Microsoft’s Copilot redesign provides an experimental opportunity

Microsoft's redesign of Copilot shows how vendors are still experimenting to figure out how to integrate AI with applications that knowledge workers are using.

Microsoft reintroduced Copilot with three major new capabilities: Home, Code and Autopilot. Home provides both Teams chat and Copilot Cowork together, with the full Word, Excel and PowerPoint apps integrated into the platform, Microsoft said. Code is powered by GitHub Copilot and lets users build custom apps, dashboards and workloads using natural language. Autopilot is a digital co-worker formerly known as Scout. It can set up and manage review processes, build schedules, prep meetings and follow-ups.

The revamp of Copilot, unveiled on Sept. 25, shows how Microsoft is transforming the platform away from being just an AI assistant into a content workspace.

With the change, Microsoft hopes to change how customers use Copilot. According to reports, fewer than 20 million users pay for Copilot out of more than 450 million Microsoft 365 customers. Moreover, Microsoft lacked clear branding for what it wanted Copilot to be, and many enterprises were unsure what they were supposed to use it for.

With the rebrand of Copilot, Microsoft is addressing some of these issues by integrating the Copilot brand with Office and other productivity apps that enterprises use. Microsoft also appears to be trying to capitalize on the popular AI coding domain, much like Anthropic, OpenAI and SpaceX (with the acquisition of Cursor) have done over the past year, while also trying to make Copilot central to how enterprise employees perform their day-to-day jobs.

Vibe writing

“This is Microsoft now bringing in coding agents, AI coding agents right into a knowledge worker’s experience, which is kind of bizarre or will be an unusual thing for CIOs to see,” said Larry Cannell, an analyst at Gartner. “The coding tab and giving access to an AI coding agent is an industry experiment.”

While access to code could work for knowledge workers, what really matters is what is done with the code created, Cannell said. He said that is why Microsoft Copilot Managed Runtime will be key for users, Cannell added. This new platform is a hosting infrastructure that enables code to run safely within an enterprise’s Microsoft 365 environment, according to the tech giant. While IT governs it, Microsoft said it will be easy for users to share an app with teammates, connect it to live data and access it from anywhere.

“It’s not creating the code, it’s maintaining the code and supporting it and keeping it running long term,” Cannell said.

With the runtime, though, Microsoft has an advantage because there is an identifier that helps manage the privacy and permissions settings, Cannell continued.

“It fits into their overall strategy,” he said, referring to Microsoft’s push to integrate the AI tools within regular applications while still allowing each user to work within the right permission settings. “It is still out there ahead of what most knowledge workers are ready for, so that is why it is an industry experiment. But it is one that Microsoft can compete in well.”

Another part of the redesign is that Copilot becomes more central to enterprise knowledge workers. Previously, many users looked to  Microsoft 365 as their main application, with Copilot on the side. However, Copilot is now the main application, with Word and other Office apps on the side.

“You’re almost going to be doing … vibe writing with this,” Cannell said, referring to mostly natural language-based AI coding. “But you are also going to be vibe co-editing with this as well,” he said. Those types of integrations are going to help the users.”

“The real value for most companies that have a Copilot license today is probably going to be the Office integration,” he continued.

Changes in pricing

Microsoft is also making a pricing change with the redesign: features in Copilot in Chat are billed based on usage rather than at a flat rate. Microsoft said that with usage-based billing (UBB), users have full control over choosing models and matching cost to value. Cowork, Code, Autowork and frontier models such as Astra from OpenAI and Fable from Anthropic all run on UBB.

However, what makes Microsoft competitive in pricing is that the vendor is maintaining its tiered licensing model consisting of free Copilot; a $20 per user per month option for Copilot Pro; $21 per user per month plan for Microsoft 365 Copilot Business; and a $30 per user per month deal for Microsoft 365 Copilot Enterprise.

“That's good news that has come out here is that they have not gone entirely to consumption. Cost,” Cannell said. “I don't expect them to do that anytime soon.”

Esther Shittu is an Informa TechTarget news writer and podcast host covering AI technology.