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Microsoft has introduced a monthly fee of $30 for its generative artificial intelligence features in its widely used software suite, Microsoft 365. This pricing decision has exceeded expectations and is expected to significantly impact the average monthly cost of business-grade versions of the service. Microsoft CEO Satya Nadella defended the decision, stating that this represents a new era of technology that will enhance productivity.
The introduction of the new AI features has resulted in a surge in Microsoft shares to a record high. The company unveiled products and services based on generative AI at its annual partner conference, including a business-grade version of a chatbot developed by Microsoft ally OpenAI. The software aims to address concerns of businesses regarding the dissemination of sensitive data through the chatbot.
Microsoft has become the first tech company chosen by Meta to commercially offer the social media company’s family of open-source language models. This marks an important moment and introduces new competition for OpenAI and Google.
The pricing of Microsoft’s generative AI has been highly anticipated, considering the extensive use of its productivity software. Over 382 million people used commercial versions of Office 365 in the latest quarter. Analysts note that the pricing is at the higher end compared to other generative AI services offered by competitors.
Nadella dismissed concerns of a content explosion and decreased productivity resulting from the widespread use of generative AI in business. He instead believes that it will reduce the number of internal emails and foster direct communication between workers and their AI-powered software.
However, the push for generative AI comes at a time of economic uncertainty, which has led to limited tech spending. Additionally, companies like Microsoft have yet to collect sufficient data to prove the increased productivity resulting from AI-enhanced software.
Wong, an analyst at Gartner, predicts that the high cost of the new features will pose a challenge for enterprise buyers, who will need to find room in their budget and justify the additional charge. He also anticipates a slow rollout, initially targeting content-generating departments such as sales and marketing.
The $30 monthly fee will be added to the existing subscriptions for enterprise-grade versions of Microsoft 365. Currently, users of the E3 version pay $36 per month, while users of the E5 version pay $57 per month.
Additional reporting by Hannah Murphy
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