of an ongoing appeal by the FTC in the case, the federal regulator alleges Microsoft's moves are a clear example of "product degradation" brought about by "a firm exercising market power post-merger." The letter's primary focus is on the soon-to-be-discontinued $10.99/month Console Game Pass tier. That's being replaced with a $14.99/month Game Pass Standard tier (a 36 percent price increase) that no longer includes "day one" access to all of Microsoft's first-party titles. To maintain that key benefit, "Console" subscribers will have to spend 81 percent more for the $19.99 Game Pass Ultimate tier, which also includes a number of additional benefits over the current $10.99/month option.

The FTC notes that these changes "coincide with adding Call of Duty to Game Pass's most expensive tier." Previously, Microsoft publicly promised that this Game Pass access to Activision's ultra-popular shooter would come "with no price increase for the service based on the acquisition." It's that "based on the acquisition" clause that's likely to give Microsoft some wiggle room in arguing for its planned pricing changes. Inflation is also a sufficient explanation for a large portion of the price increase in nominal terms -- the $14.99 Microsoft charged for a month of Game Pass Ultimate when it launched in 2019 is the equivalent of $18.39 today, according to the BLS CPI calculator.

Speaking of Xbox, the Xbox 360 Store and Marketplace are coming to a close later this month. From a report: Microsoft announced this last year and put an official end date of July 29, according to its official FAQ page. In case you didn't notice, the end of July is fast approaching. All of the games, DLC and any gaming tidbits for Microsoft's second generation console won't be available to purchase or download on the Xbox 360 console. Your games and movie purchases are still safe, however, if you've got any throwback titles on your Xbox One or Series X/S console. You can also still watch your purchased movies and shows on Windows 10 and 11 devices.

An anonymous reader shares a report: For years now, Microsoft's Xbox Game Pass has set itself apart by offering subscribers launch-day access to new first-party titles in addition to a large legacy library of older games. That important "day one" perk is now set to go away for all but the highest tier of Game Pass' console subscribers, even as Microsoft asks for more money for Game Pass across the board. Let's start with the price increases for existing Game Pass tiers, which are relatively straightforward:

"Game Pass Ultimate" is going from $16.99 to $19.99 per month.
"Game Pass for PC" is going from $9.99 to $11.99 per month.
"Game Pass Core" (previously known as Xbox Live Gold) is going from $59.99 to $74.99 for annual subscriptions (and remains at $9.99 for monthly subscriptions).
Things get a bit more complicated for the $10.99/month "Xbox Game Pass for Console" tier.

Microsoft announced that it will no longer accept new subscriptions for that tier after today, though current subscribers will be able to keep it (for now) if they auto-renew their subscriptions.

An anonymous reader shares a report: A new test version of Windows 11 is available for Windows Insiders on the Dev Channel with Build 26120.961, which rolls out a significant change: a new Windows Start menu. You'll immediately notice that Microsoft has redesigned the Microsoft user account display, moving it to the center of the Start menu as soon as you click on the username or profile picture.

This new "account manager" feature gives you quicker access to your various Microsoft accounts, such as Microsoft 365, Xbox Game Pass, and OneDrive cloud storage. To no surprise, Microsoft is using this prominent display to remind you of their own products and services. The difference to the current Windows 11 Start menu is obvious, as the following screenshot shows:

Microsoft's canceled Xbox cloud console, codenamed Keystone, has been detailed in a new patent spotted by Windows Central's Zac Bowden. From the report: Back in 2021, Microsoft announced that it was working on a dedicated streaming device for Xbox Game Pass. That device was later revealed to be codenamed Keystone, which took the form of a streaming box that would sit under your TV, cost a fraction of the price of a normal Xbox, and enable the ability to play Xbox games via the cloud. Unfortunately, it appears Microsoft has since scrapped plans to ship Xbox Keystone due to an inability to bring the price down to a level where it made sense for customers. Xbox CEO Phil Spencer is on record saying the device should have costed around $99 or $129, but the company was unable to achieve this.

Thanks to a patent discovered by Windows Central, we can finally take a closer look at the box Microsoft had conjured up internally. First up, the patent reveals that the console took the form of an even square with a circle shape on top, similar to the black circular vent on an Xbox Series S. The front of the box had the Xbox power button, and a USB-A port. Around the back, there were three additional ports; HDMI, ethernet, and power. On the right side of the console there was appears to be an Xbox controller pairing button, and the underside featured a circular "Hello from Seattle" plate that the console sat on, similar to the Xbox Series X. This patent was filed in June 2022, which was around the time when the first details of Xbox Keystone were being revealed.

Cruise, the autonomous vehicle unit from General Motors, named Amazon and Microsoft executive Marc Whitten as its new CEO, replacing former CEO and co-founder Kyle Vogt. CNBC reports: Whitten was a founding engineer at Microsoft's Xbox before leaving the company after more than 17 years to become chief product officer of audio company Sonos in 2014, according to his LinkedIn profile. He then worked at Amazon as vice president of entertainment devices and services before his most recent role as chief product and technology officer for software development company Unity's Create.

His appointment comes at a crucial time for Cruise, which is testing and relaunching its autonomous vehicles on public roadways. It ceased operations weeks after an Oct. 2 accident in which a pedestrian in San Francisco was dragged 20 feet by a Cruise robotaxi. A third-party probe into the October incident ordered by GM and Cruise found that culture issues, ineptitude and poor leadership fueled regulatory oversights that led to the accident. The probe also investigated allegations of a cover-up by Cruise leadership, but investigators did not find evidence to support those claims.

During that time, San Francisco-based Cruise was attempting to expand its operations into a revenue-generating business for GM, which has been a majority owner of the company since acquiring it in 2016. Other investors now include Honda Motor, Microsoft, T. Rowe Price, and Walmart. As of this month, Cruise has resumed supervised driving in Phoenix, Houston and Dallas, in addition to its ongoing testing in Dubai. It has not relaunched in San Francisco, where it remains under investigation related to the accident.

Microsoft has announced a new lineup of Xbox consoles, including an all-digital white Xbox Series X with a 1TB SSD, priced at $450. The company is also retiring the Carbon Black Series S, replacing it with a white version featuring a 1TB SSD and a $350 price point. Additionally, a new Xbox Series X with a disc drive and 2TB of storage will launch for $600.

The move comes as Microsoft continues to focus on digital gaming and subscription services like Game Pass, with reports suggesting that the PS5 is outselling Xbox Series consoles 2:1. The shift has led to minimal physical Xbox game sections in stores and some first-party titles, like Hellblade 2, not receiving physical releases. Despite rumors of a multiplatform approach, Microsoft maintains its commitment to its own gaming machines, promising a new "next-gen" console in the future, potentially utilizing generative-AI technology.

Further reading: Upcoming Games Include More Xbox Sequels - and a Medieval 'Doom'.