Microsoft is so confident AI is the future of computing that it's adding a new button to the keyboards of Windows PCs dedicated to its Copilot AI assistant, starting with new machines to be announced at CES next week.

Why it matters: It's the first change to the Windows keyboard in 30 years, and the latest example of hardware makers betting on AI to both create new product categories and breathe life into older ones.

What they're saying: "We definitely think this is the year of the AI PC," Microsoft executive VP Yusuf Mehdi told Axios. "We think this is the next fundamental change with how people will interact with their computers."

• While tens of millions of people are already using the Windows Copilot, Mehdi says the addition of a dedicated key shows Microsoft sees "it now becoming mainstream and valuable enough and easy enough for a much broader set of the population."
• Mehdi says that though 2024 will also see a wide array of other AI-specific hardware, the PC has a unique role since it's where users create so much content, from music to screenplays to images.

Details: The Copilot key will be located to the right of the space bar, replacing a menu button.

• The first PCs with the dedicated key will be announced at CES, with more coming by the spring from Microsoft and other PC brands. By year's end, the Copilot key should be ubiquitous on new PCs.
• Pressing the new button will launch the Windows Copilot, which uses natural language input to allow people to modify computer settings, launch apps and perform other computing tasks.
• For those that don't have Windows Copilot enabled, pressing the key will take users to Windows search.

Between the lines: While the hardware key is the most visible change to Windows PCs, Mehdi says it's part of a broader reimagining of the PC for the era of AI.

• Under the hood, PC makers are adding chips that include neural processing engines specialized for AI tasks.
• By tightly integrating AI into the Windows experience, Microsoft and its PC maker partners could also win competitive points over Apple's Mac line.

Flashback: Microsoft last revamped the PC keyboard with the mid-1990s addition of the Windows key, which takes people directly to the Windows start menu.

• That key debuted on a Microsoft-branded keyboard in 1994 and eventually became standard on Windows PCs.

The big picture: In adding AI features directly to its hardware, Microsoft has plenty of company.

• Google and Amazon are both trying to breathe new life into their smart speakers and displays by using an AI-powered version of their assistants,
• With its latest Ray-Ban Smart Glasses, Meta has added an AI assistant that makes the wearables significantly more capable than the previous version.
• Other companies have announced various AI-specific hardware in recent months. Humane, for example, is set to ship its AI-powered pin early this year, while other devices are coming from startups including Tab and Rewind AI.

What to watch: Changes like the dedicated key and neural processing engines are relatively modest, but a key question is whether the venerable PC will need to morph further to fully harness AI.

• "That's one that I would say ourselves and our partners in the PC ecosystem are looking at and talking about right now," Mehdi says.