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Microsoft is set to charge $30 a month for artificial intelligence features built into its widely used productivity software, paying a larger-than-expected premium for technology that many in the industry expect will provide a powerful boost to revenue.
For customers who sign up, the new features add 53-83 percent to the average monthly cost of business-grade versions of the Microsoft 365 service. Hundreds of millions of workers.
Satya Nadella, Microsoft’s chief executive, said the pricing was part of a generational shift in technology that would bring a new dimension to the software company’s core products.
“I would think of it as the third phase” of Office, he said, after apps like Word and Excel and cloud services like Teams. Speaking in an interview with the Financial Times, he said the new AI features are “one-of-a-kind value”, automating routine tasks and increasing productivity.
Microsoft shares hit new record highs after the announcement.
Price’s news came as the US software giant used its annual partner conference to unveil products and services based on generative AI, including a business-grade version of the chatbot it added to its Bing search engine this year. Despite attempts by many employers to ban its use, the new chatbot is aimed at businesses concerned that their workers are secretly providing sensitive corporate data to ChatGPT, run by close Microsoft partner OpenAI.
Microsoft is the first technology company selected by Meta to make available a commercial version of the social media company’s family of open source large language models called LAMA. So far Meta has licensed the technology for research use only.
The commercial release of the well-received software is seen as an important moment, bringing a new form of competition to OpenAI and Google.
The pricing of Microsoft’s generative AI is hotly anticipated in the tech world, given the widespread use of the company’s productivity software. More than 382 million people used business versions of Office 365 software in the most recent quarter, the company said.
Jason Wong, an analyst at Gartner, said the price is “higher than what we see for other generative AI services”. OpenAI charges $20 per month for the premium version of ChatGPT, while the monthly fee for the commercial version of GitHub Copilot, Microsoft’s generative AI coding assistant, is $19.
Evidence that the GitHub service has made coders more productive is “giving us real confidence, like a more ‘horizontal’ co-pilot. [Microsoft 365]“Each will have a big impact [type of] Sales, finance, HR or general knowledge work”, said Nadella.
He denied that the widespread use of technology in business could lead to a “content explosion” that would see workers inundated with AI-generated emails and documents, making them less productive. Instead, he predicts that workers will seek answers directly from their AI-powered software, rather than ask colleagues questions, reducing the number of internal emails produced.
“Every time you get a spreadsheet, you get a junior analyst with that and you can ask questions,” Nadella said. “It’s like having an on-demand inspector.”
However, the industry’s race to monetize manufacturing AI comes at a time when economic uncertainty is causing many customers to limit their technology spending, and companies like Microsoft are collecting data that proves AI-enhanced software is making workers more productive.
The new features, which Microsoft calls CoPilot, “will be a challenge for enterprise buyers,” Wong said. “They have to find out [the] Budget for this additional product. Then they have to justify the extra charge.
He added that the higher cost would contribute to a “slower” rollout, which was initially used “for people who create a lot of content – sales, marketing, customer service” and “have a lot of needs”. Communicate and collaborate”.
Organizations using enterprise-grade editions of Microsoft 365 currently pay $36 per user per month for the E3 edition and $57 per month for the E5 edition. The copilot feature, which is currently in testing with customers, will cost an additional $30 per month when it becomes generally available, the company said.
Additional reporting by Hannah Murphy