Microsoft is struggling to turn its strong enterprise software presence into widespread use of its AI chatbot, Copilot.
Despite CEO Satya Nadella’s announcement that over 150 million users engage with Copilot for tasks like productivity and coding, many IT buyers expressed hesitation at a recent conference. Some companies are even considering reducing or dropping Copilot licences, questioning its value.
Launched around two years ago at $30 per user per month, Copilot integrates with Microsoft’s productivity apps to answer questions, summarise emails, and create presentations. While Microsoft’s Azure cloud platform has grown robustly and supports OpenAI, selling AI assistants involves a different challenge: businesses want clear productivity gains to justify costs.
Competition in AI assistants is fierce, with Google, Adobe, Salesforce, and others targeting the same enterprise clients. Google’s Gemini 3 AI model has gained momentum, even prompting some companies to switch back to Google for better AI. Startups also provide specialised AI tools that some companies prefer over Microsoft’s standard offerings.
Microsoft has offered discounts up to 50% but interest appears to be falling, leading it to introduce a cheaper $21 per user business tier for smaller organisations. However, adoption remains slow, with Gartner reporting many CIOs concerned about security and access risks.
Nevertheless, Microsoft enjoys an advantage due to its vast user base. By early 2024, over 60% of Fortune 500 companies had adopted Copilot, with 78% of users reporting 10-15% productivity gains and reduced burnout. Companies like Land O’Lakes use Copilot widely, combining it with Azure and custom AI applications, while Pearson has integrated it across all its 18,000 employees.
Partnerships such as with Anthropic expand Microsoft’s AI model offerings, improving enterprise capabilities. Internally, Microsoft has seen daily Copilot usage rise from 20% to around 70% among its sales and support teams, indicating growing familiarity and habitual use.
While challenges and competition remain, Microsoft’s dominant position and continuous innovation give it a strong foundation to drive broader acceptance of AI chatbots in large organisations, provided it can demonstrate clear returns and manage security concerns.