Transcript & Summary: The Windows 11 Crisis

[00:00] We are evolving the OS. Windows [music] is now your canvas for AI and agents. We're innovating in three key ways. First, bringing AI and agents into your [music] flow and making it more intuitive to use. And second, making Microsoft 365 [music] C-Pilot more contextually helpful on Windows. And third, [music] making C-Ilot Plus PCs even more powerful with enhanced AI. That clip was an announcement from Microsoft a few weeks ago. They're making it clear that AI is now at the forefront of Windows. Windows [00:35] 11, they say, is becoming an agentic operating system. Agentic, [music] the latest buzzword for autonomous AI. Soon, your PC will make decisions on your behalf with the help of a built-in AI. Shortly after the event, Pavan Davaluri, the president of Windows and Devices, [music] tweeted the news online. The response was, well, far from pleasant. Some of the comments directly under [music] the tweet received thunderous applause in the form of likes. They read as follows. It's evolving into a product that's driving [01:05] people to Mac and Linux. Another one says, "Stop this nonsense. No one wants this. You live in a Twitter bubble where AI will create tons of wealth and you'll perish unless you adopt it now. But your users are not in this bubble. They don't care about any of this." Sh. They chat with chat GBT and that's about it. And another comment, "Nobody wants this except the parties you're selling our data to without permission." If you've used a Windows PC in the last few years, in [music] some sense, you may have felt [01:33] the same way, a little frustrated. The AI push seems [music] like just the latest in a string of efforts to make it feel like the computer that you paid for isn't really yours anymore. From forced upgrades, advertisements carelessly littered through the user interface, online account requirements for everything, and now an aggressive [music] push into AI. You get the picture now. Windows 11 has become one of the biggest sources of user frustration in recent memory. As you'll later see, it's all part of the plan for [02:03] Microsoft [music] CEO Satin Nadella, and it's all working just as it's intended to. These changes have made a lot of people wonder, is Windows still a tool for the user, or is it a cash extraction exercise for Microsoft? And hey, [music] these feelings aren't unfounded. It comes from years of bad decisions. But here's the thing. Curiously, [music] at the same time, Microsoft is now currently valued at $3.8 trillion [music] and on track to reach 5 trillion. It's one of the most powerful companies in [02:32] the world. So from a broad perspective, these decisions are making business sense. But right there, you can see it. A massive divergence is forming as the value of the company skyrockets. [music] The user experience of Windows is moving in the opposite direction down the toilet. Everyone can sense there's a problem here. [music] But the question needs to be asked, what exactly is happening here? How did Windows, the flagship operating system of the world, now end up feeling like it no longer works for the person using it? And why [03:02] does Microsoft keep doubling down on these decisions? If you've ever wondered these questions, then today [music] is your lucky day because we'll answer them right now in this episode. [music] You are watching Tool Fusion TV. [03:27] Microsoft Windows is the operating system that entire generations grew up with. The one we learned to type on, the one that taught many of us what a desktop even was. In 2025, its presence is still enormous. More than 1 billion devices run Windows. It holds around 70% of the desktop market with Mac OS at 13% and Chrome OS under 2%. But for years now, Windows has fostered a slow but steady drip of annoyance from users. A programmer by the name of Rob Braxman, who had his software demoed on stage by [03:58] Bill Gates, states that he hasn't seen backlash this bad since the transition from DOS 3.1 to Windows 1.0 all the way back in 1985. I've never encountered so much resistance to moving to a newer version, likely since DOSs 3.1 to Windows, and that was justifiable. But in recent years with the advent of Windows 11, I have to say that Microsoft has truly gone crazy. If the experience has been getting worse for so long, why does Microsoft keep making this decisions? Why does Windows suck so much today? To understand why Windows [music] [04:31] feels a bit like a money extracting husk, we briefly need to look at how Microsoft came to dominate and what they end up doing when they find themselves top dog. Back in the late 80s and '90s, Bill Gates built his empire by getting MS DOSs onto as many machines as possible. It's a wild story that I've covered previously in the piece Gary Kildall, the man who should have been Bill Gates. But the point was, once Windows was everywhere, Microsoft could dictate [music] the rules of personal computing. Look no further than the [04:58] famous antitrust case and deposition of Bill Gates in regards to forcing Internet Explorer onto everyone or just some of the aggressive contracts signed with hardware partners. In a way, it was a sign of things to come. Satya Nadella, the company's current CEO, is continuing the same idea of cornering the market, then dictating the rules, but in a less illegal way. He's capitalizing on Windows legacy reach to push all users into Microsoft's online ecosystem. When Nadella took over in 2014, Azure, Office [05:27] 365 and enterprise licensing became the core of Microsoft and you can see the effect clearly in the company's valuation. This chart shows the moment Nadella steps in. You can see a sharp rise and continuous rise in shareholder champagne popping as the company steered itself towards cloud services and long-term reoccurring revenue. It has been a remarkably successful strategy for shareholders. In fiscal year 2025, Microsoft reported 252 billion in revenue and over 55% of that or about 138 [music] billion came from cloud [06:00] services alone. When much of that business depends on B2B or enterprise clients and online services, [music] the incentives behind Windows naturally shift. And this context explains why the operating system feels the way it does. In the corporate world, the grip of Microsoft is virtually absolute. Enterprise adoption of Windows 11 has passed 60% since support for Windows 10 ended. More on that later, and Microsoft controls roughly 40% of the server market. So, some of you might be wondering, why do companies still use [06:30] Windows if there's all these problems that we're going to soon talk about? Well, aside from company legacy systems and processes for software support, Windows [music] is still king. But going back to Microsoft's shift to the cloud, it's insanely profitable. When almost every corporation relies on Windows, who cares about home users? They do very little for the bottom line of Microsoft. Their frustration rarely affects revenue, and their complaints don't threaten billiond dollar contracts. So, it's no wonder that over time, [06:58] Windows began reflecting shareholder priorities rather than the users. Now, let's get into the juicy stuff. Just some of the mind-boggling decisions that Microsoft has made. >> [music] >> It's windows slow decline into trash. [07:15] And I I don't think it like has to always be this way. I absolutely definitely think there is a path to redemption for Windows. I just don't think they're going to take it. I don't think it would take that much work to make it not trash. Genuinely, the thing that bothers me most is the things that they actively do that actively make it bad or worse. If I have purchased my Windows, I don't want freaking ads. Any amount. Don't just like put all this junk there all the time. Don't make search bad. [music] [07:43] Once you reach the desktop, Windows keeps trying to steer you in the same direction online. It's pushing you to sign into account for almost everything. [music] It encourages you to store files on one drive. It is constantly reminding you to sign up for one drive so that all of your [music] files and data and everything can be hosted by Microsoft on the one drive. Microsoft [music] Office is now a subscription tied directly to the same account. >> During the Windows 7 era and before uh you would get Microsoft Office for free. [08:11] It came with the operating system and you didn't have to sign in. Now it's a subscription service. Yeah. Microsoft is basically just milking you for every single dime. >> Even shutting down your computer is no longer simple because Windows insists on installing updates [music] first. I'm sure your boss will understand when your Windows PC randomly shuts down in the middle of say an important meeting or just before a deadline with your work unsaved [music] just for it to spend if you're lucky minutes booting back up while it does [08:39] forced updates even though you said whichever option was closest to not now I'm busy [music] or if you're really unlucky hours to do those updates. Try telling your boss that it's Microsoft's fault that you can't finish your work. Honestly, Windows 11 has hundreds of small issues that users keep running into. The [music] list just goes on. The OS was so bogged down with junk that even the user interface was measurably slower than the previous version. And the crazy [music] thing is Microsoft admitted that the [09:09] syncing to One Drive in the background was slowing down the computers of users. But the worst was yet to come. This message is sponsored by Raycon. With the holidays coming up in Australia, which by the way is summer, the weather is perfect for long walks in the evening, and I love having music on, but it's also good to hear the world around me. I've been using Raycon's Essential Open earbuds, and honestly, they're great. What makes these different from regular earbuds is that they sit just outside your ear canal, so [09:40] you get a clear, full sound while still hearing what's happening around you. I've been using them pretty much every day. Whether working at home, at the gym, or heading out for walks. Whether it's cars passing by, or just the noise of the city, you can stay aware while listening to music, podcasts, or taking calls. 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The links are below in the description, too. Thanks to Raycon for sponsoring this video. Now, back to the story. [music] At the same time, without fixing the basics, the company began pushing AI into every part of its services, including Windows itself. They invested [11:06] more than 13 billion into OpenAI, the company behind Chat GPT. And that investment was one of the largest bets that Microsoft had ever made on a single technology. As [music] aside, the investment lost Microsoft 11.5 billion in just the last quarter. [music] But with that level of investment, it was to no surprise that AI became central in Microsoft's plans. New AI features began spraying all over Word, Excel, [music] Outlook, Paint, and C-Pilot. Some of these features were useful, but a lot of them felt like they were simply added [11:38] because the company could. So, basically, what they want in an AI PC is first, you should be able to interact with it naturally in text or voice and have it understand you. Second, it should be able to see what you see and offer guided support. So, I'm going to select screen two. And now, Copilot is watching everything. Can you help me find a flash game on the internet known as Pico School? I believe it's on Newgrounds. >> Pico School is a [music] classic flash game. Find it on their website and also [12:08] on the internet archive. >> Jesus Christ. Can you take me there? >> Sure. To find Pico School on Newgrounds, just open your web browser and search. It's a popular flash game, so it should be one of the top >> Can you do it for me? >> Sure. I can't directly navigate websites or open specific online. >> WHAT THE IS THE POINT? OKAY, WHAT IS THE POINT? >> IRONICALLY, Microsoft warned Windows users not to use C-Pilot in Excel for anything that quote requires accuracy, i.e. [music] spreadsheets. Why? Because [12:41] it hallucinates too much. And that whole agentic computer thing, well, C-Pilot doesn't work as well as advertised yet. [music] Does talking to your computer work like in its TV ad? Can you get me a link to one that's in stock? >> Here's the link to Best Buy. Link to bestbuy.com/11bestby/shore website. And it's for most definitely in stock. And it's for most definitely in stock. And it's available for pickup or delivery. And it's for most definitely in stock. >> Okay. Thanks, co-pilot. >> What all these changes had in common was [13:14] they kept people connected to Microsoft's online services. And this is where the bigger picture becomes clearer. Windows [music] is the surface. The real product is the network of services underneath it. And they all point in one direction towards benefiting Microsoft's shareholders and not the [music] user. You can clearly see it in the transition from Windows 10 to Windows 11 when Microsoft officially ended support for Windows 10 in October 2025. Roughly 40% of its users were still on it. That's 400 million people. [13:42] The message was clear. Move to Windows 11 or be left behind. [music] The problem though was that many users couldn't even upgrade if they wanted to. Their computers were still modern and powerful, but Windows 11 refused to install [music] because of a new hardware requirement called a TPM 2.0. So, what the heck is that? Well, a TPM or [music] trusted platform module is a chip that stores security keys. Microsoft framed it as necessary protection, but to millions of users, it felt like a lock added without [music] [14:12] consent. Devices that worked perfectly well the day before were now suddenly [music] considered outdated. But there were more problems with the TPM chip. Pay attention to that. The TPM endorsement key, that's the unique identifier of your machine. Now it is tied to your Microsoft ID [music] identity. You can't change it. You can't delete it. Now the device ID is specifically known and is pulled [music] from the TPM. Third parties can access this now with no restriction via API. If you want to know how to check your TPM status, here [14:48] are example commands [music] on Windows. By the way, you can restrict access. There's a deliberate purpose to all this madness. And it's all tied to the AI. So don't think this is some random choice by Microsoft. And that was only the start. The Windows 11 setup process now requires a Microsoft account and an internet connection. the option to create a local account was removed and the usual workarounds were patched out. Have to have a Microsoft email address to use a Windows 11 PC. At least that's [15:19] the way that Microsoft is pushing it because even the workarounds to get a local account working on a new Windows computer, which are slowly being broken as we go, even though people keep finding new ways, Microsoft keeps breaking it. Now, they're going to get to the point where you can't even use the PC with a local account. It's all a push to funnel users into cloud services and extract money from them. But that authoritarian approach comes [music] with a cost. When customers are constantly thrown [15:51] around and beaten over the head with money extracting tactics, well, what do you know? They don't [music] like it. People who once felt at home on Windows now feel like they're being watched, [music] nudged, and controlled by the operating system. Instead of being a user, they feel like they're part of a product that they never agreed to be in. In some cases, they completely lose control of their computer. For example, Rob Brman had his Linux partition wiped without his consent [music] because Windows 11 didn't like him running two [16:20] OSS on his computer. I wasn't even using Bit Locker, and it still signal Windows to take over the boot sequence. This is not a bug. This is by design very devious. >> Privacy erosion is also a big part of this [music] shift. Windows has always collected some information in the background. But over the years, that quiet data collection grew into something that [music] people could no longer ignore. Microsoft calls it telemetry. It's meant to improve stability. [music] But investigations have shown that even on the lowest [16:48] setting, Windows still gathers details about the apps you use, your hardware, and your system behavior. That information is sent back to [music] Microsoft sometimes for Microsoft to serve you better ads for their services and other times [music] to a wide network of analytics and content providers. Unless you're on an enterprise edition, there's no real way [music] to switch it off. So, when Microsoft announced Windows Recall, the reaction made sense. Recall aimed to record everything you've ever done [17:14] [music] on your PC by capturing snapshots of your screen and feeding it to an AI so you can search your previous activity in natural [music] language. It was framed as a convenient tool, but to many users, it felt like confirmation that Windows was crossing a line. Security researchers later found that the way recall stored data was not fully protected and could be accessed by malware or anyone with local access. Their software, their malware, their virus running on your computer. Now they have a treasure trove of things to [17:44] [music] pick from. They don't just have your most recent email. They have every screenshot that your computer has ever taken. They have your banking details because they don't get scrubbed when Copilot or Recall takes a photo of it every few seconds. They know everything about you and can impersonate you to a tea. And Microsoft says we shouldn't worry about this. It's all local. But here's the thing. There is no technical barrier to sending an instruction to the AI companion to examine your recall [18:17] database and report findings to HQ. This can be done without any data leaving your computer. The backlash was strong enough that Microsoft eventually pulled the feature before launch. It eventually returned as an opt- out tool with encryption this time and stronger authentication. But even with these improvements, people are still very unsure about it. At this point, it's no longer about a single feature. When you combine the terrible user experience and growing privacy concerns, it's easy to see why people are exploring [18:45] alternatives. Users who want more transparency and more control are choosing Linux. And those who want something just simple and stable are going to Mac OS. And don't get me wrong, Windows still dominates the consumer market, but it's slowly losing market share. >> [music] >> Pavan Davaluri, president of Windows and Devices, publicly acknowledged the criticism. In a tweet, he listed reliability and performance issues and ease of use issues are areas that need attention. The reaction, yet again, wasn't very kind. [19:20] In the end, this story is less about Windows changing and more about Microsoft's priorities. The company found a model that maximizes shareholder value, but it comes at the cost of the user experience. So the real question is whether Microsoft is willing to put users first, even if that means earning a little less. But as Linux software compatibility improves, [music] especially for games, more users will migrate if things keep going. But it will be a long time until Windows is dethroned. So to all the Windows users [19:49] out there, what's your take on this? Do you feel that Microsoft has pushed too far? For me, I sweared by Windows for the longest time, but I begrudgingly made the move to Mac OS when the M2 generation came out. And frankly, besides some strange UI decisions, [music] it's been pretty smooth sailing. And it's worth not feeling like you're being spied on or having ads in your software. And it's clear that I'm not the only one. >> There's an update for our switching to Apple video. >> Oh, for one thing, [20:17] this is still in my backpack >> still. >> Still, okay, I switched by now. Wait, what about second MacBook Pro? >> I bought this with my own money. I have not bursted the laptop in like 8 years. I opened this piece of crap up, this [music] Windows garbage. The driver update literally failed. Bricked it. It took me like 2 hours to get it. And I was just like, "Fuck this." And ordered a [music] MacBook. [laughter] I can't think of many people on staff who in the past were more adamantly anti-Mac than this man. [21:00] >> So that is the crisis in Windows. How it went from a beloved operating system to an absolute dumpster fire littered with ads and AI slop and the reasons as to why Microsoft drove it in that direction. Anyway, that's about it from me. My name is Dogo and you've been watching Cold Fusion and I'll catch you again soon for the next episode. [music] Cheers guys. Have a good one. [21:40] [music] [21:45] Co fusion. It's me thinking.