Microsoft tries to sell businesses on Copilot again

A big Copilot overhaul on mobile is also coming soon.

by Tom Warren

Sep 19, 2024, 4:00 PM UTC

The Verge

Tom Warren is a senior editor and author of Notepad, who has been covering all things Microsoft, PC, and tech for over 20 years.

Microsoft has spent billions of dollars on an ambitious bet to refocus the entire company on AI. It wants to eventually “democratize AI, making it accessible and beneficial for everyone,” but first, it’s looking for a return on its huge investments by tempting businesses to pay extra for AI features inside the Microsoft Office tools they use every day.

While some analysts have predicted more than $10 billion in annualized revenue by 2026 for Microsoft 365 Copilot, the response to Microsoft’s $30 per month, per user Copilot subscription has been lukewarm so far. The Information reported earlier this month that analysts estimate between 0.1 percent and 1 percent of the 440 million users of Microsoft 365 are paying extra for the AI features. That means Microsoft still has to convince a lot more businesses to adopt Copilot.

Earlier this week, Microsoft unveiled its latest sales pitch for Microsoft 365 Copilot, including improvements to its AI integration in Office apps and a new Copilot Pages AI playground for businesses. Copilot will now help you organize your Outlook inbox, perform advanced analytics in Excel, and build better PowerPoint decks — all part of a “wave 2” push for the AI assistant.

Microsoft CEO Satya Nadella even called Copilot “the UI for AI,” demonstrating how important the brand and assistant-like functionality is for ushering people toward these AI features. “Copilot is rapidly becoming an organizing layer for work,” said Nadella during a nearly 30-minute stream highlighting Microsoft’s new Copilot features. “We’re just getting started.”

Most of the AI changes inside Office apps feel very incremental, making it indeed seem like early days in the transformation. The software maker also appears to be taking a very Teams-like approach to new features, announcing them weeks or months in advance with vague promises of when they’ll actually be fully available. Some of Microsoft’s new Copilot features are available immediately or in preview, others are coming later this month, and some have to wait until “later this year.” I’ve seen Microsoft promise new Teams features in a similar fashion, followed by long waits for them to ship.

Copilot Pages is rolling out right now, though, adding a more collaborative way to use Copilot for businesses. Pages lets a team work in real time on a project plan, business pitch, meeting notes, or anything else where collaboration is needed. You can bring in Copilot, and the data it creates lives inside Pages, almost like the AI assistant is a virtual colleague. It feels like yet another response to the growing popularity of tools like Notion, especially Notion’s AI product that millions of people are apparently using. Microsoft has also tried its hand at directly competing with Notion with its Loop app recently.

After multiple reports of Microsoft facing struggles to convince businesses to adopt Microsoft 365 Copilot, the company also took the time to let people know that businesses are actually using the AI tools it’s building. “The number of people who use Copilot daily at work has nearly doubled, quarter over quarter,” said Nadella. “Copilot adoption rates are faster than any other new Microsoft 365 suite.”

The problem for Microsoft is convincing more businesses to pay up for an additional subscription, especially when Copilot is buggy and there are issues trusting the output of generative AI models. Businesses can also use the free AI tools Microsoft is increasingly adding to its Microsoft 365 plans that businesses already pay for. Even Copilot Pages will be available to all Microsoft 365 subscribers later this month.

“My sense is that organizations’ ability to absorb the innovation is not nearly as great as the innovation that’s coming their way right now,” said Jared Spataro, corporate vice president of AI at work at Microsoft, in an interview with The Information earlier this month. “And that’s a statement about how budgets work. They can’t even scrape together the right budgets to buy this stuff.”

I’d doubt these latest additions will be enough to make businesses stretch to pay for a Microsoft 365 Copilot subscription, but like Nadella says, the company is still in the early stages of this AI transformation of Office even 18 months on. As models become more powerful and more affordable to run both locally and in the cloud, maybe we’ll see Microsoft make Copilot subscriptions more worthwhile so businesses can justify paying extra for AI features, and hopefully the costs of these subscriptions simply come down over time.

Microsoft also subtly rebranded from “Microsoft Copilot for Microsoft 365” to Microsoft 365 Copilot during its event earlier this week. I was expecting more branding changes, though. Microsoft had originally planned to use “Microsoft 365 Copilot in Word” instead of “Copilot in Word,” but it appears those plans have been walked back after I reported Microsoft was “rebranding Copilot in the most Microsoft way possible” last month. I’m glad someone at Microsoft realized that real humans would just keep saying “Copilot in Word” anyway.

Next up, I’m hoping we’ll hear more about the consumer side of Copilot. Google DeepMind cofounder Mustafa Suleyman has been busy overseeing Microsoft’s development of consumer AI products, including Copilot, Bing, and Edge, since earlier this year. Sources at Microsoft tell me that some interesting changes are coming to the Copilot mobile app, which is about to be updated with a whole new UI that encourages people to ask more questions and generate ideas. More on that soon.

Microsoft definitely needs a bigger effort to convince consumers that Copilot Plus PCs are the future or that AI features inside Windows matter. There is a lot of pushback about generative AI features in Windows, and I’d personally like to see Microsoft focus on features that are more assistive than ones that can generate a crappy-looking AI image. Nadella has called Copilot the new Start button, but the reality is that Microsoft has added a Copilot key to new laptops and made the experience of using the assistant less useful on new Copilot Plus PCs. There are clearly changes ahead for Copilot in Windows, and I’d expect to see Copilot Pro improvements, too. We’re now waiting on Suleyman’s team to detail what’s next.

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Thanks for subscribing and reading to the very end. Are you excited by Microsoft’s AI push? You can reach me via email at notepad@theverge.com.

If you’ve heard about any of Microsoft’s other secret projects, you can also speak to me confidentially on the Signal messaging app, where I’m tomwarren.01. I’m also tomwarren on Telegram, if you’d prefer to chat there.

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