MSFT announced that Microsoft 365 Copilot will be priced at $30 per month. This pricing is based on the company’s initial trial of Copilot with about 600 enterprises, which showed that the tool can significantly improve productivity in the 365 suite of apps.
The stock market reaction to the announcement of Microsoft 365 Copilot was positive, with the stock price rising by 4%. However, this might just be the initial impact, considering the numerous other Microsoft (MSFT) products that can leverage Generative AI to expand MSFT’s TAM. Globally, the company boasts 345 million paid users for Microsoft 365. With the recent announcement of MSFT 365 Copilot priced at $30 per month, Microsoft has effectively added a TAM of $124 billion solely from its Microsoft 365 suite. Early estimates from corporate trial users of MSFT 365 Copilot suggest a productivity improvement of 25-30% for medium-high users of the 365 suite.
While productivity improvements are phenomenal, Enterprises have two major concerns about generative AI applications such as 365 Copilot:
A) Data sharing: When enterprises use these applications, they share sensitive corporate data with a third party. This data could be used by a third party for its own purposes, or it could be sold to others, including competitors.
B) Model training: The data that enterprises share can also be used to train other generative AI models. This could give competitors an advantage, as they would be able to create models that are more accurate and effective than those of the enterprise.
These concerns have led enterprises to be hesitant to adopt generative AI applications. Microsoft 365 Copilot addresses these two major concerns that enterprises have about generative AI applications. Unlike other Generative AI applications, Copilot does not share any data with even Microsoft. This means that enterprises can be confident that their sensitive data will not be shared with others. Consequently, Copilot data cannot be used to train competitive models and enterprises do not have to worry about their competitors gaining an advantage by using their data.
As a result of these features, we believe that Copilot will be widely deployed by enterprises. Copilot has the potential to revolutionize the way that enterprises work, and we believe that enterprises will be eager to adopt this Generative AI app.
We will continue to explore how Microsoft is well-positioned to generate additional Generative AI-related TAM from its other products, such as Azure and Dynamics.
Follow us on Twitter @ketulsakhpara or Telegram at: https://t.me/bayfortcapital