Microsoft reports significant traction with its generative AI-based Copilot software among enterprise customers. This indicates that its AI investments are beginning to yield results. Jared Spataro, Microsoft’s Corporate Vice President of AI at Work, said, “Last quarter, the number of Copilot for [Microsoft 365] customers increased by more than 60%, which is great because we were already off to the races with that.
Daily users more than doubled, and we love that trend. When we start to see that type of intensity of usage doubling, it means that you’re really onto something.”
Microsoft reported revenue for its Intelligent Cloud segment, which includes Azure services, of $28.5 billion. This was just short of Wall Street’s expectation of $28.7 billion.
Despite a 19% year-over-year revenue increase, investors reacted negatively. This sent shares lower following the earnings announcement. Spataro noted substantial growth in large enterprise subscriptions.
The number of 10,000-seat subscriptions for Copilot for Microsoft 365 doubled among big-name organizations. These include Capital Group, Disney, Dow, and Novartis. Microsoft did not provide exact numbers on daily or monthly active users or the total Copilot licenses sold.
Key to Copilot’s success is its ability to save enterprise users time. For instance, networking and cybersecurity firm Lumen’s employees are saving four hours per week using Copilot. This translates to an estimated $50 million in annual savings.
Copilot gains traction among enterprises
Cognizant reported a 10% reduction in time spent on emails and a 27% increase in meetings ending early. Despite the positive feedback, not all has been smooth for Microsoft.
In February, some users reported issues with Copilot’s meeting scheduling and summarizing features. An executive at a pharmaceutical company even canceled an ordered upgrade. They cited mismatched pricing and value.
However, Microsoft’s internal six-month study of 60 companies found a 50% decrease in email usage thanks to Copilot. A survey of 1,300 Copilot users showed that it typically takes companies 11 weeks to see a time savings of at least 11 minutes per day for Copilot habits to stick long term. “This is a moment of reprogramming how work gets done,” said Spataro.
“It is not just an incremental change.”
In a Morgan Stanley research note, 94% of surveyed chief information officers expressed plans to use Microsoft’s generative AI services within the next 12 months. This is a significant increase from 47% in the second quarter of 2023. Microsoft faces competition from Google, which is offering its Gemini for Workspace to customers, and Salesforce, which is also pushing its own generative AI software.
Microsoft is rolling out Copilot-based updates for Windows, including the Recall feature. This was initially pulled due to security concerns. As the generative AI revolution is still nascent, Microsoft must continue expanding its Copilot user base to maintain its leadership in enterprise software.
With close investor scrutiny on its AI advances, consistent delivery on AI goals is pivotal for Microsoft’s success in this new computing era.
