Microsoft adjusts AI strategy to address profit concerns, focusing on driving paid conversion for Copilot

According to Zhitong Finance APP, under the increasing pressure of artificial intelligence commercialization, Microsoft (MSFT.US) is adjusting its AI product sales strategy, shifting from a previous emphasis on free promotion to focusing on driving paid conversions in response to Wall Street's concerns about its profitability.

According to insiders, Microsoft management stated in an internal meeting that the company had set and largely achieved "quite aggressive" sales targets for Copilot in the quarter ending this March. Judson Althoff, head of Microsoft's commercial business, mentioned that the company is refocusing on encouraging enterprise customers to pay for Copilot rather than offering it as a free add-on to office software.

Earlier this year, Microsoft disclosed that only about 3% of its overall customers were paid users of its core AI office assistant, Copilot, a figure that fell short of market expectations and raised concerns among some investors. As a result, Microsoft's stock price has fallen approximately 24% year-to-date, significantly underperforming the market. However, following the news of the strategic adjustment, the company's stock price experienced a slight rebound.

Analysts pointed out that Microsoft previously adopted a "first free popularization, then commercialization" approach, hoping to leverage its large office software user base to promote AI tools. As of the beginning of this year, the company had approximately 450 million office software users. However, under pressure from investors demanding faster revenue growth, the company has begun to accelerate the push for a paid model.

Currently, Copilot is priced at about $30 per user per month, while Microsoft's recently launched new office software bundle is priced at approximately $99 per user per month, aimed at increasing the usage and monetization of AI tools.

Althoff stated in the internal meeting that the company has set higher paid subscription targets for Copilot for the current quarter, expecting them to be significantly above previous levels. He also noted that the current AI market is highly competitive, and the company faces direct competition from rivals at every customer level.

In terms of competitive landscape, Microsoft is engaged in fierce competition with AI companies including OpenAI. The company emphasizes that its advantage lies in its ability to integrate multiple leading AI models in a secure environment, providing enterprise customers with more comprehensive solutions