Microsoft has reportedly had a hard time convincing corporate customers to pay premium prices for its enterprise AI products, particularly as their employees prefer ChatGPT or Gemini. The Information reported in December that Microsoft quietly slashed sales targets for some of those products — a report that Microsoft denied. Nevertheless, by Microsoft’s own admission, just 3.3% of its vast Microsoft 365 user base has a paid Microsoft 365 Copilot license.
Customers’ reluctance to pay top dollar for Microsoft’s AI tools likely reflects the pace at which new AI alternatives have raced to market. With so many services to choose between and the industry at such a febrile and inventive stage, customers want to dance between the options as they seek those they prefer, rather than being in thrall to one provider — while recent Microsoft 365 price increases show the extent to which sector dominance can leave customers exposed to price hikes. Now bitten, customers are shy to commit too much to one provider.
Spoiled for choice
Why would they want to, given that there are so many alternatives to choose from? AI services are like streaming services, except you don’t need to subscribe to them all: they pretty much all offer the same thing, though some are better for some tasks.
