AI Office "First Experience": What can Microsoft Copilot really bring?

In the wave of AI, Microsoft is making a big bet: its Copilot AI assistant is set to revolutionize global offices, injecting new vitality into Office productivity software.

Early users have reported that the Copilot AI assistant has indeed improved their efficiency and saved time. However, this technology is not plug-and-play; it requires data organization and training by enterprises to effectively perform tasks. It may even require hiring consultants for large-scale deployment, which undoubtedly takes time and financial investment.

Analysts point out that Microsoft may not see financial returns until the first half of 2025.

From GitHub to Microsoft 365, more and more companies are adopting Copilot

In the past two years since OpenAI introduced ChatGPT to the world, the tech industry has been rushing to deploy and improve tools based on large language models that support generative chatbots.

Microsoft acquired the relevant technology through a $13 billion investment in OpenAI and is committed to embedding its assistant into company products. Previously, Copilot was already launched on Microsoft's coding platform GitHub, and as of the end of March, this AI programming assistant had 1.8 million paying customers. Microsoft is eager to replicate this success elsewhere.

Last fall, Microsoft widely released the enterprise version of the AI assistant, M365 Copilot, to large customers, and two months later began offering it to small businesses, aiming to automate functions in Outlook, Word, PowerPoint, Teams, and more.

To ensure the effective use of Copilot, Microsoft has created a series of user guides and launched an early adopter program.

Network systems provider Lumen Technologies gained access to the software well before widespread use and has deployed M365 Copilot to thousands of employees. Lumen's marketing director, Ryan Asdourian, stated:

"The assistant saves salespeople over three hours of research time per week, which is expected to translate into an additional $50 million in revenue annually... The impact is significantly better when your employees know how to use it."

For a company of Lumen's scale, the saved funds may be just a drop in the bucket, but Asdourian believes that the expected increase in sales revenue is enough to justify the additional subscription expenses.

Adam Preset, Vice President and Analyst at Gartner, stated, "As far as current AI-based enterprise productivity enhancements go, this is a success story." He mentioned that he has discussed the deployment of Microsoft Copilots with over 1,000 clients.

In June, Ernst & Young announced that they will equip around 100,000 employees with Microsoft's sales software, including a substantial order that includes Copilot

Widespread adoption may still take some time

Early adopters point out that while Copilot excels in information refinement, there are still shortcomings in understanding the context of requests and handling commands involving multiple applications. Widespread adoption may still take some time.

Gartner's Preset also indicates that the biggest obstacle to widespread adoption of Copilot is the cost of correctly inputting information and redesigning data storage or software permissions.

Unlike new features in software updates, successful deployment of Copilot often requires hiring consultants or investing in training resources, resources that could have been spent elsewhere.

There are also a series of obstacles in the enterprise deployment process, such as in Excel, if Copilot cannot understand Python, it cannot become a guide for spreadsheets; and although Copilot can generate a fully functional PowerPoint, outputting this result requires step-by-step input of commands.

Regarding these obstacles, Jared Spataro, Corporate Vice President of Microsoft 365, stated:

Fixes for these issues are already in progress or will be rolled out in future updates.

At the same time, enterprises also need to gradually learn what information should be input into the software. If too little information is input, Copilot is basically a very expensive email drafting tool. If too much information is input, office workers may inadvertently view their colleagues' salaries or pry into projects unrelated to their work.

How far away is profitability?

Jefferies analysts predict that Microsoft may not see financial returns until the first half of 2025.

For enterprise users, the monthly subscription cost for this Copilot doubles to around $60 per user. Microsoft is set to announce its performance next week, and the company has not disclosed how many customers are subscribing to Copilot.

Despite facing many challenges, most industry observers expect Copilot to eventually bring substantial recurring revenue to Microsoft.

UBS analysts earlier this year surveyed large enterprise technology buyers and found that they are testing M365 Copilot with about 14% of employees. If half of these employees eventually become paying customers, it will be a victory for Microsoft