Microsoft's business unit shuffle and shrouded AI spending spark a sharp conversation on whether shareholders and users can trust what's hidden behind new financial reports. Also, Start11 v3 adds Start widgets and menu sharing, plus Taskbar Islands, app groups, and more. Finally, LM Studio is the obvious place to start with local AI, and it works on any PC (not just an RTX Spark). Just be sure to get the right app.

Microsoft Earnings

• Microsoft earned a net income of 36.6 billion on revenues of $92.3 billion in the quarter ending September 30, 2026
• Those are both double-digit gains over the year-ago quarter, or 32 percent and 19 percent growth, respectively, year-over-year (YOY)
• We were promised more transparency, but what we got is a mixed bag
• Microsoft is too complicated a business for only two top-level business segments
• Windows revenues from PC makers down 27 percent (!)
• XBOX gets a hard revenue number, and it's not bad
• Microsoft spent $45.2 billion on capex (AI) expenses, up 30 percent - this is not the real number - and it will get bigger
• No paid Copilot numbers, weird
• Microsoft "earned" $10 billion in revenue from OpenAI - OpenAI still owes Microsoft money - MS stake in OpenAI is down; no one said why

Windows

• We talked about this last week, but I now have two sources at Microsoft confirming that Microsoft's AI strategy is the reason it's fixing Windows 11
• Microsoft discusses its work to make Windows 11 fit in 8 GB of RAM
• Microsoft Edge is the first Windows browser to support accelerated app launches
• Experimental and Experimental 26H1 get new inline actions for the new Windows Search

Hardware

• It's been weird watching other reviewers try to figure out RTX Spark, but this much is clear: This platform is not ready
• Baby steps: A few minor victories after weeks of defeats

More earnings

• AMD up 45 percent to $13.4 billion
• Intel up 21 percent to $16.5 billion
• Google/Alphabet up 25 percent to $127.6 billion
• Apple up 12 percent to $114.5 billion
• Amazon up 12 percent to $202 billion

AI/dev

• Three and a half years after it should have happened, Anthropic, Google, Microsoft, and OpenAI agree to let sites opt out of scraping
• OpenAI to unify chat and Work but not Codex
• Google says schools that disable AI will lose access to Google Search - They're integrated. It's nice to see Google channeling Microsoft again
• .NET Conf is next week, and Microsoft just posted the schedule

XBOX and gaming

• There was a bit of drama when XBOX COO left after only a few months on the job, and now there's more
• New titles coming to Game Pass in early November
• The next Elder Scrolls game is ES VI Sentinel
• GTA VI to rival Call of Duty - in the amount of disk space it requires

Tips and picks

• App pick of the week: Start11 v3
• App pick of the week #2: LM Studio
• RunAs Radio this week: PowerShell 7.7 and DSC 3.3 with Jason Helmick
• Brown liquor pick of the week: Caol Ila 12

*Thumbnail courtesy of Joe Esposito in Club TWiT

These show notes have been truncated due to length. For the full show notes, visit https://twit.tv/shows/windows-weekly/episodes/1008

Hosts: Paul Thurrott, Richard Campbell, and Mikah Sargent

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Why does Microsoft keep stumbling with new devices and software design... and what happens when enthusiasts start favoring AI over old-school Office? Paul, Richard, and Leo dig into shifting loyalties and what that means for the future of the desktop. And with the release of 26H2, it's time to update your install and recovery media. The build number is 26300.9457

Windows

• Windows 11, version 26H2 is here
• New features, none unique: Start, Taskbar, Search, etc
• New defaults for some features: Windows settings backup for commercial customers, etc.
• The time a UX legend interviewed for a job at Microsoft running Windows UX
• WSL Containers are generally available in Windows 11
• Four new Insider builds, but only Experimental gets anything interesting: Phone companion improvements and Energy recommendations directly in Quick Settings

Software

• Microsoft retires the Microsoft 365 Companion apps for Windows 11 that never made sense in the first place
• Mozilla ships the new Nova UI in Firefox 157

Hardware

• Copilot+ PC brand could be on the way out, but it was all over IFA, including on RTX Spark-based PCs
• Microsoft launches new base Surface Pro and Laptop models with Snapdragon X2 - And a new mouse, for some reason
• Qualcomm brought (first-gen) Snapdragon X to Googlebook, but it's also bringing X2 to Linux
• Google quietly reveals that, yes, Chromebooks are on the way out

AI

• Microsoft unveils the Copilot "super app" and the notion that this is basically an OS
• Open releases about 1000 new updates for ChatGPT
• Claude Sonnet 5.5 joins Opus 5.5
• The AI money pit, part 127: Report details Anthropic losses, spending, and revenues. Report also does a bad job at visualizing that information

XBOX and gaming

• Disc to digital program is live
• Minecraft Dungeons is here with a new dimension, and it's coming to Minecraft next year too
• Microsoft has a new casual mobile game for some reason
• XBOX now has mythic achievements

Tips and picks

• Tip of the week: Get the Windows 11 version 26H2 ISO
• App pick of the week: Opera on desktop and on mobile
• RunAs Radio this week: AI and Penetration Testing with Paula Januszkiewicz
• Brown liquor pick of the week: Kilchoman Loch Gorm

Hosts: Leo Laporte, Paul Thurrott, and Richard Campbell

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