Microsoft is sure that Copilot will make money in the long term even if it is struggling now

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Key notes

  • Microsoft’s AI assistant, Copilot, faces adoption challenges despite promises of long-term success.
  • The $30 monthly cost and underdeveloped features in some applications like Excel are hurdles.
  • Microsoft emphasizes Copilot’s value in areas like information retrieval and task completion within Teams and Outlook.

Microsoft remains confident in the future of its AI assistant Copilot but admits the technology is facing hurdles with user adoption in the short term. At the recent Morgan Stanley Technology, Media, and Telecom 2024 conference, Jared Spataro, corporate vice president of Modern Work & Business Applications at Microsoft, highlighted both the promise and current limitations of Copilot.

Spataro acknowledged that the $30 per user monthly price tag for Copilot within Microsoft 365 may deter some customers. He added that certain versions, such as Copilot for Excel, are still under development and may not yet justify the cost.

However, Spataro emphasized the value proposition of Copilot in applications like Teams and Outlook, where it excels at “sophisticated information retrieval” and “sophisticated task completion.”

Microsoft is aware that Copilot needs further development in certain areas to meet user expectations. Spataro admitted:

So if you look at Copilot in Excel, like, we all can’t wait until it’s an Excel jockey and can do a lot, but it’s coming. It’s learning and people have very high expectations. Same is true of PowerPoint and it’s going to disappoint there because we’re still learning the commanding surface of Excel.

Microsoft is working closely with customers to demonstrate the tool’s value and justify its pricing. The company cites internal research indicating a 29% productivity boost for users and high satisfaction among those who have used Copilot for two weeks.

Investors were advised to manage their expectations and not expect immediate financial returns, as reported by The Register. Microsoft is currently employing a “land and expand” strategy, offering Copilot programs to entice customers and then aiming to convert them into paying subscribers for more licenses.

While Copilot may not be an instant financial windfall, Microsoft’s long-term vision remains optimistic. The company believes Copilot has the potential to become a crucial tool for users across various applications, streamlining workflows and boosting productivity. What’s your take on it?