Microsoft (MSFT.US) adjusts AI strategy to address profit concerns, focusing on driving paid conversions for Copilot

Zhitong Finance APP learned that, amid mounting pressure for the commercialization of artificial intelligence, Microsoft (MSFT.US) is adjusting its AI product sales strategy—shifting from previously emphasizing free promotion to focusing on driving paid conversions to address Wall Street’s concerns about its profitability.

According to people familiar with the matter, during an internal meeting, Microsoft management said that in the quarter ended in March of this year, the company had set and basically completed a “fairly aggressive” Copilot sales target. Judson Althoff, head of Microsoft’s commercial business, said the company is refocusing on getting enterprise customers to pay for Copilot rather than treating it as a free add-on feature to office software.

Earlier, in January this year, Microsoft disclosed that its paid users for its core AI office assistant Copilot accounted for only about 3% of its overall customers—below market expectations—triggering concerns among some investors. Affected by this, Microsoft’s stock price has fallen by about 24% year to date, significantly underperforming the broader market. However, after the related strategy adjustment news was released, the company’s stock price rebounded slightly.

Analysts noted that Microsoft previously took a path of “free adoption first, then monetization,” hoping to promote AI tools by leveraging its massive base of office software users. As of the start of this year, the company’s office software user base was about 450 million. But under pressure from investors to achieve faster revenue growth, the company began accelerating the rollout of a paid model.

Currently, Copilot is priced at about $30 per user per month, while Microsoft’s recently launched new office software bundle package is priced at about $99 per user per month, aiming to increase the usage rate of AI tools and enhance monetization capabilities.

In the internal meeting, Althoff said the company has set a higher Copilot paid subscription target for the current quarter and expects it to be significantly higher than the previous level. He also pointed out that competition in the AI market is fierce, and at every customer level, the company faces direct competition from rivals.

In terms of the competitive landscape, Microsoft is engaged in intense competition with AI companies including OpenAI. The company emphasized that its advantage is its ability to integrate multiple leading AI models in a secure environment, providing enterprise customers with more complete solutions.