For the first time ever, Microsoft(NASDAQ:MSFT) has revealed key metrics for its Copilot artificial intelligence (AI) chatbot and assistant, a key part of the conglomerate’s artificial intelligence strategy that is seen in part as a competitor to other chatbots such as OpenAI’s ChatGPT. Investors have long been trying to understand how Copilot will be received by customers and whether it can truly become one of the major artificial intelligence chatbots. The disclosure metrics surrounding Copilot are alarming in many ways.
As described on Microsoft’s website, “Copilot is an AI-powered conversational assistant that helps improve productivity and streamline workflows by providing contextual help, automating daily tasks, and analyzing data.” Examples of tasks Copilot can perform include drafting presentations and reports by generating content and suggesting edits and revisions, analyzing data and creating charts, summarizing email chains, and drafting emails.
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Different Microsoft Copilot plans include different Copilot assistants and features. The free version of Copilot gives users access to Microsoft’s AI chatbot and the ability to generate AI-powered images. Microsoft 365 Personal provides users with higher usage limits on AI capabilities in the Microsoft 365 suite of office products and Copilot apps, advanced security, and up to 1 TB of cloud storage for files and photos.
Microsoft 365 Premium plans offer higher limits and more app usage than Microsoft 365 Personal. Copilot Studio enables users to build, test, and publish agents while granting access to generative AI plug-ins to enhance those agents.
During Microsoft’s most recent earnings call, management said that Microsoft 365 Copilot has 15 million paid Copilot seats, up 160% year-over-year. Businesses can pay $30 per user per month for Microsoft 365 Copilot.
Additionally, Copilot appears to be resonating deeply with some enterprises, as some Microsoft customers now have over 35,000 seats using Copilot, including Feser, INGUniversity of Kentucky, University of Manchester, and the U.S. Department of the Interior.
Management also said Copilot’s average number of conversations per user doubled year over year, and daily active users increased tenfold. Copilot also has a checkout feature, and Microsoft has partnered with payment and e-commerce sites such as PayPal, Shoppingand Stripe, so users can purchase directly from Copilot. Finally, Microsoft’s GitHub Copilot for developers has 4.7 million paid subscribers, a year-on-year increase of 75%.
While growth may be strong, Copilot’s adoption rate among Microsoft’s total user base remains low. The 15 million paid Microsoft 365 Copilot users represent only about 3.3% of the company’s 450 million total 365 subscribers. The 4.7 million paid GitHub Copilot subscribers only account for about 3.1% of GitHub’s total 150 million registered developers.
Now, adoption may of course take more time. However, Microsoft has invested hundreds of billions of dollars in AI-related infrastructure and services, and it seems unable to become a true competitor to some of the larger chatbots (such as OpenAI’s ChatGPT).
“M365 rpm growth has not accelerated due to Copilot, many checks of Copilot do not show strong usage growth (we plan to update our own checks in case we miss usage growth), and the market for this model appears crowded and capital intensive,” UBS analyst Karl Keirstead wrote in a research note after Microsoft’s latest earnings report. “We think Microsoft needs to ‘prove’ these are good investments.”
The market clearly wants more. If you think about the average person, how many people know about ChatGPT, how many people know about Copilot? Clearly, there is still a lot of work to be done to increase Copilot adoption. I still think Microsoft could be one of the main beneficiaries of AI adoption, especially in its Azure and cloud services businesses, but Copilot currently leaves a lot to be desired.
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Microsoft has finally revealed how many paying Copilot customers it has. The answer is shocking for more reasons than one. Originally posted by The Motley Fool
