Has Microsoft Lost Its Mojo (Again)?

This week, Satya Nadella kicked off Microsoft’s annual Build developer’s conference with typical boasts about new products and a sunny view of AI. The focus of his speech was how Microsoft was going gaga for agentic AI. But there was a cloud over the gathering at San Francisco’s Fort Mason, and I’m not talking about Azure.

While the valuations and share prices of its competitors have soared, Microsoft’s stock has been down this year. Its workplace AI products, which like just about everything at Microsoft these days are called Copilot, have had disappointing uptake. And while the company was an early leader in coding tools, Anthropic has grabbed the lead with its groundbreaking agentic approach to coding. Microsoft responded by ending its Claude Code licenses to force its developers to use Copilot.

Meanwhile, GitHub, the invaluable code repository and Microsoft subsidiary, has had unprecedented downtimes that have led longtime fans to complain and even defect. One Reddit post said it outright: “Has GitHub become a dumpster fire?” For Microsoft, losing the hearts and minds of the coding community would amount to a catastrophe. Remember former CEO Steve Ballmer’s famous summary of what kept the company ahead? Developers! Developers! Developers!

Scott Hanselman is a Microsoft VP who is on the GitHub technical staff. He has spent countless hours talking to developers, training engineers, and evangelizing GitHub and AI. He’s also smack in the middle of Microsoft’s belated effort to seize the agentic moment. Late last year, he was considering leaving the company after 18 years to teach high school science. But in November, he became supercharged by the agentic coding revolution kicked off by Claude Code and OpenClaw. He helped bring the latter, which is open-source, into Microsoft. At the Build conference, he was part of Nadella’s keynote, demonstrating how the company’s “copilots” could automate tasks for coders, workers, and anyone else.

Hanselman seemed the perfect spokesperson to explain what’s happening at Microsoft. After busting out the gate three years ago as a leader in the generative AI era, has Microsoft lost its mojo? (This interview has been edited for clarity and concision.)

STEVEN LEVY: GitHub users have been complaining lately about frequent downtimes. Some have left. What’s going on there?

SCOTT HANSELMAN: You remember when social media got flooded by bots, or 20 years ago when email got flooded by spam? The incoming traffic to GitHub and the usage of GitHub is as many bots as people. GitHub, I think, is doing a great job of scaling to meet that need, but the bots are very, very fast. I think this is just a hiccup moment.

How are you convincing developers that this is just a hiccup and not a sign of complacency?

It’s easy to say it’s down at this moment, but people forget that it’s up 99 percent of the time. It’s just under tremendous pressure from the bots.

Microsoft’s biggest announcement at Build was about agents and its OpenClaw adoption, through a product called Scout. You helped make that happen and even brought OpenClaw founder Peter Steinberger into the process.

It's just one of those things that happens when open-source people talk. Last year, OpenClaw started everything. I made a little Windows app, Satya thought it was exciting, and I started talking to folks. Microsoft had been thinking about agents on Windows for a very long time, and I just thought, “This is a great opportunity for us, why not go for it?”

You went down the coding agent rabbit hole last November along with everyone else?

It was an intense time for the nerds. I spent a lot of time talking to coding agents during that holiday. And it’s been an absolute rocket ship of a ride since then.

Claude Code seems to have gotten the thunder there, beating Codex, and frankly, Copilot. A few years ago Microsoft’s Copilot coding tool seemed to stand at the head of the pack. Now it’s Claude Code.

I would respectfully disagree. Coding models are part of it, but Microsoft is a great place for developers. Windows is an open platform on open hardware where people can build anything.

Microsoft wants Scout to be adopted by productivity workers and even consumers. AI agents make mistakes and have hallucinations. How many errors will people tolerate?

That’s a good question. I don’t know. Trust but verify. Give it a small task, and then try it out, and see if it works. And then, “Oh it hasn’t done anything wrong. I’ll give it read-only access to something.” For example, when I tell somebody I gave OpenClaw access to my blood sugar, because I’m a type 1 diabetic, there’s the knee-jerk reaction, “How dare you give an agent access to your health data?” It is super useful for me to get proactive notifications about my blood sugar. I don’t think that’s a controversial thing.

I get that, but right now there are many people who are skeptical or hostile to AI.

When a new tool is introduced, whether it be a chainsaw, a power tool, or the internal combustion engine, there’s a chaotic time as people figure out how to make this thing good for humans. I am not personally all in on AI, because I vote with my feet. I don’t use AI image generation, and I don’t use AI video generation, because I don’t believe in those things. I use AI for coding, and I find it to be a joy.

Yes, coders absolutely love agents, but outside of that community, there’s resistance. Microsoft has seen this in the underperformance of its AI productivity tools. Are you anticipating similar headwinds with agentic AI?

They’ll either like it or they won’t. I remember when the Walkman came out and people said, “No one’s going to wear those things on their heads. Those headphones look ridiculous.” Now we all walk around with these white Q-tips hanging out of our ears.

You don’t feel that Microsoft is in catch-up mode?

I would respectfully push back and point out that everybody’s in catch-up mode, because you pull ahead and then you go back and forth. It’s a thumb war. I would remind folks that the term “Copilot” was something that Microsoft did first, and that term has become like Kleenex.

Do you feel that this year’s developer conference has put Microsoft back in the race?

A couple of Mac users were hanging out with me backstage, and they watched the Surface Laptop Ultra announced. They saw all the new developer tools, and they begrudgingly looked at us and said, “Dang it, you’re going to make me get a Surface, aren’t you?”

The trash cans at Fort Mason are full of MacBook Airs now?

That would be an amazing result, although I would hate to make more eco waste.

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