FILE PHOTO: Judson Althoff, CEO of Microsoft’s commercial business, appears during an interview in San Francisco on Jan. 27, 2017.
David Paul Morris | Bloomberg | Getty Images
Microsoft is adding artificial intelligence to its Office productivity suite and charging 65% more for the upgraded offering, as the company tries to lure enterprise users to its Copilot AI add-on.
The new top-of-the-line bundle for corporate workers, Microsoft 365 E7, will cost $99 per user, per month, compared with $60 for the E5 subscription, after upcoming price hikes. E7 includes the $30 Copilot, $12 Entra identity tools and the new $15 Agent 365 product for managing companies’ AI agents.
Microsoft has sunk more than $100 billion in the past year into data center infrastructure, including Nvidia chips that can power AI models. Selling AI offerings is one way to show a return on that investment.
For customers that pay for E7 or the stand-alone Copilot, Microsoft is introducing Copilot Cowork, stemming from a partnership with AI model developer Anthropic. It will handle tasks with multiple steps, such as sending regularly scheduled emails to colleagues and preparing for meetings with documents and internal calls. Copilot Cowork will become available as a research preview this month to clients enrolled in Microsoft’s Frontier program, which provides early access to AI features.
The launch comes after updates to Anthropic’s Claude Cowork service made some investors worry about AI models posing competitive threats to mature software companies.
The Copilot upgrades and the launch of the E7 tier on May 1 should both lead to further adoption of Copilot, Judson Althoff, CEO of Microsoft’s commercial business, told CNBC in an interview. The existence of E7 should also inspire organizations to upgrade more workers to E5, he said.
“The majority of our base is E5 now, right?” he said. “And then we’re going through healthy renewal cycles on E5 right now. But E5 was created pre the agentic world.”
Growing productivity revenue remains a high priority for Microsoft, alongside expanding its cloud business.
Microsoft 365 commercial products and cloud services represented 30% of the company’s total revenue in the December quarter. But Microsoft has reported slowing growth in the number of people for whom commercial clients are buying subscriptions, with 365 commercial seats up 6% in the latest quarter.
Increasingly, Microsoft is picking up more revenue from each commercial user, including with Copilot.
In January, Microsoft CEO Satya Nadella said the company had 15 million Microsoft 365 Copilot paid seats, or 3% of the seats for commercial Microsoft 365 subscriptions.
For Alastair Woolcock, an analyst at technology industry researcher Gartner, the inclusion of identity, management and security software in E7 is critical for helping large companies ensure that they can safely distribute modern AI tools and increase productivity.
“Nobody wants to buy a dozen different $20 a month products, right?” he said.
In a note to clients on Thursday, Jefferies analysts led by Brent Thill reiterated the firm’s buy rating on Microsoft stock after meeting with the company’s vice president of investor relations, Jonathan Neilson.
Thill wrote that the company “emphasized growing conviction” that it is coming into a total addressable market-expansive movement in Microsoft 365, built on its roughly 450 million user base.
“Management noted that while third‑party offerings (e.g., Claude Cowork) are garnering hype, the majority of AI‑driven work continues to occur inside MSFT applications – creating incremental usage of MSFT IP (Outlook, Teams, Excel, PPT etc.),” Thill wrote.
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