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Griffin on Tech: How much will you pay for a copilot?

Peter Griffin, Editor. 21 July 2023, 10:50 am

Whether you are an IT professional, an office worker or a small business owner Microsoft likely looms large in your tech stack.

So there’ll naturally be a lot of interest in the AI-powered features that Microsoft is bringing to its Microsoft 365 suite, including Word, Excel, Outlook, and PowerPoint. At its Inspire conference this week, Microsoft revealed the US pricing for Microsoft 365 Copilot putting its stake in the ground for how much value it thinks the Copilot features bring to Office productivity.

A commercial licence for Microsoft 365 E3, E5, Business Standard and Business Premium customers will cost US$30 a month, on top of the existing licence fee for accessing Microsoft 365. In New Zealand, a Business Standard licence costs $18.90 per month, while a Business Premium licence costs $33.30.

We can anticipate that Copilot here will cost around NZ$30 more per month as well. That’s around a 100% premium. Youch! This is the first big play to monetise subscription-based generative AI in software that most businesses use, so it's a test of the financial viability of the technology - and the appetite for using it.

Big revenue implications for Microsoft

Wall Street analysts are very bullish on Copilot. Mizuho Securities analyst Gregg Moskowitz forecast that the $30 monthly fee for Microsoft Copilot could raise Microsoft’s 2025 revenue by as much as US$9 billion, assuming that 20% of its customers sign-up for the new add-on. Revenue would rise $19 billion if 40% adopt Copilot.

But in an environment of constrained budgets, as businesses grapple with inflation and sagging demand, a $30 increase will be hard to get past those who hold the purse strings in New Zealand organisations. It opens the door for Google and others to offer a cheaper alternative. I'd be willing to pay around $10 extra a month for similar AI features in the Google Workspace account I use - $30 a month would have to deliver radical new features that make me significantly more productive and creative.

Microsoft pointed out this week that Copilot doesn’t focus on a “single capability, like real-time transcription or copywriting”.

“It’s grounded in your business data in the Microsoft Graph — that’s all your emails, calendar, chats, documents and more. So, Copilot can generate an update from the morning’s meetings, emails and chats to send to the team; get you up to speed on project developments from the last week; or create a SWOT analysis from internal files and data from the web.”

SaaS sprawl

Sounds great, but there will need to be some consolidation of application use in organisations to make the case for it. The pandemic saw the typical business collect a sprawl of SaaS-type services. They’ll now be weighing up whether to ditch Otter for transcription, finally move from Zoom to Teams, and replace Canva for creating presentations and social media graphics, in favour of Microsoft Copilot.

Microsoft has a lot to prove around the value proposition for Copilot, and whether it can actually do a fair job of replacing the dedicated apps that are also building AI into their offerings.

Some businesses may instead opt for implementing Bing Chat Enterprise, which draws on the GPT-4 technology underpinning the Bing search engine chat function to allow businesses to securely apply generative AI to their own data. It’s free to use for the time being, but will eventually attract a fee of US$5 per month for US customers.

One area where the Copilot concept has already been well-received is in software development, where Microsoft offers Github CoPilot, ranging in price from around US$4 to $19 a month depending on the licence.

Copilot Chat

At Inspire, Microsoft debuted Copilot Chat, moving beyond getting suggestions for code, to being able to ask the chatbot for assistance throughout a coding job.

“This new evolution turns GitHub Copilot into a context-aware conversational assistant right in the IDE, allowing developers to execute some of the most complex tasks with simple prompts,” Mario Rodriguez, Vice President of Product at GitHub, said.

Software developers I talk to tell me that Github Copilot definitely saves them time and CoPilot Chat should extend those productivity gains. Having invested at least US$!0 billion in Open AI, and billions more in reinventing its Microsoft 365 suite with generative AI, Microsoft now has to show that it can do the same for the software hundreds of millions of people use every day. 


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