Microsoft unveils Copilot Code and on-device AI for Windows PCs

Microsoft announced at its Windows and Surface event on October 7, 2026 that Copilot's Code experience and on-device AI are coming to Windows PCs, with CEO Satya Nadella describing the PC as an 'infinite software factory' because Copilot can build software on the desktop without cloud token spend, according to techradar.com.

In a Windows Experience Blog post, Windows and Devices chief Pavan Davuluri described a hybrid intelligence setup where Copilot reads local files with permission and hands work to on-device models. Copilot's Code experience can build an app, dashboard or workflow from a plain-language description, and Microsoft says it can produce native apps from one prompt on Windows.

The underlying model is MAI-Code-1.1 Flash, Microsoft's in-house 137-billion-parameter coding model, which Nadella said is now optimized to run on a PC. The on-device version is quantized down to 53GB, roughly an 80% reduction from the cloud model, and peaked at 75.5GB of memory at full context on a Surface Laptop Ultra with Nvidia's RTX Spark.

Rollout and hardware

Eight Surface Laptop Ultra configurations are in play, and only the 128GB model at $5,899 has more than 64GB of memory. GitHub Copilot's automatic mode decides task by task whether work runs locally or in the cloud, and Microsoft documentation notes that local inference does not make the session offline. The routing ships at the end of October 2026, hybrid Copilot features reach Copilot+ PCs over the coming months, and Code rolls out first through Microsoft's Frontier early-access program.

Jared Spataro, Microsoft's chief marketing officer for AI at Work, said building such tools is becoming as basic a skill as writing a memo or modeling a budget. In a 2025 staff memo, Nadella recalled that Bill Gates had envisioned 'not just a software company, but a software factory,' and argued the AI era demanded a rethink. At a recent customer gathering, Nadella said Microsoft had progressed from code assistance through agentic coding 'to software factory all within one year'.