Microsoft’s CEO is defending the company’s decision to charge $30 per month for AI features.
The company has added generative artificial intelligence (AI) to the business-grade versions of its Microsoft 365 service, a move that adds 58% to 83% more per month in cost for users, as the Financial Times (FT) wrote Tuesday (July 18).
In an interview with the news outlet, Microsoft Chief Executive Satya Nadella said the pricing model was part of a massive shift in technology that adds new facets to one of his company’s flagship products.
“I would think of this as the third leg” of Office, he said, following applications such as Word and Excel and cloud services like Teams, added that the new AI features “are the same class of value,” automating routine tasks and boosting productivity.
The FT report noted that Microsoft’s shares reached a record high following the announcement, which came the same day as news that the company had been tapped by Meta to help the social media giant make a commercial version of its AI product available to the public.
Before now, Meta’s open-source large language model, known as LLaMA, had only been available for academic use.
The report notes that Microsoft’s pricing of generative AI has been highly anticipated in the tech world, due to the widespread use of the company’s productivity software.
The price is “at the higher end of what we see for other generative AI services,” Jason Wong, an analyst at Gartner, told the FT.
OpenAI charges $20 a month for the premium version of ChatGPT, while Microsoft charges a $19 monthly fee for a business version of its generative AI coding assistant, GitHub Copilot.
Evidence that GitHub has boosted productivity is “what’s giving us real confidence that a more ‘horizontal’ co-pilot like [Microsoft 365]” will have a big impact on “every [type of] sales, finance, HR or general knowledge work,” Nadella said.
Last month, PYMNTS looked at Microsoft’s years-long work with ChatGPT maker OpenAI, writing that this “unlikely partnership between one of the world’s largest tech giants and a former nonprofit, research-oriented artificial intelligence (AI) company has gone on to revolutionize the business landscape.”
By commercializing AI-powered solutions and integrations, the two companies have turned the emergent sector into one of the hottest tickets in the venture capital world, even though there are reported tensions between the firms.
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