Microsoft to charge enterprise users a premium for using generative AI features
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The days of the free lunch are about to come to an end for enterprise users of Microsoft's Office 365. In a blog post, the company has announced a monthly fee per user for using artificial intelligence (AI)-powered features, in addition to what companies already pay for using productivity software such as Office, Teams, and other apps.
Microsoft was quick to harp on the hype generated by OpenAI's conversational chatbot ChatGPT and incorporated the large language model into its products. Over the past few months, users can access AI-powered features right inside their web browsers and search engines, if they prefer to go with Microsoft's offerings and not Google's.
Microsoft's productivity software, such as Office apps, Teams, and storage solutions like OneDrive, ha seen an infusion of AI features to improve user experience and was rolled out as part of the Microsoft 365 Copilot Early Access Program. Businesses such as KPMG, Lumen, and Emirates NBD are among the 600 enterprises using them, and now Microsoft has revealed the price to continue doing so.
Microsoft 365 Copilot charges
The AI-powered features under Microsoft 365 Copilot will soon be available only to enterprise customers who pay $30 per user monthly. In contrast, Microsoft's current 365 plans are tiered into four layers, beginning at $12.50 per user per month. This could nearly triple the costs for businesses looking to continue to use the features.
A Microsoft 365 E3 customer currently pays $36 per user per month, while the E5 version costs $57 per user. Still, a $30 additional monthly user fee would significantly add to business costs when a downturn is expected in the global economy.
Microsoft has not announced a date for these charges to apply, but billing could start as soon as the feature becomes generally available.
Is the price too steep?
Microsoft's proposed prices are well above the $20 that OpenAI charges for the premium version of GPT or even what it charges for a similar Copilot offering on GitHub.
According to The Verge, these prices are Microsoft's way to recoup its heavy investments in OpenAI and build infrastructure to power the AI behind the services. NVIDIA's GPUs are not bought off the shelf, and Interesting Engineering has previously reported how Microsoft has spent a fortune to be the first mover in this space.
CEO Satya Nadella told The Financial Times that Copilot could "automate routine work and increase productivity", which is expected to generate more business revenues. Its experience in rolling out Copilot for GitHub gives it the confidence that AI in Microsoft 365 will have a much more significant impact across departments.
The company's announcement could also set the tone for pricing from other tech businesses such as Google, Salesforce, and Zoom, which incorporate AI into their offerings but have also seen revenues dip after the boom during the pandemic. AI rollout promises a new boost to income, and Big Tech will not let that slip away.
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