The Dynamics of Artificial Intelligence at Microsoft: From Software to People, Platforms and Service-as-Software (SaaS)

Consumers are particularly sensitive to being asked to pay more for artificial intelligence features right now, and nobody likes price increases. If you don’t want to pay more, Microsoft will offer a plan for existing subscribers to remain at the same price point.

Personal Classic and Family Classic are the only two new plans that will be available in the next year. As folks go through the renewal process, they will be available. If they go to cancel they’ll have the opportunity to pick one of these Personal Classic or Family Classic plans.”

These plans will only be available to existing Microsoft 365 subscribers, and new subscribers will get AI-powered Office features by default with the new pricing changes. It seems that the classic plans won’t get any of Microsoft’s new features. “They’ll continue to get security updates and minor feature updates, but any new additional innovations that we deliver in the future won’t be included in those plans,” says Oystryk.

Microsoft makes it easy to turn off Copilot in Office apps if you don’t want the assistant, or you’re a student and your school has policies against using it. There are times when we found users wanting to turn off Copilot. We’ve been working on adding new settings to some of the key applications that will allow people to switch off Copilot.

Combining Microsoft’s AI platform work and its developer division will put AI at the heart of the very tools, platforms, and services that Microsoft builds for customers and its own teams. Nadella even described this platform shift as the ability for Microsoft’s AI agents, which are essentially virtual employees that automate tasks, to eventually be able to build custom applications. It’s a transformation for Microsoft that looks like it will flip the company from software-as-a-service to service-as-software — where once-manual human tasks are automated by software and AI.

Microsoft has spent the past 15 years selling cloud computing to businesses, tempting them to move off traditional software that’s licensed and installed to on-premise servers toward servers hosted by the software giant. Nadella led Microsoft’s transformation to cloud infrastructure and services before becoming CEO, and it’s been hugely successful for the company. Now, Nadella appears to be betting on being able to automate many people-based services and package this up in a software solution Microsoft can sell to businesses.

I spoke to employees in Microsoft’s Development division who were not comfortable with the company’s commitment to Artificial Intelligence at all costs. Microsoft’s new AI engineering group emerged just days after Meta chief Mark Zuckerberg predicted 2025 is going to be a year where “Meta, and the other companies that are working on this, are going to have an AI that can effectively be a mid-level engineer that you have at your company that can write code.” In an interview with Joe Rogan, Zuckerberg said he believes that, over time, a lot of the code in Meta’s apps “will be built by AI engineers instead of people engineers.”

This is where Copilot really transforms from a simple chatbot into a more assistive technology that can analyze Excel data for you, write paragraphs in Word, or generate an entire PowerPoint presentation. A lot of CTOs tell me that businesses have found the most value in Copilot inside Microsoft Teams, where the intelligent assistant is able to pull out important talking points from the meetings to help you catch up on calls that may have been missed.

How will you know if microsoft is rolling out the Notepad app in the next few days? Tune in with TOM@theverge

Microsoft had been testing the new subscription model in several countries, including Australia, New Zealand, and some markets in Asia, and the worldwide launch this week feels like it’s going to be a bigger test.

Thanks for subscribing and reading to the very end. The week was late partly due to Microsofts final announcement of the week on Thursday. Next week’s Notepad will also arrive on Friday, the day after the Xbox Developer Direct event.

If you’ve heard about any of Microsoft’s other secret projects, you can reach me via email at [email protected] or speak to me confidentially on the Signal messaging app, where I’m tomwarren.01. I’m also tomwarren on Telegram, if you’d prefer to chat there.