Microsoft will charge a premium for Generative AI features

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Microsoft will charge $30 per month for generative artificial intelligence features in its widely-used productivity software, putting a higher premium than expected on a technology that many in the industry expect will generate strong revenue. will increase.

For customers who sign up, the new features are set to add a steep 53-83 percent increase to the average monthly cost of business-grade versions of the Microsoft 365 service, a suite of software formerly known as Office 365. Which is used by millions of workers.

Microsoft Chief Executive Satya Nadella defended the pricing decision as part of a generational change in technology that would bring a new dimension to one of the software company’s core products.

“I would consider it the third phase of Office,” he said, after applications like Word and Excel and cloud services like Teams. Speaking in an interview with the Financial Times, he claimed that the new AI features are “in the same class of value”, automating routine work and increasing productivity.

The pricing news comes 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 in its Bing search engine this year. The new chatbot is aimed at businesses that are concerned that their employees are secretly feeding sensitive corporate data to ChatGPT, which is run by close Microsoft affiliate OpenAI, despite efforts by many employers to ban its use. Is.

Microsoft has become the first tech company selected by META to provide a commercial version of the social media company’s family of open-source large language models, known as LLAMA. META has so far only licensed the technology for research use.

The commercial launch of the well-received software has been hailed as a pivotal moment, bringing with it a new form of competition for OpenAI and Google.

Microsoft’s pricing of generic AI is highly anticipated in the tech world, given the widespread use of the company’s productivity software. The company said more than 382 million people used business versions of Office 365 software in the latest quarter.

“The price is higher than what we see for other generic AI services,” said Jason Wong, an analyst at Gartner. OpenAI charges $20 per month for the premium version of ChatGPT, while the monthly fee for the commercial version of Microsoft’s generative AI coding assistant, GitHub Copilot, is $19.

There’s evidence that the GitHub service has made coders more productive, “which is giving us real confidence that a more ‘horizontal’ co-pilot like (Microsoft 365)” can be used in every (type) of sales, finance, HR or But will have a big impact. Common sense works”, Nadella said.

He denied that the widespread use of technology in business would lead to a “content explosion” that would leave workers inundated with AI-generated emails and documents, potentially making them less productive. Instead, he predicted it would reduce the number of internal emails produced, as employees seek answers directly from their AI-powered software rather than bombarding colleagues with questions.

“Every time you get a spreadsheet you essentially get a junior analyst with whom you can ask questions,” Nadella said. “It’s like having an analyst on demand.”

However, the industry’s rush to capitalize on generic AI comes at a time when economic uncertainty has prompted many customers to limit their tech spending, and before companies like Microsoft are gathering data to prove it. AI-enhanced software has enabled workers to be more productive.

The new features, which Microsoft calls Copilot, will be “a challenge for enterprise buyers,” Wong said. “They need to find the budget for this add-on product. And then they need to justify the extra charge.

The high cost is likely to contribute to the “slow” rollout, he said, initially limiting its use to workers who “generate a lot of content – ​​sales, marketing, customer service”, as well as those who “need a lot.” is “communicating and collaborating”.

Companies using enterprise-grade editions of Microsoft 365 currently pay $36 per month for each user of the E3 edition and $57 per month for the E5 edition. The company said the additional $30 per month would apply when the CoPilot feature, which is currently in testing with customers, becomes generally available.

Additional reporting by Hannah Murphy