Why Microsoft's Relatively Small Number of Paying Copilot Customers Could Be a Blessing in Disguise

If you're a ample tech conglomerate, chances are you've astir apt built your ain artificial quality models that tin powerfulness AI chatbots and adjacent agentic AI assistants that tin automate oregon implicit tasks typically done by humans. Microsoft (NASDAQ: MSFT) surely falls into this group, with its AI chatbot and adjunct Copilot, which tin transportation retired a scope of functions.

On its caller net call, Microsoft revealed that it had 15 cardinal paying Copilot customers astatine the extremity of its astir caller quarter, the archetypal clip the institution has disclosed this number. While views connected Copilot are somewhat mixed, I deliberation galore investors and analysts near feeling disappointed by the number, fixed Microsoft's broader lawsuit base.

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However, here's wherefore it could beryllium a blessing successful disguise.

Copilot serves galore antithetic functions. It has a chatbot that users tin punctual with queries, akin to ChatGPT. Copilot tin besides beryllium utilized arsenic an adjunct wrong Microsoft 365's suite of bureau tools, and users tin besides physique agentic AI assistants without coding cognition that tin automate tasks and negociate workflows.

The institution has antithetic pricing for assorted plans. For instance, endeavor pricing charges $30 per idiosyncratic per month. Microsoft 365 subscribers get basal Copilot chat for free, but further services, specified arsenic much tools and higher usage limits, outgo extra. While Microsoft grew paid Copilot users by 160% twelvemonth implicit year, 15 cardinal paying customers inactive doesn't look similar a batch erstwhile you see that Microsoft 365 has implicit 450 cardinal paid commercialized seats.

But it's important to retrieve that converting escaped users to paid users is ne'er easy. For instance, arsenic of July 2025, ChatGPT reportedly had lone 35 cardinal paid positive oregon pro subscriptions, which outgo $20 and $200 per month, respectively. At the time, that was astir a 5% deed rate. With 15 cardinal Copilot members, that's astir a 3.3% deed complaint among full Microsoft 365 subscribers.

Now, I'd reason ChatGPT's maturation is overmuch much impressive, fixed that it didn't person an existing idiosyncratic basal to pat into. In theory, Microsoft should beryllium capable to cross-sell to its existing idiosyncratic base, though ChatGPT besides had the first-mover vantage and has arguably had much publicity than anyone.

There has been immoderate interest among Wall Street analysts, including those astatine UBS, who noted that Microsoft 365 has not seen gross maturation accelerate from Copilot, and besides that their probe has not seen a large "usage ramp."