File photo: Microsoft Commercial Operations CEO Judson Althoff appears during an interview in San Francisco, January 27, 2017.
David Paul Morris | Bloomberg | Getty Images
microsoft The company is adding artificial intelligence to its Office productivity suite and charging 65% more for upgraded products as it seeks to drive enterprise users to its Copilot AI add-on.
Microsoft 365 E7, the new top-tier bundle for enterprise employees, will cost $99 per user per month ($60 for an E5 subscription) after future increases. E7 includes Copilot for $30, Entra identity tool for $12, and Agent 365, a new product for managing enterprise AI agents for $15.
Over the past year, Microsoft has spent more than $100 billion on data center infrastructure, including: Nvidia A chip that can enhance AI models. Selling an AI product is one way to demonstrate a return on that investment.
For customers paying for E7 or standalone Copilot, Microsoft is introducing Copilot Cowork, born from a partnership with AI model developer Anthropic. Handle tasks that involve multiple steps, such as sending regularly scheduled emails to colleagues or preparing documents or meetings on company calls. Copilot Cowork will be available this month as a research preview for customers enrolled in Microsoft’s Frontier program, which provides early access to AI capabilities.
The announcement comes after updates to Anthropic’s Claude Cowork service caused some investors to worry that AI models could pose a competitive threat to mature software companies.
Judson Althoff, CEO of Microsoft’s commercial operations, said in an interview with CNBC that both the Copilot upgrade and the launch of the E7 tier on May 1 should lead to further adoption of Copilot. The presence of E7 should also encourage organizations to upgrade more employees to E5, he said.
“Most of your base now is E5, right?” he said. “And now E5 has a healthy update cycle. But E5 was created before the agent world.”
Growing productivity revenue remains a top priority for Microsoft, along with growing its cloud business.
Microsoft 365 commercial products and cloud services accounted for 30% of the company’s total revenue in the December quarter. But Microsoft has reported slowing growth in the number of commercial clients purchasing subscriptions, with 365 commercial seats up 6% in the latest quarter.
Microsoft is making more and more money from each of its commercial users, including Copilot.
Microsoft CEO Satya Nadella said in January that the company had 15 million paid seats in Microsoft 365 Copilot, or 3% of seats in commercial Microsoft 365 subscriptions.
Gartner analyst Alastair Woolcock, who tracks the technology industry, says it’s important to include identity, management and security software in E7 to enable large enterprises to securely distribute the latest AI tools and improve productivity.
“Who wants to buy a dozen different products for $20 a month?” he said.
Jefferies analysts led by Brent Till reiterated their buy rating on Microsoft stock in a note to clients Thursday after meeting with Jonathan Nielson, the company’s vice president of investor relations.
Thill wrote that he is “increasingly confident” that the company is entering a completely viable market expansion move with Microsoft 365, which is built on a user base of approximately 450 million people.
“Management noted that while third-party products (e.g. Claude Cowork) are garnering hype, the majority of AI-driven work continues to occur within MSFT applications, with increased usage of MSFT IP (e.g. Outlook, Teams, Excel, PPT),” Thill wrote.
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