TL;DR

Microsoft has denied reports that it lowered sales quotas for AI products, though the company did not dispute adjusting growth targets. The clarification comes after reports suggested the Azure AI agent-building platform has been underperforming against ambitious sales goals.

The Dispute Over Targets

The Information reported that Microsoft had reduced sales targets for some AI products, highlighting the Azure Foundry platform as underperforming. According to the report, fewer than one in five workers from one US Azure sales unit met the previous 50% growth target.

Microsoft responded sharply: “The story inaccurately combines the concepts of growth and sales quotas, which shows their lack of understanding of the way a sales organisation works and is compensated.” The company stressed that “aggregate sales quotas for AI products have not been lowered.”

Growth Targets vs Sales Quotas

Notably, whilst Microsoft denied lowering sales quotas, it did not deny adjusting growth expectations. One sales unit reportedly had its quota to double Foundry sales reduced to 50% growth instead. This distinction suggests the company may be calibrating expectations whilst maintaining overall sales targets.

Azure Performance Remains Strong

Despite the sales target controversy, Azure revenue grew 40% in the most recent quarter, reflecting continued strong demand for cloud-based AI technologies. CEO Satya Nadella has stated the company will “continue to increase investments in AI across both capital and talent.”

Looking Forward

Microsoft stock dropped approximately 3% following the initial report before starting to recover. The situation highlights the challenge facing enterprise AI vendors: whilst organisations express strong interest in AI capabilities, converting that interest into rapid adoption of specific products remains difficult. The world is still “working out where AI is most useful,” the report notes.

Source: TechRadar