Microsoft has 450m Office users. So why is fewer than 7% paying for Copilot?

• Microsoft has more than 450m commercial Office 365 seats.
• Fewer than 7 per cent have a Copilot licence.
• The new Copilot combines coding, productivity and AI agents.

Microsoft has a huge audience for its workplace AI tools. The problem is getting that audience to pay for them.

More than 450 million commercial Office 365 seats are in use worldwide, but fewer than 7 per cent have licences for Microsoft 365 Copilot, according to the company’s latest figures.

That is the challenge behind Microsoft's latest attempt to reshape Copilot, bringing coding and more advanced AI agent capabilities into the same app as its productivity tools.

The updated Copilot app, introduced on Friday, is designed to handle everything from ordinary workplace requests to more complex assignments and software development.

Microsoft currently charges businesses $30 per user per month for Microsoft 365 Copilot. But the new approach will also allow customers to pay based on usage for three parts of the platform: Cowork, Code and Autopilot.

From answering questions to doing the work

The biggest change is that Copilot is no longer being positioned simply as an AI assistant that generates text or answers questions.

The new Code feature uses the technology behind GitHub Copilot to help people create software projects, including users without traditional programming backgrounds.

Autopilot, meanwhile, allows users to create custom AI agents that can take on assignments and communicate through Microsoft products such as Teams and Outlook.

The company is also introducing Cowork, designed for more complex productivity tasks.

David McLaren, enterprise data and AI leader at consulting firm GHD, said his company has given Microsoft Copilot to around 12,000 employees, with about 200 already experimenting with Copilot Cowork.

He said the new app was appealing because it made GitHub-style capabilities easier for more employees to use.

That broader functionality is important because Microsoft is facing competition from AI companies that are increasingly packaging multiple capabilities into a single product.

Anthropic has gained traction in enterprise AI, while OpenAI and other providers have pushed tools that can handle increasingly complex tasks. Meta has also entered the agent market with its Muse app.

Microsoft's own executives have acknowledged that some of the new functionality represents a catch-up effort.

Jacob Andreou, Microsoft's executive vice president for Copilot, said AI agents have traditionally been difficult to bring into businesses. He also acknowledged that adding coding capabilities to the main Copilot experience was an example of Microsoft playing catch-up.

Microsoft still needs its rivals

There is another interesting element to Microsoft's strategy.

Despite developing its own AI models, the company is continuing to rely on leading models from OpenAI and Anthropic.

Users of the new coding product can manually select which model they want to use, including a more cost-efficient Microsoft model.

The choice is more limited in the Home section, where users can ask Copilot to perform productivity tasks such as generating reports or making scheduling changes. No Microsoft model is currently available there.

The strategy reflects how quickly the enterprise AI market is evolving. Rather than betting entirely on one model, Microsoft is positioning Copilot as a platform where businesses can access different AI capabilities.

That also explains the company's shift towards usage-based pricing for some of the new features.

Instead of asking every customer to pay a flat fee for the full suite, Microsoft can charge according to how much customers actually use more advanced AI functions.

The company hopes that makes Copilot more useful to businesses while giving customers greater flexibility over how they deploy it.

Microsoft's Frontier customers will receive access to the Home and Code tabs in the coming weeks, while Autopilot is expected to enter private preview by the end of September.

For Microsoft, the bigger test is not whether Copilot can do more. It is whether those additional capabilities can persuade a much larger share of its existing Office 365 customer base to actually use and pay for AI.