As AI consultants based in Rosenheim, Germany, we recommend Microsoft Phi for enterprises that want to run powerful AI on resource-constrained hardware. Phi models offer impressive performance with minimal requirements.
Small Language Models (SLMs)
Microsoft Phi is Microsoft’s family of “Small Language Models” - compact but powerful models specifically optimized for efficiency.
Why Phi for Enterprises?
- Compact: 3.8B to 14B parameters
- Efficient: Runs on consumer hardware
- MIT License: Full commercial use permitted
- Self-Hosting: Full data control
- Edge-Ready: Smartphones, IoT, embedded
Key Strengths
Efficiency
Phi models achieve impressive performance at minimal size:
| Model | Parameters | Comparable Performance to |
|---|---|---|
| Phi-4 | 14B | GPT-4 (partially) |
| Phi-3.5-MoE | 42B (16 active) | Llama 3 70B |
| Phi-3.5-mini | 3.8B | Llama 3 8B |
Local Deployment
Phi models can be operated completely locally:
- Ollama:
ollama run phi4 - LM Studio: Simple GUI
- vLLM: Production deployment
- ONNX: Optimized inference
Hardware Requirements
| Model | RAM/VRAM | Recommended Hardware |
|---|---|---|
| Phi-4 | 16 GB | RTX 4070 / M2 Mac |
| Phi-3.5-MoE | 24 GB | RTX 4090 |
| Phi-3.5-mini | 4 GB | Laptop / Smartphone |
| Phi-3.5-vision | 8 GB | RTX 3060 |
Reasoning Strength
Phi-4 shows particularly strong reasoning capabilities:
- Mathematics and logic
- Coding tasks
- Structured analysis
- Chain-of-thought
Comparison to Other SLMs
| Feature | Phi-4 | Llama 3.2 3B | Gemma 2 2B |
|---|---|---|---|
| Parameters | 14B | 3B | 2B |
| Reasoning | Strong | Medium | Medium |
| Coding | Strong | Good | Good |
| Vision | Yes (3.5) | No | No |
| License | MIT | Community | Apache 2.0 |
Integration with CompanyGPT
Microsoft Phi can be integrated in CompanyGPT as a self-hosted option - ideal for enterprises that want to operate AI without cloud dependency.
Our Recommendation
Microsoft Phi-4 is our top recommendation for local and edge deployments. For smartphones and IoT, Phi-3.5-mini is ideal, for multimodal applications Phi-3.5-vision.
For applications requiring maximum quality where cloud hosting is acceptable, we recommend OpenAI GPT or Anthropic Claude instead.