Microsoft is bullish about 2024, so much so that last week it told analysts that 2024 will be a better year than they have been predicting. The company has already generated impressive results, even before pushing for most of its AI-related products. With AI poised to explode in 2024, Microsoft is also poised to do well if its predictions are to come true.

What does that mean for savvy ITAD vendors? Three things are likely to take place in the short, medium and long terms:

1- Strong Windows licensing revenues suggest that OEMs are currently preparing to ship more units in the quarters ahead. I am not fully confident that we will see major traction in 4Q2023 holiday season, but next year, the ITAD industry should prepare for a spike in devices exiting their primary lifecycle to make ways for AI- and Windows 11-powered system.

2- In this context, the ITAD sector should not struggle too much to procure systems and parts to feed into the secondary markets. There have been inventory buildups over the past quarters that will need clearing and savvy ITADs should be part of the inventory clearing efforts in the short term.

2- On the longer term, ITADs may have to be patient to engage into the AI wave. It will take a bit of time for the first generation of AI devices to retire, but the wait will not be as lengthy as in previous PC refreshes because AI will probably force fast turnaround and shorter lifecycles until the sector matures.  All of this should be good news for ITAD vendors with proper go-to-market strategies.

The details:

For its quarter ending 30 September 2023, Microsoft generated a solid $56.5 billion, about $2 billion more than the analyst consensus forecast, producing a good 13% growth rate.

Revenue from Microsoft’s Intelligent Cloud unit, home of the Azure cloud-computing platform, rose 29% to $24.3 billion. This bodes well for MS in the months to come because this is the unit that will essentially power the company’s AI initiatives. This is also a clear indication that Microsoft customers are jumping head on into the AI bandwagon and so that means a new refresh cycle for PCs and other hardware is underway and likely to accelerate in 2024. And so the company is spending billions of dollars to get its AI infrastructure ready, in particular its costly data centers.

One of the ways Microsoft will be looking to push for and monetize its AI initiatives is to charge $30 per month anyone of you who wants to utilize Microsoft 365 Copilot. If you don’t know, Copilot is an AI assistant, specifically catered for people who subscribe to Microsoft 365 applications using OpenAI’s GPT-4 large language models to do tasks such as summarizing emails. Is Copilot enough to initiate a refresh? Well, it is a start.

Looking at the more traditional areas of business for Microsoft, its Windows OS is also doing well, generating a health $13.7 billion, surpassing what analysts have predicted. What does that mean for the ITAD sector? In this case, we can generally assume that PC OEMs have been busy preparing to ship new units to customers likely eager to move to Windows 11 and that should help stimulate demand on the ITAD front.

The months ahead look strong for Microsoft, which continues to see demand for its products expanding. For Azure, it predicts double-digit growth in its fiscal second quarter, once again surpassing analyst estimates. Its Windows segment is predicted to generate more than $16 billion and an even greater revenue level for its business segment where LinkedIn resides.