Microsoft Corp. reported internal progress toward monetizing its Copilot workplace AI after altering how it sells the product, company executives said.
Judson Althoff, chief executive officer of Microsoft’s commercial business, told employees during an internal meeting Thursday that the firm had set and effectively achieved "some pretty big audacious goals" for Copilot sales in the fiscal third quarter, according to people familiar with the remarks. The company’s fiscal quarter concluded earlier this week.
In January Microsoft disclosed that only about 3% of its customers were paying for Copilot. The company had previously prioritized driving widespread, free adoption of Copilot among its existing office-software base while also offering paid subscriptions. Executives said that approach has shifted.
Facing pressure from Wall Street analysts to increase the share of customers who pay for the assistant, Microsoft changed tactics to emphasize converting corporate clients to paid Copilot subscriptions. Althoff said the company set goals for paid Copilot subscriptions in the current quarter that will be "materially ahead" of the figure reported in January, according to people familiar with his comments.
The account of the strategy shift and the reported sales progress comes from company executives who described the internal update. Those executives said Microsoft altered its sales emphasis from free bundling toward subscription sales in direct response to feedback from analysts seeking greater paid adoption.
Clear summary
Microsoft shifted its Copilot sales strategy away from prioritizing free distribution and toward driving paid subscriptions. Company executives say the firm set and met ambitious sales targets in the quarter ended in March and expects paid-subscription metrics to be notably higher in the current quarter than the roughly 3% paying-customer level disclosed in January.
Key points
- Microsoft moved from free bundling toward a paid-subscription focus for Copilot.
- Executives reported achieving "some pretty big audacious goals" for Copilot sales in the fiscal third quarter.
- Paid Copilot subscriptions are expected to be "materially ahead" of the roughly 3% paying-customer rate disclosed in January.
Risks and uncertainties
- The company disclosed in January that only about 3% of its customers were paying for Copilot, indicating potential challenges in scaling paid adoption.
- The reported shift in sales approach responds to analyst feedback, which introduces uncertainty about how quickly corporate customers will convert to paid subscriptions.
- Statements about achieving internal targets and expectations for the current quarter are based on executive remarks and have not been supplemented here with independently published figures.