Intel Corporation (INTC) Earnings Call Transcript & Summary

All right, everyone. Well, welcome to the webinar. It's 3 things to consider when refreshing your PC fleet in 2024. I want to introduce you here to your host for today. My name is Mike Nordquist, I'm the Vice President and General Manager of Commercial Client Planning and Architecture team at Intel. I really focused on some of those long-term commercial PC platforms that are out there. I've also got Brian and Rob with me today as guests. So Brian and Rob, I'll let you go ahead and introduce yourselves.

Perfect. Good morning. Thanks for joining us today. My name is Brian Campbell. I'm the Vice President of Digital Experience at CDW. We care about all things user and customer experience focused on the platforms that all of you are consuming today.

Yes, thanks, and hi, everyone. Again, thanks for joining us. My name is Rob McGilvrey, I'm the Americas Specialist for Windows Pro and Modern Endpoints here at Microsoft. So really focused on everything to do with Windows 11 and the modern hardware that went to the platform. So I'm looking forward to the discussion today.

And you've got that agenda listed here, but for those of you not familiar with the platform, you can kind of move the boxes around, we've got kind of chat capability, right? So it's great. All 3 of us like to talk, but it's better if we actually have interaction through the chat. And we kind of go back and forth as much as possible. We're going to be reading that as we go through. I'm, you know, counting on the guys, Brian and Rob. If I'm talking there, looking through it, vice versa as we go through, we'll try to mix it up. And we've got some polls in here just to kind of get a pulse of where people are at. They're not amazing polls that are going to change your life, but it helps us get kind of tuned to who is the audience that's out there, what are they seeing? And the agenda overall is just, hey, how is the business computing landscape changed. And so we'll talk a little bit about that upfront. And then we'll jump into what are some considerations for PC refresh, right? We actually started at like, 15, then we whittled it down to 3. So you get to see our top 3 as we've gone through. And then some of this, I'm not going to go through every number that we have in this, but we know a lot of you are looking at PC purchase decisions. There are some things you just get. But at the end of the day, it's like, "hey, I got to see some ROI," I've got to go ahead and tell us then how am I going to see return. I can't walk in and just say, it's all soft costs. And so we work with some partners that are out there to just show you the financial benefits, right? We're not just saying, hey, this is what it is. We put some dollar figures behind it. And then lastly, just kind of Q&A. We have that at the end. We'll hit it at the end. But as we go through, we're going to try to monitor that chat window. Again, it's not as fun if we're just up here. We're just talking and broadcasting. I want to try to make it as interactive as possible. So we'll do our best to see what those questions are that come in, and we'll try to adjust as we go through. So the first big poll question here is, how long does your organization typically go between PC refresh, right? So just go ahead and look through where are you at right now. What are you doing. We know a lot of things have changed, right? This probably was an easy question back in 2019, we could kind of go and just click on it and some different analysts report and see. But we know we've had a lot of different changes, right? We saw a big refresh in 2020 as people were just trying to get devices. How has that changed? And we'll do a little more kind of discovery on that a little bit on the polling.

But Rob, Brian, kind of any comments on this, what you see?

Yes. I mean we've seen -- I've been at CDW for a long time, over 20 years. And I think that there was a very consistent PC refresh cycle going on for most of my tenure right up until, I don't know, March of 2020. And then everything kind of turns sideways, a lot of supply chain, panic buying, getting exactly what is available versus what people need. But it really took a toll on this question. I know it made the job very difficult for IT administrators and people who are setting budgets for PC refreshes because it was such a predictable process, you had the flow and the features coming out from providers like Intel and Microsoft, but you had your company plan, and it was very predictable. Today, I think some of that predictability has really gone out the window.

Yes, I would agree with that. I actually started with Microsoft in March of 2020. So a few weeks in and then all of a sudden, the pandemic hit. I saw people just rushing out of the building, drawing computers and monitors in the back of their car. And then as we kind of came out of that, people were just trying to capture whatever inventory we can. And so I met with customers. It sometimes could be a mix, right? There could be a PC that's a couple of years old that maybe needs to be refreshed because it was just purchased as a mix that was all that was available and they need something that with a little more horsepower to help support that use case within their organization.

Yes. And we'll dive a little bit more into it, too. I mean, I think I've seen people change some of the digital experience tools that you see out there, the alternatives, the next things, some of the different things. Now you're able to kind of maybe not even have a set cycle. Some people will look at that and just say, "Hey, I'm going to go look at their experience and it might be faster, it might be slower." And it might just be different for some of the different groups, right? If I have an executive or sales force to the front of customers, maybe they're in a quicker refresh than some of that is maybe back office and maybe not seeing some of the things. But we'll talk a little bit more about what people are seeing. I'll go and just kind of click forward. This just kind of shows you, okay, people online, where are they at. Biggest chunk, 4 to 5 years, right? And so not surprising, right, we're about that 3.5 year or so kind of checkpoint from when Rob came in, right? So he came and they all refreshed as soon as Rob joined Microsoft. Great job, Rob. Had nothing to do with anything else. But -- so now, people are on that like, hey, what's around the horizon. And so we'll talk about some of the things. Obviously, people moved were like, "oh my gosh, you can do video on your PC, right?" That was all of [indiscernible], 2020, all of a sudden, everyone was doing it. Now, it's just -- here, we're at home, we're working from home, doing these different things. Now we've got kind of AI around the corner. And there's some pretty cool experiences that we've been kind of watched in the last 6 to 9 months. Pretty cool capabilities coming. We've got some different hardware and capabilities in the platform, either they are all out there today or you're going to see, we've actually got a pretty cool launch coming up in another week that you'll hear more about some of the Intel products they support.

On that answer, you saw that there are a chunk of people that don't have a set cycle. And I think that -- I'm starting to hear a little bit more on that. I may have a year count in mind but I'm looking for innovations on platforms or I'm looking for some compelling event within my organization, maybe a merger acquisition. Things like that, that maybe throw my cycle off. But I'm starting to hear more and more people react to market conditions versus sticking tried and true to their set schedule that they had prior to the pandemic. I think that's a testament, both to Intel and Microsoft, for all the great work that you're doing to drive that innovation.

Very cool. Okay. So that was kind of a look at where people were at. Now before we kind of jump into the 3 reasons, because I'm sure everyone is just dying to know what those 3 reasons are, we'll talk a little bit about how the business computing landscape has changed. What are some of the specific things that have happened as we kind of look back, right? Hybrid work is the new normal, and it's here to stay, right? I mean, I'm sitting at home right here. We've got Brian that's actually in the office. I think Rob is working from his home office as well. Really kind of that flexibility is, hey, I'm usually in the office Tuesday, Thursday, Monday and Fridays, I'm at home, right? And I think that's pretty common to a lot of folks that are out there. So it's a real kind of big change. And the device I need at home and how it's plugged in might be different than some of the peripherals and things that I have in the office as well as just -- what's the ambient noise, what are some of the things that we have here. So big changes up there. I'll go ahead, Brian, Rob, you can maybe talk a little bit about what you see as well in your office as well, just to deal with your customers and partners?

Yes. I mean we're seeing the reaction to the business landscape changing pretty dramatically, right? I mean there's -- that what you mentioned around hybrid work is just as much a culture decision and initiative as it is a technology one. And they should be -- they should go together. But when you think about the balance of power and what companies are looking to invest in, and I'm sure we're going to talk about doing more with less, but being able to take all of our most competitive differentiated advantages within our businesses, i.e., our people, and ensuring that they have all of the tools and resources that they need to be as productive as possible. And I think that, that pressure from the business to the employee and from the employee back to the business has driven up the need for a little bit more personalization, which has had an unbelievable impact on business computing. BYOD has been around for a while, devices and service is starting to get a little bit more traction in the market. But people are demanding an experience that's highly productive for them because the business is demanding an outcome that's greater than what it was prior. Rob, what do you think?

Yes. No, I think -- yes, I'll kind of build on that, right? It's experience. So we've had a few requests coming in from customers as they kind of now are starting to shift to focus on, "hey, look, we survived these last few years in the pandemic. We've built out our infrastructure to help support the flexible work and hybrid work moving forward." But what's the right piece of hardware? What's the right equipment that I need to give my end users to have that better experience? And what is that really moderate PC criteria? What do I need to look for? And how do I need to change the way that I'm purchasing a device to make sure that I'm supporting this new experience of how we work, whether it's in the office, whether it's coffee shop, whether you're traveling, whether you're at home. And the selection of a PC today is probably more important than it's ever been. And we'll talk about some of those reasons here and admit it, but yes, that's a big thing we're hearing from customers is the shift in purchasing decisions around the PC has drastically changed over the past 4 years.

Yes, for sure. And I just look at the way we interact now, a lot of times, it's actually through the PC. It used to always be in the office, right, for the most case. And a lot of audio bridges. And now it's like your portal into your employees, your peers, your customers, your partners is a lot of times through that PC. It wasn't too long ago that we were having conversations about like, "hey, do you use an external monitor or are there specialists that use 2 monitors?" And now it was 4 years ago, you're having those conversations. And I think for a lot of us now, it's like, well, I'm using at least 2 displays, right? Sometimes 3, depending on what I'm doing. Yes, I've got a high-definition camera. In a lot of cases, I'll have background blurring on, right? I probably should. You guys can see probably behind me a bunch of stuff that's maybe distracting, the trees up in the background and everything. But you start to bring some of those things in and you layer on it here some of the generative AI, right? This is where I'm excited, right? We don't have to attend the meetings. I can join late and catch up really quickly, right? And so some of that innovation, I know Microsoft is bringing in with some of their products. Okay, what happened in that meeting? What were like the 5 big takeaways? I'm not even sure. Can I just get some basic notes out? So kind of the next wave of things are actually what I'm pretty excited about. And it's not about, "hey, I've got to go get a bunch of new software, a bunch of new tools." I love how Microsoft is kind of weaving that in to just the tools that already exist that people know, and it's trying to make that transition seamless. And then talk a little bit about, okay, so what do I need from a hardware perspective? Because a lot of us that go on and buy, we just wouldn't look through, a lot of people are saying 4 to 5 years, right? I've got to build in performance headroom for the next wave of things that are coming, right? I don't want to find out that, hey, I already have the capability to do it with a platform I chose. Now I got a refresh. I want to buy some of that performance headroom as we move forward. Okay. I told you guys were talkers, didn't lie about that, but I'm never going to get through some of the content if we don't move forward. One of the areas I'm super passionate about that a lot of people are not is security, right? So that's -- my day job is kind of looking into the future. I work super closely with a lot of my counterparts at Microsoft. A lot of it's 3 to 4 years out, to be honest, right, because that's where we're making some of the decisions on the hardware. But one of the challenges we've had is we went from what was called like a castle-and-moat strategy to everyone is out in a 0 trust environment, right? And what that means is, I used to back in the office, where -- from a security perspective, where I had different firewalls and things that actually protected me when I was in the office. So the endpoint itself didn't have to be as built up and capable. Now when you're out working either at home or other places, you're not protected anymore. There is no moat around, there's no castle walls, right? So from that endpoint, how am I making sure that we're protected? Now IT's response to that is, I'm going to layer on 5 security agents, just to make sure, right? And usually, when you do those things, that turns into a terrible end user experience, right? And so for us, a lot of what we want to do at Intel is, how do we build and harbor that's going to allow you to turn those dials up on the security, right, that seamlessly have it just didn't taking care of on the hardware where it doesn't impact that user experience. And so some of the innovations, even over the last couple of years that you've seen, all it does is basically offload that stuff that used to just run on the CPU and be an extra task, we've got specific features that don't require that kind of overhead. And so we're pretty excited about that. Okay. Without further ado, we're 15 minutes in, finally getting to the 3 considerations, right? Well, you've all been waiting for the excitement, right? I feel like we should have had a drumroll, Rob, Brian. It's just -- I mean. I've got a little sarcasm, in case people haven't picked that up. But okay, so what are the 3 considerations for PC refresh in 2024? I mean, I think the first thing is, you got to think about hybrid, right? Like how is hybrid work strategy required and evolved approach to cybersecurity? I just talked about some of those things that you have to consider as you go through. I'll talk a little bit more about some of the things that we're doing to make that better. Second thing is just the current pace of innovation is moving faster than the traditional refresh cycle, right? For me, that's super exciting, right? I would argue this is the most exciting time to be in the PC business. And like since probably Windows 95, right, the late '90s, right? This is the biggest kind of change. You see AI coming in. You see things really accelerating. And just -- it's not just for the IT person, it's for the end user person that's using this, that overall experience. Well, I can physically do a lot of things on these newer pieces that I can never do before. So I think that's super exciting. And then number three is employees want it, right? This isn't something that IT is saying, you're going to have this. It seems wow, there's these cool new user experiences, and we heard some of the folks talk about this earlier on is people are going to start demanding it, saying, "I need this," right? They -- bring your own PC. Yes, there was some of that, but it's really transitioning to choose your own device. I want devices that are capable. This is how I get my work done. Whether we like it or not, the PC is still the #1 productivity tool that most employees have, right? So making sure you have got the most capable device for them to really get that work done and add value to the company, super important as we walk through. So I'll pause for a second. Brian, Rob, anything else you want to try to add to that?

No. I mean I think -- yes, I think you're spot on. No, spot on here, so. [indiscernible]

Awesome. Okay. So we've got a little poll in here, right? So one of the things is we're trying to get a feel for have your organization's PC refresh plans changed in the last year, right? We know, as we just look at the numbers, giant wave in 2020, right? People were like, "Oh my gosh, we were hitting this earlier." Rob was talking about. People are just trying to get a system, right? They throw on stuff in their trunks, coming back. And in the last 6 months, 9 months, we kind of hit that law, right? Like, "Oh my gosh, I bought all these PCs. I'm not sure, I'm going to pause things a little bit. We're checking out the economy, seeing how things are working." So maybe they slowed down. Now is it cranking up. We've got some of those new innovations coming in. Depending on who you are, it looks like the job market has accelerated in some cases, so people need new PCs for new employees. So that's kind of one. We're just trying to get a gauge on -- or maybe didn't change as we go through. Maybe it's still on that like 4-year kind of traditional refresh.

Mike, I think it's going to be really connected to your comment you made earlier, I think, on the last slide around the accelerated pace of change, and if you believe that, that is true in technology, right? If technology continues to double every x amount of months, but x amount of months keeps getting smaller and smaller and smaller, the risk profile changes, the productivity profile changes, the ROI productivity profile changes, like everything changes if you believe that, that innovation curve is up into the right -- further than what it was 10 or 15 or 20 years ago, which I think is almost undeniable today.

Yes. I'll take 2, we've got moments, right, also things to consider here as you think about Windows 10 and the support, what does that strategy look like? Are we identifying PCs in our environment that don't meet those minimum threshold requirements? And so how are we identifying that and strategically planning out over the next couple of years now? Yes. So there's also some [ syntactical ] elements that we hear from customers, too, that they're starting to plan out and think about it as we get closer to some of those impactful life cycle moments as well.

Awesome. Well, let's take a look here so people can kind of see where we're at. So you people have accelerated, right, as you see the new things coming in. And then we've got a mix of people that have delayed the refresh cycle as well as people that are still on track for 4 years. And so we'll get into those 3 things like we think right now is a good time, but we have reasons why, right? Like so let's talk about what those look like, and we'll split up amongst us. So the first thing is, hey, hybrid work strategies require an evolved approach to cybersecurity, right? So we know, I just said, hey, everyone's at home, are they're moving around to different things, they are not protected by the office, hey, they're more vulnerable than bad actors, right? So you've got a bigger attack base that you go after, right? And then it's a, hey, how do I utilize some of the hardware. I talked a little bit about that is, what can we do in the platform to help protect against that? And some of this really gets into -- and I'll talk a little bit about it on the next page, but some of this just gets into reactive versus proactive, right? And when I talked to a lot of people about security, they're like, "hey, don't worry, I got a great EDR solution. I'm covered. I can -- I don't need anything on hardware because I've got best-in-class detection capabilities, right?" And I always think that's good. You want to have that, but it's like saying you have a house and you're like, I've got the world's most sophisticated security system, right? But I leave the front door wide open, right? It's like -- but at the moment someone walks into my door, I know they're there. It's like, well, maybe you should work on to shutting and locking the front door to begin with, blocking the windows and doing some of those things. And so it's a mix of preventative things that you can do with the hardware as well as kind of detection capabilities. And if I look the last 3 to 4 years, I mean, I've been in my job about -- been with Intel 23 years, but I've been in the commercial space, the late -- last 8 years, really working on security, it's constantly bringing that bar up, right? And that's what we've been working on with Microsoft in particular, both with the OS as well as some of the Defender assets that they actually have. And it's not -- it's about, "hey, lock in the front door, putting a dead bolt on. Okay. Now let's go over and lock the windows, right? Okay. Yes, we got that done now. Hey, let's go look at the top windows that we have in here, is that secured as we go through?" And that's the platform approach that we've been taking. So there's no like magic. This generation, I have this. It's like game changer. It's just platform hygiene as we've gone through. And we were loud and clear from our customers of like, I can't take a lot of time to set the stuff up. I can't configure it. It's just got to work. And I think that's what's exciting for us, is the way we set up that hardware is you get the latest version of Windows 11, it just sees that the hardware is there, and it takes advantage of it, right? Some of the AI-powered cybersecurity. We've actually taken with Defender, and we've actually offloaded some of the standing capability to our graphics GPU, right? So automatically scanning there, you won't get that user experience impact that I talked about, but you'll have dialed up some of the security capabilities in the platform. And you dialed up that protection kind of capability. So what is the data behind that, right? I talked about what it's doing, right? We did some research on it. We just said, "Hey, how much of that attack service -- Mike, you said, it reduced attack service? Like is that 5%? Is that 10%?" When we look at it, 70% reduction, right? So that's that platform hygiene. That's dead bolt on the front door, the windows are locked. So it's just reducing the surface area. It doesn't mean you can't still be attacked right? It just means there's less places for you to get attacked. And so that is lower. Those pieces are also 20% lower risk of successful security breaches or attacks as we look at it. So with that, I'm going to go ahead. And I think on this one, we hand over to Rob, if I've got my notes correctly.

Yes, that's right. And before I jump into this reason, I'll just add a few comments there on security because I think there are some good points to kind of tie in, right, taking the full advantage of a lot of the investments we made in the Windows 11 Foundation from a security perspective. When I talk with customers, it's really around 2 key focus areas, right? What can we do to, out of the box, make it the most secure first windows ever, and reduce the attack threats. And we needed raise base hardware threshold to run the new levels, we can take advantage of some of those things. But then also, you have a proactive element there, how are we leveraging things to really just help end users be proactive from a security perspective. And so I think that really is a good segue, right, into kind of innovation. And really the reason to here is that the current pace of innovation is moving fast. And that innovation is not just generative AI, right? We know that the generative AI is top of mind for a lot of customers. But we do know that innovation is happening across the entire platform from a technology perspective, both from security and things that we're building in to make sure that we give that end user the most secure experience possible but also how can we then innovate across the entire Windows platform to really help end users get more done, get access to innovation quicker. One statistic that -- I don't quote me on this, because my numbers might be a little off on the years, but we think about generative AI, it was like 3 months to get 100 million users for ChatGPT, 3 months. We have things like Facebook, it was 4.5 to 5 years. Cell phones are like 6 or 7 years. And so we know that this technology is here, and it's been here quick. And it's amazing, and there's a lot of questions around it. But our focus at Microsoft is really to start bringing some of those technologies and some of those things into the platform to really help this new wave of business computing. And then how can we partner with Intel to really just take advantage of all that technology and create that best end user experience. I have a slide that we sometimes show about our commitment on like this continuous innovation. And just in 2023, over the past 10 months, I think we've integrated more on the Windows platform than we did in the last 10 years. And so it's really an exciting time how we're integrating all these amazing technologies into the platform. And we want to make sure that we're equipping our end users with the right PC to really make sure that they can take advantage of all this amazing technology. And so just again, just really excited here about the innovation that we're bringing, both from a Silicon perspective, from an OS perspective and also from a cloud perspective. And so, with that, I will pass it over to Brian for the reason 3.

Yes. Thanks, Rob. And to maybe continue to illustrate that technology innovation curve that we're seeing. It is really amazing. And I think a lot of us can remember back when other ages began, right, the arrival of a technology to the full adoption of it, the Internet essentially arrived in 1991 in all of like commercial purposes. But by 2011, Google had like 80 billion unique monthly visits. So it was about a 20-year arrival to adoption cycle. You mentioned phones, right? Mobile phone and smartphone are a little bit different. Mobile phone is in like the early '80s, but by, I don't know, 2010, the global market was about 6 billion users. That's crazy. The smartphone, which had about 120 million users in 2007, when Steve Jobs held up the phone, exploded to 4 billion users in about 13 years. So I think about like all of this accelerated from '20 to '17 to '14, ChatGPT was announced is a year ago, 1.5 years ago, and now we're seeing ChatGPT-4 Turbo, we're seeing all this innovation around AI, and everything associated with that is productivity gains. So the adoption cycle will not be 10 years from arrival in these technologies because it's demand, and we're demanding it, we want more of it, and we're feeding it. So I really believe that this is not only game changing for us today, but where we are in a year, it could be a really interesting place for user productivity and all the ROI that we're receiving. So the reason 3 that we have up here, and this is -- to me, this is a kind of a symbiotic relationship. Employees want more because employers have demanded more. And I think that those 2 things you cannot really separate. We talked a little bit about BYOD. We talked a little bit about personalization of my experience. And I think Mike hit on ensuring that we have a good security profile with as much personalization and productivity as we can possibly have. And I think that's a really big challenge for IT leaders today to be able to balance all those things. One of the fun conversations that we have with our customers is if the pandemic happened 10 years earlier, what would have happened. And when they think about the ability to securely access data from not a corporate office, like you can see like the heart rates start to go up a little bit. And our point is, well, great, let's make sure that the security profile is turned on, to Mike's point, lock the door and lock the windows, but also ensure that we're giving today's experience to our users. So users are wanting more because they have more choice. Because they have more choice, I don't know, like we have all these capabilities out there that we use as consumers or outside of our business world. And we want the same level of access and ease of use as we had inside of the office. So that is really driving up innovation. I think a lot of business leaders, not just IT leaders are seeing the art of the possible for what's out there today and are really demanding that they have the latest tools and technologies. But I think about this like the employee experience around platform, like I have all of these tools to be able to do my jobs, which one is the right one? And am I having the right experience with my device? And do I have the ability to utilize all of today's inertia around AI? And I think if you only know a little, you're kind of excited. If you know a lot, you think about all of the art of the possible with what could happen inside of your environment. So just to put a kind of an exclamation point on AI. And I know there was a question, Eric, in the chat was asking around examples of how businesses, employees are getting value out of AI. And I believe this to be true, there is a balance of productivity, security and return on investment that AI is going to give. But if I'm an end user and today, I think I'm 1 month into my Copilot experience. And not going to say that my boss is like giving me compliments right now, but he if he knew how much time saving that was going on in my world, I think he'd be thumbs up on me. But number one, I have this great virtual assistant that's helping me organize my calendar, organize my tasks and make sure that I'm getting all my work done on time. Number two, this virtual assistant is helping me with all of the things that happened in my meetings. Rob and Mike, I know you guys are in the same boat as I am, like we are in meetings all day long. And I can spend time paying attention to the meeting or I can spend time writing down notes for the meeting. What I get today out of Copilot is a summary of what happened in the meeting and the things that I'm responsible for, the things that someone on my team is responsible for. So I don't have to type that note out and then send it out because I'm doing that at the end of the day, that's my after dinner activity, just making sure that all of the activities from my meetings are in place. I take a look at e-mail, I take a look at my reporting functions. Heck, I give presentations all the time. And generally speaking, I'm trying to find a couple of like nuggets, facts and statistics, and being able to use Bing Chat Enterprise, it's just such a great productivity tool for me to be able to accomplish my objectives in a faster time. And again, if my leadership team and my organization is demanding more from me, getting the tools that help me be more efficient and more productive is really like the give back, right? So I think that this is a nice balance. Now that's not to say that there isn't a threat out there or there isn't a different consideration. We're still talking about ROI and how do you measure it? How do I -- how do I showcase to my boss that I'm an hour more efficient a week, 2 hours more efficient a week. And then how do I show him that there's value in those 2 hours that I've been giving back and whether it's thinking about my work or doing something else. All of those things are really kind of part and parcel to this investment around platform, around devices, and the promise of AI for user productivity. That's my experience talking to users and being a user myself, Rob, I know you've got some commentary around AI as well.

Yes. Yes. So I'll just go kind of real life example of kind of how I've used it. We kind of go back to that continuous innovation. We're coming out with a lot of stuff in Windows and sometimes, I'll meet with customers and partners, and they want to talk about a specific feature, and we may not have content that's really consumable for those end users to talk about a feature. And yes, we have great documentation, but that documentation is overwhelming. It's a massive website with a ton of tasks. And so I'd use generative AI to go and say, "Hey, let me highlight this web page. Let me put it into the Copilot UX on my PC, and let's summarize that. And then let's take that, let's put it into a consumable format. Now I've done this before, done this for years. And I've probably seen a 50% or 60% reduction in the time it's taken me to complete this task or a specific -- ask for a partner and a customer. And to kind of layer on that, right? We're -- ROI is important here. And so Harvard actually did a recent study with the Boston Consulting Group. This is kind of fresh off the press. And here's what they found around generative AI. They found that end users can see a 12.2% increase in task completion rates using generative AI, 25.1% decrease in time spent completing those tasks, a 12.5% increase in the sub task completed. What I found really interesting a 40%-plus increase in the quality of those responses to those tasks. And so the possible here is really impactful, and we're really starting to see some of these ROI studies come out around how generative AI can really have an impact on end user productivity. And what I'm excited about is hearing from customers how they're leveraging, how they're thinking outside the box and how they can leverage generative AI to really help increase that end user experience and productivity. Brian, to your point, we're being asked to do more with less, and then getting that ROI back into the organization. And so kind of ROI, I'm going to kick it back over to Mike, and as you mentioned earlier, there's a study around some of the things that they've done from an ROI perspective within Adobe Pro. So, I'll kick back over to you, Mike.

Yes. Well, I would just say, too, I've been kind of listening. First of all, a little mad at Rob, because he didn't tell me that we couldn't do generative AI to make this presentation better, right? So whoops on us, right? We should have kicked that off right away. We didn't set out. We were going to have Copilot running here in the next month. That's my excuse why I didn't use it, but Rob's got no excuse. I did -- I kind of noted in there, too, but like, what about a bank teller DMB, how could they possibly do it, right? Because they're not sitting and listening to meetings. That's great for the general worker. And this is where the possibilities to me are like super exciting, right? Because what's your biggest challenge, if you have those employees that are the DMB somewhere else, they maybe don't have a lot of experience, right? So if I have an assistant there to kind of recommend solutions or recommend products kind of listening to what's going on. They can fine-tune it. It's not just generic, right? It's not like let me go search the web and see if I could find something. It's like at your fingertips of like, "Hey, I've got the account information on this person. Here's what you could recommend for this product." So you instantly just kind of boost the capability of that person instantly that's in front of them, right? And so you can build up those capabilities and take advantage of that, right? Brian, are you worried -- are you excited about that? Or are you worried about your job? I can't quite tell.

I'm so excited about it. I'm so excited about it. But the bank teller example is -- that kind of struck a nerve with me or [ accord ] with me when I think about like the role of someone who is very customer facing in a like high-touch environment. So if you're a customer service agent, in person or in a call center, it doesn't matter, the advancements in AI are giving you the tools that you need to serve your customers better. That's number one. And a bank teller is in person, right? So that someone went into a bank, they wanted to get help and assistance. And like the last thing that you want to have is a bad experience when you go into the bank. So being able to use AI to help you to the right answer or the fastest answer possible or maybe even to look at a new -- a new service or a new product in their portfolio that might be of interest to the consumer, so great there. If you're a virtual agent, two things can happen. Number one, you have all the tools and resources at your fingertips, along with the next 3 things to talk about. Or, and many of you love this, but you have a really great virtual agent experience that's taking those mundane, easy tasks away from people. If you can automate the easy stuff and give people the hard stuff, that to me is like the perfect way to think about employee productivity and customer experience in the same vein. And all of that is being made possible by all the innovation in AI.

Yes. And I think we didn't even talk about -- I mean we talked a lot about generative AI because that's what gets end customers excited, right, like end users, maybe not end customers, but end users. Oh, I can do this, it can help me do this. We didn't even talk about what we call like AI operations or AI ops, you'll hear talked about, right, which is generally going into IT shop, what do they want to know? How are you going to save me money? How are you going to offer better experience than what I had before, right? And I think when I talk to IT folks, that's where they really get excited, right? We have -- and I mentioned this earlier, we have digital experience tools that are now out there, right? It used to be, how do I know I have a problem. Someone called me or contacting me that said they had a problem, right? That was kind of old school. The new way is, "hey, I'm able to actually monitor the experience of the system. I saw this person rebooted, I saw that things were lagging. It looks like Outlook maybe closed a couple of times, that looks abnormal. I'm starting to get experience indicators to see what's going on." Now, I could have a person go and try to solve that individually, but that's expensive as we go through. As you bring AI in, you start to get a good data set from your fleet. Now you can automatically go and draw correlations of, hey, what's happening there? What is the issue? What do I see? What do these have in common. And I can proactively actually go fix those things before anyone called, right? If you're tuning your IT, I've got no problems because no one called me, Guess what, you're probably not doing a great job, right? There's probably frustrated users out there. And this is what AI does, is it allows you to go address those things before someone does call, and those are expensive tickets. Or if they do call, how can I solve it really quickly? Like when I talk to IT folks, they'll generally say, I try to troubleshoot a PC for anywhere from 8 to 10 minutes on the phone. If I can't do it after that, my answer is [ shell swap ], right? I'll just swap the system. That is super expensive, especially if you're in a hybrid environment. I'll tell you what, why don't I -- next day, you have a system, when you get it next day, the one back to me, right? I'm spending a couple of hundred bucks, forget about just the inventory of extra pieces, a couple of hundred bucks just shipping the systems back and forth. In addition to do that person sit there for a day and not have anything, they're just trying to work through their phone? And so really being able to apply AI intelligently to those things, to fix them either before they become a problem, or just overall user frustration where it's like, "Man, I got to reboot my system. I got to do X, Y or Z, and I'm just wasting an hour a day." Highly [indiscernible] place, that's a bunch of money, right? And so that's where I get really excited about some of the things that are coming that aren't just the end user. Like I'm excited, I got 12 employees right now. It's like, I've got review time in January. I got to write a review for every one of them, right? Like, that's going to take some time. That's the most [indiscernible]. So I could say, hey, Brian, let's pretend Brian works for me. It's a stretch, but I probably work for Brian, maybe a better way to do it. Brian could say, "Hey, you know what, ChatGPT, why don't you summarize the big accomplishments that Mike's talked about in the one-on-ones that we've had over the past year, and do a first draft at this yearly review. It doesn't mean that he's going to take it and use it as the final one, but hey, what a great starting point right? I can't -- I got 10 people. I can't remember everything Mike said, he talks a lot, right? But hey, if I could use generative AI to do that, that would be pretty powerful, right? It would actually probably be a better experience of what my review actually said than something that Brian would just normally write up, like, oh, yes, I forgot all that. That was back in Q2. I didn't capture that. So I think those are -- like you start to look at those possibilities of what you could do and they're starting to come in. I get pretty excited about it, right? I see all those possibilities, it's just scratching the surface and just being the tip of the iceberg type of thing.

Yes, it's pretty amazing stuff. I mean I -- the example you just shared, I had a reviewer, at the end of the day, I was drained. I kind of knew what I wanted to talk about. I kind of made some statistics about what was accomplished. And so like, you're not always going to use Copilot to write it for me. It wasn't perfect, but I'd tell you what, it kind of got me out of that slump of -- at the end of the day, being on calls all day, I was like, I don't want to write this. And just really -- just yes, just that little initial like getting out of that brain drain block or that creativity block and then getting back into the flow, yes, it was so impactful just from an end user experience perspective.

Cool. Well, I'll keep moving here, it's the ROI when you refresh with Intel vPro. So these are some statistics here just from the last year. You're going to see in the next week, we're going to go launch a brand-new product. It's got something in it that none of our previous generation products had in it, it's going to have what's called an NPU or neuroprocessing unit. So traditionally, we have a CPU, we have a GPU, right? And this is bringing in basically an AI accelerator to the edge. It doesn't mean that you can't do some of the experiences that we just said, but right now, they're in the cloud. So this is going to start to give you the capability to do that at the edge. So even as I'm looking at some of the data that we said, hey, based on a new PC, what are the savings, that doesn't even account for some of the new innovation that we just -- you could see us kind of light up and get excited about for the kind of that next wave of things that are starting to come to the market here, starting in like a week, right? So it's just right around that quarter, just in time for the holiday season, I guess. But IDC kind of gave some statistics here of, hey, what do you see, hey, it's actually cheaper as you bring in new hardware, new software, overall operation costs are going to go down. I mean that's pretty -- if you got a 6-year-old car, it's probably going to need more maintenance than a new car as we kind of go through, right? And there's going to be more downtime. So I think that's pretty intuitive that you're going to see that. Forrester, right? We don't just do [ IDC ], we look at Forrester, what do they see with the impact of Windows 11 Pro-based devices. Obviously, NPV, great NPV as we go through here. Part of it's just deployment, too, right? How do we make it? So we've got things like autopilot that really make it seamless. And for a lot of us, if we look at our experience 4 years ago on an older PC and what you can do in a new PC of a new hardware or new software, it used to be like, I'm going to go to a room, right? They're going to give me a PC. I'm going to log in. I'm going to do these different things. And then I'll go get coffee as they transfer some of my data, right? Now, you look at that experience, you don't have to go anywhere, right? They can shift that PC to you, you can get kick started with things like autopilot of what you can actually go do. And then whatever your share drive is -- could be one -- one drive could be something else, really easy to transfer those things. So as you go deploy those PCs, much lower cost than you've traditionally seen in the past. And then just kind of the last one, "hey, what is some of the payback." This is a 2022 study, right? But we've seen lower management costs as well as you try to manage these PC. There's next-gen manageability capabilities in these products. So what are some of the key takeaways, we'll go through and I see, I'm excited about the security question in here because I'm a security nerd, but I was holding off to the end and not break up our flow. But hey, ensure your workforce stays secure. I see the question of like, "hey, I've seen some attacks. They're down at the BIOS, UEFI, BMC level, right? That's all the nuts and bolts that are underneath the OS, right? What are we doing to protect that? I spent a lot of the last 6 years of my life actually doing this stuff. I know you know what BIOS is, I know what UEFI is, right? We drive a lot of the UEFI type of work. And Microsoft did some really cool innovations. I know when Windows 11 came out, some people were complaining here like, why is there a base level of hardware that I have to have on security? Why do I need a TPM 2.0, right? And working together with Microsoft, it was like we're going to have a minimum bar of security that every PC that's going to ship Windows 11 is going to have. And it's not because we're just trying to move people to new hardware, right? It's not -- or anything like that. It's like, no, you actually need these hooks. And so that was kind of the base level. Then the other big change that Microsoft made is they actually turn on virtualization. And they took all your secrets. They put them in a little virtual container and said, even if something bad happens on the host OS, I've got an isolated over here in a virtual container. So then what did the hackers say, "Well, I would like to try to attack that virtual container. How do I get to it? Well, I'm going to go after BIOS and UEFI and BMC, I'll get underneath that, I'm going to get to next level. They've locked the front door, they've locked the windows on the first level. I'm going to go to the second floor and attack those windows are an entry point. That's really what the BIOS and UEFI is. And so we actually did a lot of work there to deprivilege a lot of what BIOS even has access to. What does it need access to all the members? It doesn't, right? So we did a bunch of technologies in our Intel vPro platform with Hardware Shield to deprivilege the BIOS. We actually have hooks that give you the handoff, a dynamic route of trust kind of measurement that we can actually do that hands off to the merchant container in OS and says, yes, this is the actual hardware running. It has not been compromised, and we start that handshake as we actually go through. And then we even give ways for the OS to actually see, hey, are all these security hooks turn on and running correct, right? So we built all of those things in. Those weren't available on a 5-year-old PC, right? So that's not like you didn't have the locks to actually lock the windows, right? Those are built in now. And it's not so sophisticated, okay. So I think I got the new hardware, what do I do now? Just have the lastest version of OS and it's supported, right? We added things like Control Flow Enforcement technology, CET, biggest class of Internet explorer attacks that used to happen, right, couldn't solve it in software alone, right? 2.5 years ago with our Tiger Lake product, we introduced it, eliminated that from the OS of [indiscernible] even attack, right? So those are the like -- there's not like the silver bullet. But okay, what are we doing? We're deprivileging the BIOS, right? That's great. Okay. What's next? Okay. I want to make sure I have a secure handshake that OS could see. Got it. That's protecting [ virtualization ]. Hey, I got to make sure I'm protected against -- rough attacks that are coming. Great. I've got a technology, working together with Microsoft, we can go solve that, that's implemented. So all those things maybe don't always make the headlines to any individual thing. But you start adding all 4 or 5 of those things up, you get a substantially more secure base than you had with a 5-year old PC that a lot of people saying they were on a 5-year refresh.

Yes. If you don't mind, I'll add in there to a little bit. Probably -- you probably explain that better than anyone I've ever heard explain the dynamically addressed virtualization. But then, I think some of the improvements, I think that we're all working on together on identity management, too. Getting out of the password management business is like the next -- kind of that next step there, right? We've secured the core of the device. Now what are we doing to innovate to secure the identity, leveraging things like Windows flow for business, biometrics or hopefully on the [ TPM ] chip, bringing in passkey support, so if you're visiting third-party sites, you can now log in with your biometrics and really getting out of that password management business. I was talking to the customer the other day. They had a replay attack where somebody grabbed the token sign in and was replaying it across the globe. And they realized, hey, if we would have been using additional access to that drive or directory, we can actually tie that token to the device that it was signed in on, and they wouldn't have been able to do a replay attack. And so just as you think about that journey, right, and how we love that, right? You can -- you're protecting the core. And then what are we doing to really innovate around protecting identity. And then just taking that into the cloud and how we can then bring in additional features from the cloud to really help just the entire -- the entire user experience in the entire platform. So A lot of exciting stuff on security and really love the innovation and the partnership that we have with Intel to really take that to the next level.

Yes. I've seen some of the other questions come through. A lot of questions on AI, which is not a shocker, right? It brings the AI wave, right? But the wave is still out there, we're seeing, we're like, oh, there's cool stuff that's coming. There are some questions about, okay, why do I care if there's an NPU, do I need a ton of horsepower? So all these models that actually start out, the training is still going to be done in the cloud, right? Because it's just massive compute to do training. It's got all these different parameters. Now to start to do what's called inferencing, right? That's going to start at the cloud. I'm going to do some inferencing at the cloud. Now why would I want to do it locally, right? Well, I think, first off, it's expensive to run at the cloud, right? The latency depending on what you're doing, is going to be longer. And so as those models get fine-tuned, you can cut down the parameters and you can actually start running them at the edge. But they start out as really heavy-duty compute. And so what we're doing is we're working closely with Microsoft to look at some of those models, you think of the MEP or the Microsoft experience, things that you're doing in Teams, next level of background blur, voice cancellation, that's really just kind of that tip of the iceberg. As you start to think how do I take a large language model that might be your generative AI that we've been talking about. The plan is to be able to move those things to the edge and take advantage of them right there. That's going to offer you some latency advantages. Hopefully, that will help drive down the cost where, hey, someone's got to pay for that cloud as you go through it versus being able to use it locally. And it also gives you some enhancement, just from a privacy and security perspective, right? If you know you've got very sensitive things. I don't want to move my data. I don't want to use the data in the cloud. I really want to keep it locally. I've got that option and that capability to do it. And because I'm doing it on the NPU, that's a specialized neural processing unit that's made to do that at much lower power, right? You can actually do some of these things. There are AI capabilities on the CPU and on the GPU, right? They're not as efficient as an NPU would be though.

Yes. I think the layer on that, I think there was also kind of a question there around like Copilot on the desktop. right? And so we've launched Copilot in the Windows, which is kind of the UX experience for the end user, which is going to integrate into Microsoft 365 Copilot for your productivity apps. But when you think about, yes, there's the generative AI piece. But when you also like Copilot in Windows, there's also what I like to call Windows skilling across the platform. So when we're talking about IT directors, it's, "hey, I could use Copilot to change my background. I can use Copilot to open an app. I can use Copilots to add a bluetooth device." And so there's possibilities here to leverage this experience in the PC that maybe traditionally an end user, they would pay IT for, would open a helpdesk ticket for because they can't find something. Can you have a profile on the PC to really just help improve that experience and customize that experience and alleviate some of those potential helped us take that [indiscernible] coming because Copilot can do it for me. So and that is kind of like the additional piece of AI that we're bringing across the platform. One of my favorite AI features is AI recommendations in File Explorer, where if I open a File Explorer, it looks at my calendar, it looks to my files and says, "hey, look, we think these files might be relevant to an upcoming meeting." Well, hey, I just got access to information a lot quicker just based on the normal way of working -- just opening up File Explorer, not even realizing AI is working in the background to really just help me be more productive. And so I think that's the additional advantage and benefits on the -- from an AI perspective on the PC as well.

I got to chime in. Your application examples, Rob, were perfect. How many times do you have the wrong formula in Excel, Apparently, for me, it's very, very often. So Copilot fixes that for me. And as someone who manages and maintains a sales forecast and pipeline, being able to utilize Copilot to interact with our CRM allows for greater sales force adoption -- CRM adoption, it just helps with all of the efficiencies of a large organization. And we really rely on those efficiencies to ask more of our employees. And we think, again, we think that, that is the relationship that exists between what employers are demanding from their people and what people are demanding back from their employers.

For sure. And hey, I'm just realizing the timing. I get carried away. I'm a talker, what can I say? So I'll just go ahead and wrap it up. I mean, so what are the key takeaways? We started this whole thing with 3 reasons of why you should consider refreshing, what to think about. And it starts with ensuring your workforce stays secure, right? That's not just about EDR, right? It's about getting locks on the windows and the doors, making sure that you're protected a lot of advancements in the last 4, 5 years. I kind of nerve out for a little bit and talk about some of the BIOS level and virtualization of some of those cool things. But I'm past gen, I'm excited about it, right? Obviously, you can tell. The second thing is embrace the wave of AI, right? We're at early stages, right? I would argue, I'll make bold statements. I think AI is probably the biggest thing to the PC since the Internet, right? Like it's that big a deal, and we're just early on. We've got some great products that are coming up both from a software perspective and from a hardware perspective. If you're not using it to develop your products to offer better customer service you're going to be behind, right? And you're trying to unlock that potential for your employees to actually do that. And that really hits the last one, right? So what is, in most cases, the best tool people have to be productive and add company value, the tool? It's the PC, right? So give your employees the tools they need to really thrive, is that going to be on a 5-year old PC? No, it's not, right? So those are kind of the 3 big things, if nothing else, you walk away with as you go back and kind of consider what you want to do as you move forward. We think it's a great time. Exciting things just come to the market right now, right? We've got the hardware, we've got the software. We've got the capabilities to go do it. So with that, I'll just wrap up and really thank everyone for listening in today.