Microsoft just learned its lesson about overcharging for AI features

2 weeks ago 11

Apple is just getting started with building AI into its various software platforms. However, one of its chief competitors, Microsoft, just learned an important lesson the company could take to heart: most consumers aren’t willing to pay very much for AI features.

Copilot Pro no longer a standalone subscription, now bundled into Microsoft 365

Microsoft recently announced that its Copilot Pro AI features are being baked right into Microsoft 365 (via ZDNet). This will bring Copilot Pro to key apps like Word, Excel, PowerPoint, Outlook, and more.

This is good news for users, but it also represents an admission of a failed AI business strategy.

Why? Because until now, Microsoft had been charging $20/month for Copilot Pro as a 365 add-on.

And apparently, that wasn’t going over very well with users.

From Microsoft’s announcement:

It’s been nine months since we introduced consumers to Copilot in our Microsoft 365 apps via Copilot Pro. We’ve spent that time adding new features, improving performance, and listening carefully to customer feedback. Based on that feedback, we’re making Copilot part of our Microsoft 365 Personal and Family subscriptions.

The company is making slight price bumps to Microsoft 365, as it adds not only Copilot Pro but also the new Microsoft Designer app to its subscription bundle. But the increases are extremely small compared to the amount Microsoft charged previously.

These changes are currently limited to users in Australia, New Zealand, Malaysia, Singapore, Taiwan, and Thailand. But Microsoft undoubtedly plans to roll them out globally before too long, and its experiments in select regions help it avoid strategic missteps in markets like the US.

Lessons for Apple Intelligence

I’m not a Microsoft 365 subscriber, so the changes around Copilot Pro don’t impact me personally. However, I do think Apple could learn a couple lessons from Microsoft’s pricing experiments.

If the company wants to charge for certain Apple Intelligence features in the future, $20/month is undoubtedly too high a price. It might work for ChatGPT Plus, but OpenAI doesn’t seem terribly concerned with getting a ton of subscribers.

If Apple creates premium AI features, it’s likely better off throwing them into Apple One, then bumping the bundle’s price a little. I expect that will go over much better with users.

What do you think of Microsoft’s Copilot Pro changes? Let us know in the comments.