I can't recall the last time Microsoft kicked off its Build conference with a keynote featuring Windows, but that's exactly what CEO Satya Nadella did this week. Instead of addressing the issues Microsoft is trying to fix in Windows 11, Nadella chose to entice the audience with the sleek Surface RTX Spark Dev Kit, calling it a "dream device."

Nadella unveiled the new Surface devices just days after Nvidia officially returned to Windows on Arm with its new RTX Spark chips. Both companies are touting these chips as a new beginning for PCs, and it's clear the RTX Spark will handle native AI tasks in a way that Microsoft's previous Copilot Plus PCs haven't yet.

This week’s Build conference focused on this message, positioning Windows as a cornerstone of Microsoft’s AI proxies. Microsoft’s original mission, under Bill Gates, was to have a computer on every desk and in every home, a goal Nadella redefined as “unlimited intelligence on every desk and in every home” within the opening minutes of his keynote.

This paved the way for Microsoft and Nvidia to position new Windows devices as a potential solution for pricing cloud-based, use-driven AI models. As on-premises computing evolves, there’s a clear gap that Microsoft and Nvidia can fill with powerful, user-owned hardware.

“I think we at Microsoft have a responsibility to build the best possible AI architecture on Windows, and of course, lead the best AI architecture in the cloud,” said Pavan Davuluri, head of Windows, in an interview. Davuluri believes Microsoft is well-positioned to capitalize on hybrid computing, where chipsets like the RTX Spark handle many workloads locally and intelligently move them to the cloud when more power is needed.

Nvidia CEO Jensen Huang is even more optimistic about on-premises AI computing. He wants to transform computers into tools that work for you, eliminating wasted time when they're turned off or not in use. "In the future, if you need my laptop to do something, just send it a message via WhatsApp," Huang said this week. "You don't always want to run everything in the cloud, because if you can run it locally, it's free."

Nadella seems to agree. "The amount of computing power on the periphery is incredible," he said during his Build keynote. "If you put all the computers together, that's massive computing power."

That power is on display with Nvidia's new RTX Spark chips, which will be available in a variety of creator-focused laptops and microcomputers later this year. The RTX Spark can run a massive language model with 120 billion parameters locally, allowing many AI workloads to run without relying on the cloud. This is an appealing concept given the continued financial strain on AI developers and consumers.

Microsoft is targeting its Surface Laptop Ultra at developers and creators, backing it up with continuous improvements to Windows 11 performance and developer-friendly features. While Microsoft's deeper move into Linux tools within Windows this week didn't generate the same enthusiastic response as the Windows Terminal announcement in 2019, developers are excited about the addition of Coreutils and WSL containers.

The Surface Laptop Ultra is also attracting particular attention, especially among developers and professional users. Microsoft isn't positioning it as a traditional premium laptop, but there's significant potential to appeal to a wider range of users. Davuluri explains, "I think you'll see us perform well with STEM and CAD applications on the platform, as they leverage the same high-performance computing modes."

All this renewed focus on Windows at Microsoft seemed impossible just six months ago. Davuluri responded to pressure to improve Windows 11 by outlining a plan to focus on performance, reliability, and the overall system experience just a few months ago. I saw some performance improvements during this week's build, with live comparisons of the Start menu and taskbar loading speeds. Microsoft is clearly working hard to improve Windows 11 and listen to feedback from users across various categories.

But I've been wondering why Microsoft doesn't just move directly to Windows 12. It seems easier to admit that Windows 11 isn't working and then offer Windows 12 as a solution. Microsoft has done this several times in the past, notably with the releases of Windows 7 and Windows 10.

Davuluri says, "There are many considerations when thinking about the release of the operating system itself, and I think much of the core of offering Windows 11, or even Windows 12 or whatever name we use, is about the end users and how they use the product and their workflow. We're more focused on improving the product experience in the context in which they use it, and that's what's most important to us."

While we may not get Windows 12 anytime soon, I wonder how Windows will survive in a world dominated by AI agents. Microsoft has made it clear that it sees Windows as a platform for AI agents and their workloads, but this week it also unveiled Project Solara, a new hardware platform focused on agents. Microsoft showcased a smart employee card that can run an agent capable of copying and recognizing real-world objects, and also presented a reference design for an Amazon Echo Show-like device with an AI agent. Clearly, Microsoft wants to offer a platform for future dedicated AI devices.