Microsoft may be about to clinch a major customer for its main Copilot AI offering.
In a recent meeting, Chief Commercial Officer Judson Althoff told employees that a customer with more than 1 million Microsoft 365 licenses will be adding Copilot, according to people who attended. These people asked not to be identified discussion private matters.
It’s unclear how far along the discussions are, or whether the deal will change or pan out. The details of how this customer will be charged may also be in flux. Microsoft typically sells per-seat software licenses that cost a certain amount each month, however, the company could include consumption-based pricing this time, which is a new trend in AI.
One way of estimating the potential size of such as deal would be looking at the current sticker price for Copilot, which is $30 per user per month. Adding 1 million licenses for the tool would be worth about $360 million a year for Microsoft. It’s unlikely that such a customer would pay the official sticker price, given the volume of licenses, even if Microsoft charges that way.
Still, adding such a large number of new Copilot users in one go would be a big win for Microsoft as it tries to increase adoption of its AI tools. Microsoft has made massive investments in developing these new offerings, but is still trying to figure out the best way to make money from them. Some customers, competitors, and company insiders have been skeptical of Copilot’s capabilities and the evolving business model. Microsoft declined to comment.
Recently, the company developed a new plan to simplify its many AI offerings by streamlining how the products are pitched to customers, according to internal slides from a recent presentation.
It’s unclear which customer is adding the licenses, but there aren’t many companies with workforces that size.
Amazon has more than a million employees. However, an Amazon employee told BI that it’s unlikely Amazon will use Copilot because it has warned staff in the past about using external AI tools. An Amazon spokesperson declined to comment.
In late 2023, Amazon agreed to spend more than $1 billion over five years on Microsoft 365 services, BI reported previously. That deal included about 550,000 seats of Microsoft’s M365 E5 product for corporate workers and 1 million seats of M365 F5 for frontline staff such as fulfillment center employees, a person familiar with the matter told BI at the time.
Amazon employees will migrate to Microsoft’s cloud applications on a “rolling basis,” according to a recent internal memo previously reported by BI, and includes services such as Outlook, Word, Excel, and PowerPoint. The memo did not mention Copilot.
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