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Why Microsoft is Moving Into a Lower Margin Business?
Here’s what we covered in this episode:
1. Microsoft is selling the business agenda, not the software.
Microsoft launched a new company: Microsoft Frontier. $2.5 billion, 6,000 engineers, sent inside other companies to make their AI work. That is consulting. The highest-margin software business ever built just walked into one of the lowest-margin businesses in tech, on purpose.
The stock is down about 20% this year and has shed over a trillion from its peak.
The Wall Street Journal covered it. It never asked why the richest software company on earth needs an army of humans to sell software that sells itself.
Companies are not stuck on the technology. They are stuck on the vision. Almost none have made AI the co-founder of the company, the way we said two years ago.
The high-order bit in enterprise is the business agenda, not the tech. Whoever owns it wins. Enterprise AI is still in its startup phase, and every startup is a small piece of technology wrapped in consultants who go find the use cases. Amazon put a billion into the same idea two years ago. OpenAI and Anthropic followed.
The move is talent, not acquisition. Poach the $10-million specialist: half the cash, five times the upside in equity. Point them at the niches where the use case is obvious:
* Bankruptcy and turnaround. Ninety days to pull a business out of the fire.
* M&A due diligence. Buy this, sell that, fast. Perfect for AI.
* Cost takeout. The least strategic move and the most certain one.
Own the business agenda around the tech, and you own the category. Microsoft gets it. The legacy consultants didn’t.
2. Wall Street thinks Elon is buying a phone company. He’s building a bundle.
Starlink is six years old with more than 10,000 satellites and 10 million broadband subscribers.
Its IPO filing put Starlink Mobile’s market at $740 billion. Last month, the Philippines became the first country to connect phones straight to the satellites. No towers. Dense cities still need them, but a country of remote islands is where Starlink isn’t an option, it’s the only one.
Wall Street’s plan for him: buy T-Mobile. Wrong lens. Elon wants the spectrum, not the company, the way Google bought Motorola for the patents. He could cut two-thirds of T-Mobile’s $23 billion in overhead, put a 20x multiple on it, and unlock $320 billion. Cost-cutting was never the point.
Two things make this his fight.
* Radically analog: nobody stands up rockets, data centers, and networks at his speed and cost.
* The bundle: Microsoft became Microsoft this way, taking four category kings, WordPerfect, Lotus 1-2-3, Harvard Graphics, and dBase, and declaring them one category: Office.
Own the pipe, and you own what runs on it.
The cell phone bill. Global mobile is a $200 to $400 billion-a-year category. Between 70% and 94% of homeless Americans carry a phone. It’s a category with no off switch, and the beachhead for a new category built while the telcos aren’t looking.
3. Europe has a heat problem. It actually has a reframe problem.
175,000 Europeans die from heat every year, per the World Health Organization.
Paris hit 104 last week, the fourth such day since the 1800s. The fix is a century old: AC.
Adoption is stranger.
Japan 91%, South Korea 86%, China 60%, Mexico 16%, India 5%. On this one technology, the UK is closer to India than to the developed world. Japan and South Korea were destitute 60 years ago. AC didn’t just make them comfortable, it made them productive.
The fight went ideological. The same script is now running in America over AI data centers, the buildout that could double GDP, argued about like a threat instead of a cure.
Every transformational technology hits the same emotional wall before it wins:
* Air conditioning. A century-old machine still fought in European courts.
* Full self-driving. The freedom to hand an aging parent back their independence.
* GLP-1s. Proof we were never destined to be an obese country.
The way out is word of mouth, the most powerful form of marketing there is.
Roger Martin calls it being reflective, not reflexive. Make it personal. Your parents. Your grandparents. The friend six months pregnant heading into a European summer with a fan.
The Wall Street Journal covered the death toll and missed that the cure shipped a hundred years ago. The fight was never about the machine.
3 conversations to have about the news with the Pirate Eddie Bot and Pirate Christopher Bot
We just told you what’s happening to three categories. The bots help you figure out what it means for yours. Reading the news is the easy part. Turning it into something actionable is the hard part, and that is exactly what The Pirate Eddie Bot and Pirate Christopher Bot are built for. They jam with you 24/7, they come with the founding tier, and they never get tired of your follow-up questions.
Take this to them this week:
* Own the business agenda, not the technology. Tell the bots what tech you’re betting on and have them find the business agenda underneath it, the vision your customer is actually stuck on. Microsoft hired 6,000 humans to sell that, not the software.
* Turn your product into a bundle. Tell the bots your one product and have them spec the category kings around it you could fold into a single thing customers can’t unbundle. Elon wants the pipe so he can own everything that runs on it.
* Stop selling the spec sheet. Tell the bots a technology your market keeps rejecting and have them reframe it from an ideological fight into a personal, emotional yes. Europe is losing 175,000 people a year to a spec-sheet argument.
Three headlines, one move. Somebody has to hold the customer’s hand through the transformation. That’s the whole game.
Not a founding member yet? You can join here.
What’s coming up on Pirate Street Journal
We’re making a few changes to Pirate Street Journal next month.
Every Tuesday, we drop a Pirate Street Journal episode at 7 a.m. PST / 10 A.M. EST. Three topics, thirty minutes, a couple of bongos.
The first two Deep Dive Reports (DDRs) have already earned their keep:
* Volume 1 (May 22, 2026): we said AI hardware was about to re-rate. Micron is up 61% and just posted the best quarter in its history.
* Volume 2 (June 10, 2026): we said more than one thing can be true about the SpaceX IPO, strong for the long run and volatile near term. It IPO’d at $135, ran to $202, and sits at $153 as of June 25, 2026.
The reports are built to pay off not just the day they drop, but over the next few quarters, even the next year or two. So we are making two changes.
One, the reports get their own lane. Episodes drop Tuesdays. Mini-books and DDRs come out every other Friday.
Two, who gets what changes. There are now two kinds of reports:
* Deep Dive Reports (DDRs). The long, twice-a-month Friday reports. Founding Members get the full report. Everyone else gets a preview in their inbox and can read the rest by upgrading.
* Breaking News reports. When there is breaking news on a category transformation, every paying subscriber gets the full report, Monthly and Founding alike.
Starting with the next DDR, the complete version is a Founding Member benefit.
Two ways to climb aboard now:
Monthly: $20/month. You’ve done dumber things with $20. You get the Tuesday episodes, every DDR preview, and every Breaking News report in full.
Founding: $375/year. About a dollar a day for every future DDR start to finish the day it drops, plus:
* The Pirate Eddie Bot and the Pirate Christopher Bot, your 24/7 AI jamming partners
* Every mini-book we have ever written (300+)
* Our entire audiobook library (30+)
* All seven of our full-size books
Want the whole thing every time? Become a Founding Member.
Recorded Friday, June 26th. Every number above is as of that morning.
Piratey disclaimer: This is NOT financial advice. None of us have a Series 63, Series 7, Series 6, CPAs, CFAs, IUDs, IEDs, and hopefully not IBS (this makes DUDE Wipes sad).
Stay tuned for next week’s episode.
Arrrrrrr,
Category Pirates
Eddie Yoon
Christopher Lochhead
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.categorypirates.news/subscribe
View all episodes
By Category Pirates 🏴☠️Here’s what we covered in this episode:
1. Microsoft is selling the business agenda, not the software.
Microsoft launched a new company: Microsoft Frontier. $2.5 billion, 6,000 engineers, sent inside other companies to make their AI work. That is consulting. The highest-margin software business ever built just walked into one of the lowest-margin businesses in tech, on purpose.
The stock is down about 20% this year and has shed over a trillion from its peak.
The Wall Street Journal covered it. It never asked why the richest software company on earth needs an army of humans to sell software that sells itself.
Companies are not stuck on the technology. They are stuck on the vision. Almost none have made AI the co-founder of the company, the way we said two years ago.
The high-order bit in enterprise is the business agenda, not the tech. Whoever owns it wins. Enterprise AI is still in its startup phase, and every startup is a small piece of technology wrapped in consultants who go find the use cases. Amazon put a billion into the same idea two years ago. OpenAI and Anthropic followed.
The move is talent, not acquisition. Poach the $10-million specialist: half the cash, five times the upside in equity. Point them at the niches where the use case is obvious:
* Bankruptcy and turnaround. Ninety days to pull a business out of the fire.
* M&A due diligence. Buy this, sell that, fast. Perfect for AI.
* Cost takeout. The least strategic move and the most certain one.
Own the business agenda around the tech, and you own the category. Microsoft gets it. The legacy consultants didn’t.
2. Wall Street thinks Elon is buying a phone company. He’s building a bundle.
Starlink is six years old with more than 10,000 satellites and 10 million broadband subscribers.
Its IPO filing put Starlink Mobile’s market at $740 billion. Last month, the Philippines became the first country to connect phones straight to the satellites. No towers. Dense cities still need them, but a country of remote islands is where Starlink isn’t an option, it’s the only one.
Wall Street’s plan for him: buy T-Mobile. Wrong lens. Elon wants the spectrum, not the company, the way Google bought Motorola for the patents. He could cut two-thirds of T-Mobile’s $23 billion in overhead, put a 20x multiple on it, and unlock $320 billion. Cost-cutting was never the point.
Two things make this his fight.
* Radically analog: nobody stands up rockets, data centers, and networks at his speed and cost.
* The bundle: Microsoft became Microsoft this way, taking four category kings, WordPerfect, Lotus 1-2-3, Harvard Graphics, and dBase, and declaring them one category: Office.
Own the pipe, and you own what runs on it.
The cell phone bill. Global mobile is a $200 to $400 billion-a-year category. Between 70% and 94% of homeless Americans carry a phone. It’s a category with no off switch, and the beachhead for a new category built while the telcos aren’t looking.
3. Europe has a heat problem. It actually has a reframe problem.
175,000 Europeans die from heat every year, per the World Health Organization.
Paris hit 104 last week, the fourth such day since the 1800s. The fix is a century old: AC.
Adoption is stranger.
Japan 91%, South Korea 86%, China 60%, Mexico 16%, India 5%. On this one technology, the UK is closer to India than to the developed world. Japan and South Korea were destitute 60 years ago. AC didn’t just make them comfortable, it made them productive.
The fight went ideological. The same script is now running in America over AI data centers, the buildout that could double GDP, argued about like a threat instead of a cure.
Every transformational technology hits the same emotional wall before it wins:
* Air conditioning. A century-old machine still fought in European courts.
* Full self-driving. The freedom to hand an aging parent back their independence.
* GLP-1s. Proof we were never destined to be an obese country.
The way out is word of mouth, the most powerful form of marketing there is.
Roger Martin calls it being reflective, not reflexive. Make it personal. Your parents. Your grandparents. The friend six months pregnant heading into a European summer with a fan.
The Wall Street Journal covered the death toll and missed that the cure shipped a hundred years ago. The fight was never about the machine.
3 conversations to have about the news with the Pirate Eddie Bot and Pirate Christopher Bot
We just told you what’s happening to three categories. The bots help you figure out what it means for yours. Reading the news is the easy part. Turning it into something actionable is the hard part, and that is exactly what The Pirate Eddie Bot and Pirate Christopher Bot are built for. They jam with you 24/7, they come with the founding tier, and they never get tired of your follow-up questions.
Take this to them this week:
* Own the business agenda, not the technology. Tell the bots what tech you’re betting on and have them find the business agenda underneath it, the vision your customer is actually stuck on. Microsoft hired 6,000 humans to sell that, not the software.
* Turn your product into a bundle. Tell the bots your one product and have them spec the category kings around it you could fold into a single thing customers can’t unbundle. Elon wants the pipe so he can own everything that runs on it.
* Stop selling the spec sheet. Tell the bots a technology your market keeps rejecting and have them reframe it from an ideological fight into a personal, emotional yes. Europe is losing 175,000 people a year to a spec-sheet argument.
Three headlines, one move. Somebody has to hold the customer’s hand through the transformation. That’s the whole game.
Not a founding member yet? You can join here.
What’s coming up on Pirate Street Journal
We’re making a few changes to Pirate Street Journal next month.
Every Tuesday, we drop a Pirate Street Journal episode at 7 a.m. PST / 10 A.M. EST. Three topics, thirty minutes, a couple of bongos.
The first two Deep Dive Reports (DDRs) have already earned their keep:
* Volume 1 (May 22, 2026): we said AI hardware was about to re-rate. Micron is up 61% and just posted the best quarter in its history.
* Volume 2 (June 10, 2026): we said more than one thing can be true about the SpaceX IPO, strong for the long run and volatile near term. It IPO’d at $135, ran to $202, and sits at $153 as of June 25, 2026.
The reports are built to pay off not just the day they drop, but over the next few quarters, even the next year or two. So we are making two changes.
One, the reports get their own lane. Episodes drop Tuesdays. Mini-books and DDRs come out every other Friday.
Two, who gets what changes. There are now two kinds of reports:
* Deep Dive Reports (DDRs). The long, twice-a-month Friday reports. Founding Members get the full report. Everyone else gets a preview in their inbox and can read the rest by upgrading.
* Breaking News reports. When there is breaking news on a category transformation, every paying subscriber gets the full report, Monthly and Founding alike.
Starting with the next DDR, the complete version is a Founding Member benefit.
Two ways to climb aboard now:
Monthly: $20/month. You’ve done dumber things with $20. You get the Tuesday episodes, every DDR preview, and every Breaking News report in full.
Founding: $375/year. About a dollar a day for every future DDR start to finish the day it drops, plus:
* The Pirate Eddie Bot and the Pirate Christopher Bot, your 24/7 AI jamming partners
* Every mini-book we have ever written (300+)
* Our entire audiobook library (30+)
* All seven of our full-size books
Want the whole thing every time? Become a Founding Member.
Recorded Friday, June 26th. Every number above is as of that morning.
Piratey disclaimer: This is NOT financial advice. None of us have a Series 63, Series 7, Series 6, CPAs, CFAs, IUDs, IEDs, and hopefully not IBS (this makes DUDE Wipes sad).
Stay tuned for next week’s episode.
Arrrrrrr,
Category Pirates
Eddie Yoon
Christopher Lochhead
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.categorypirates.news/subscribe