Microsoft was considering major changes to its popular 365 software suite. The company’s Copilot AI tool was a key part of those considerations this summer, but the software giant has now postponed any decisions, people told BI.
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Microsoft has paused a major overhaul of the AI in its popular 365 software suite, according to people familiar with the matter.
CEO Satya Nadella and his senior leadership team will hold an executive review this summer and consider options such as repackaging new AI capabilities into existing licenses or creating more expensive bundles of AI capabilities. I considered it.
The plan revolved around Microsoft’s Copilot tool. These are primarily powered by OpenAI’s GPT AI model, and Wall Street has high expectations for the new offering.
The goal was to finalize the changes by September, when Microsoft’s sales team would return from a summer slump. In late September, the decision was made. of seeds.
The company, spearheaded by Chief Commercial Officer Judson Althoff, will begin pilot testing in select regions to see what customers are willing to pay for in return, according to people familiar with the plans. and said that the tests would be carried out throughout the financial year.
Other changes Microsoft is considering for the 365 software bundle are a new suite of security features only, the people said. They asked to remain anonymous regarding private matters.
A Microsoft spokesperson declined to comment on the bundling plans, but said several customers, including Vodafone, Amgen and Teladoc, are effectively using the Copilot tool.
Big 365-degree changes come with risks.
Even without flashy new AI features, the company may be taking a cautious approach, as its 365 product is an important source of revenue and growth.
This software suite includes popular business applications such as Word, Excel, and PowerPoint. It is part of Microsoft’s Productivity and Business Processes division, with quarterly sales of approximately $20 billion.
Because companies depend on their products to run smoothly every day, making major changes to commercial software like this is risky.
Concerns about whether customers will pay
Still, Microsoft’s decision to pause deeper integration of Copilot AI capabilities could be a sign that the company doesn’t believe the tool can drive license purchases.
Indeed, people familiar with the decision said the pilot test was chosen in part because of concerns about whether the AI technology was creating enough value to persuade customers to pay.
Options Microsoft considered earlier in the summer, including repackaging AI capabilities into existing licenses and creating more expensive bundles with Copilot capabilities, amid concerns whether the new approach would actually be successful. The matter has been put on hold, officials said.
pressure is building
Microsoft currently spends more than $10 billion in capital spending each quarter, with most of it going to data centers, GPUs, and other AI projects. The company is trying to figure out how to recoup this huge investment.
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Here, the pressure for the company to make tangible results is increasing. In recent months, some customers and investors have begun to question the value of generative AI technologies, such as Microsoft’s Copilot AI assistant.
The Copilot AI tool currently costs $30 per user per month. This is in addition to the monthly cost of Microsoft’s 365 software bundle. For example, an E5 license is listed on Microsoft’s website for $54.75 per user per month.
customer complaints
Some customers have complained about the additional cost of this additional software. They also don’t like the complexity of managing multiple software licenses.
Microsoft has faced complaints from customers about Copilot’s value compared to its significant cost.
For example, the CIO of a pharmaceutical company recently canceled a Copilot upgrade for 500 employees after six months. The reason was that the cost was too high, some features did not work well, and more attractive tools for summarizing meetings had to be disabled. The legal team was careful about record-keeping.
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