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 Company executive Judson Althoff told employees on Thursday that the company had faced criticism for low adoption rates in recent months for its artificial intelligence add-on Copilot, but the company has further expanded its sales to enterprise customers.
Software stocks, including Microsoft, have fallen this year on concerns that generative AI models could increase competition. Microsoft, whose stock price fell 23% in the first quarter, has ramped up spending on data centers for cloud customers such as OpenAI, and investors are looking for signs that products powered by AI models will boost revenue and profitability.
In January, Microsoft announced that it had acquired 15 million seats of Microsoft 365 Copilot, which is included in subscriptions to its commercial productivity software, which is 3% of the seats in the standard bundle. Microsoft 365 enterprise users have access to the Copilot chat assistant with limited functionality. CEO Satya Nadella told analysts on an earnings call that the company has “multiplied the number of enterprise chat users.”
Microsoft 365 Copilot, which costs $30 per month, will be widely available in 2023, and many analysts have since said it is in the early stages of adoption. Analysts at UBS, which recommends buying Microsoft stock, said they expected more subscribers after the January disclosure.
The sellers were trying to get paid Microsoft 365 Copilot seats and give everyone else access to Copilot Chat, but Microsoft reassessed its strategy after receiving analyst feedback, Althoff, CEO of the company’s commercial business, said in a town hall meeting, according to records seen by CNBC.
Microsoft could not be reached for comment. Bloomberg first reported on this statement.
Althoff said he and Microsoft’s finance chief, Amy Hood, announced bold goals for the fiscal year that ended in March on Tuesday.
“These are things that hit in the third quarter,” Althoff said.
The company has set new ambitious targets for the June quarter.
“Actually, I’m very confident in these numbers,” he said.
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