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Why pay $30 extra a month just for Copilot?

Microsoft has surprised by putting a high extra price on their upcoming AI features in Microsoft 365. To get these innovations, add another $30 a month to the cost, which in many cases doubles the price of Microsoft 365.

Copilot is Microsoft’s name for their AI features that can write, summarise and design parts of Word, Excel, PowerPoint and Outlook that us humans used to do ourselves.

$30 per user each month is a lot, available to Microsoft 365 E3, E5, Business Standard and Business Premium users sometime later this year.  Most commentators were guessing $10 or $15 at most.

For comparison a Business Standard plan is just $12.50 each user/month, to get Copilot will more than triple the price to $42.50.  Business Standard is the cheapest plan that’ll support the Copilot addon. (Business Basic doesn’t include the desktop Office apps).

At the other end, Microsoft 365 E5 Enterprise plan is already $57 per user/month plus another $30 per user for Copilot.  Many big organizations manage to negotiate lower prices, but even so, they are facing a 50% cost increase.

Any way you look at it, $30 a month is a severe price increase for an untested and perhaps overhyped technology.

Copilot for organizations makes a lot of sense because it can use relevant and current data. The system Microsoft is building will use all the data the company has stored in their cloud (internal documents, sheets, slides, email etc) to make AI responses.  Redmond is at pains to reassure customers that their data is secure within their organization.

For comparison, the generally accessible AI services like Bing and ChatGPT rely on public data on the web which isn’t always reliable and not up-to-date.  ChatGPT, for example, is mostly based on data up to September 2021.

We think there’s a place for AI and Copilot, no doubt. But it’s still early days and the daily reality of AI responses from the likes of Bing don’t come near Microsoft’s overwrought promises.

What’s going on?

It’s tempting to think that Microsoft is carried away with their own hype.  That’s possible but not likely.  For all of Redmond’s outward bravado, internally the company is more realistic.

There are two main possibilities for the $30 price tag.

Microsoft really does think Copilot is great and organizations will fall over themselves to pay extra.  The argument is that Copilot will let companies cut staff ( sorry “make workers more efficient” and “reorganize internal systems”) to justify the high price.

Trying to reduce early demand for Copilot.  AI systems need a lot of server resources to cope with the many complex requests.  Microsoft has to drastically increase the hardware and connections in over 50 data centers across the globe.  It’s possible the high price is a strategy to discourage too much early adoption that would overwhelm their systems.

Hyperventilated Marketing

Naturally the Microsoft Marketing Machine™ is almost hyperventilating with faux excitement about Copilot.

Microsoft 365 Copilot: Thousands of skills. All your data. Infinite possibilities.

Microsoft 365 Copilot is incredible on its own, and it’s also integrated into the apps millions of people use every day. Copilot jump-starts your creativity in Word, analyzes data in Excel, designs presentations in PowerPoint, triages your Outlook inbox, summarizes meetings in Teams – whether you attended or not – and so much more.”

FIRST LOOK: Excel’s six new AI Copilot functions
Get Copilot AI in Windows now, but don’t expect too much
Use Microsoft’s AI magic now – don’t wait for Copilot

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