While some Microsoft solution providers see no issue selling customers on a planned $30 per user per month Microsoft 365 Copilot, others say the vendor needs to better justify the generative artificial intelligence tool’s price tag.
Even before the Redmond, Wash.-based vendor has disclosed a date for when M365 Copilot becomes generally available, some solution providers have started building generative AI practices that promise to increase productivity and save users time through content generation.
“If the strategic digital goal of the company is to increase efficiency, grow the business, improve customer satisfaction while reducing cost across many workloads in their enterprise, then $30 per person could be a bargain depending on what they are able to achieve,” Perry Thompson, managing director of technology strategy at Indianapolis-based Microsoft solution provider Core BTS, told CRN in an interview.
[RELATED: Microsoft Q4 Earnings: ‘Aggressive’ Spending, ‘Gradual’ AI Services Growth]
Microsoft Solution Providers On M365 Copilot
Core BTS is a member of CRN’s 2023 Managed Service Provider 500.
Other solution providers told CRN that partners and Microsoft need to lay out well-structured business cases to motivate executives into investing in M365 Copilot once it’s available, Vineet Arora, chief technology officer of Santa Clara, Calif.-based Microsoft partner WinWire Technologies told CRN in an interview.
WinWire is No. 233 on CRN’s 2023 Solution Provider 500.
“I do feel that $30 per user per month is a little bit on the higher side given that this price will be 80 percent of what an E3 (license costs) and over 50 percent for E5 per user cost,” Arora said. “Emphasizing the robustness of this Copilot technology and offering a phased implementation plan and some sort of try-before-you-buy commit can also help gain CXOs’ trust for this additional investment. All these approaches can then potentially justify the $30 price tag – else it may even hamper adoption of a GenAI feature that I also believe has tremendous potential.”
The $30 per user per month price tag for M365 Copilot is on top of existing M365 payment plans. A recent report from financial services firm Bernstein said that the price uplift ranges from 53 percent to 240 percent. M365 E3 is $36 per user, per month. M365 E5 is $57. M365 Business Standard is $12.50. And Business Premium is $22.
While M365 Copilot’s GA date isn’t yet known, some generative AI offerings such as Microsoft Sales Copilot and Azure OpenAI Service are GA. Other tools such as Bing Chat Enterprise are in preview.
A recent report from Morgan Stanley speculated that M365 Copilot could go GA in spring 2024.
Until users gain more access to generative AI tools, the channel and other investors are left to guess on the ultimate value of these offerings.
Earlier this month, Microsoft CEO Satya Nadella called next-generation AI a partner ecosystem opportunity that could span $4 trillion to $6.5 trillion.
And on this month’s quarterly earnings call from Microsoft, Chief Financial Officer Amy Hood said that the time needed to move copilots through preview and GA, to give them prices and sell them means no meaningful revenue until the second half of Microsoft’s 2024 fiscal year – in the winter.
“Even with strong demand and a leadership position, growth from our AI services will be gradual as Azure AI scales and our Copilots reach general availability dates. … I do think this is really about pacing,” Hood said.
A Morgan Stanley survey suggested “broad initial interest in Generative AI, but little near-term budget impact,” according to a recent report.
Here’s what else solution providers told CRN.
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Wade Tyler Millward is an associate editor covering cloud computing and the channel partner programs of Microsoft, IBM, Red Hat, Oracle, Salesforce, Citrix and other cloud vendors. He can be reached at [email protected].
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