Microsoft (MSFT, Financial) has announced the integration of AI tools into its Microsoft 365 consumer suite, alongside its first subscription price increase in 12 years. Copilot, an AI assistant, will be added to applications such as Word, Excel, PowerPoint, Outlook, and OneNote, enhancing their utility for consumers. This move aims to increase the appeal of Microsoft 365 subscriptions.
The subscription costs will rise by $3 monthly, reflecting the increased benefits over the last 12 years and supporting future innovations. The new pricing is as follows: Microsoft 365 Personal will increase from $6.99 to $9.99 per month, or from $69.99 to $99.99 annually. Microsoft 365 Family, which supports up to six users, will increase from $9.99 to $12.99 per month, or from $99.99 to $129.99 annually. Current subscribers will see these changes upon renewal.
As of September, Microsoft had 84.4 million consumer Microsoft 365 subscribers, a 10% year-over-year increase. While Microsoft 365, formerly Office 365, is crucial in competing with Google's productivity tools, its revenue contribution from the consumer market remains low. In Microsoft's fiscal Q3 2023, business products and cloud services made up 31% of revenue, while consumer products contributed less than 3%.
The update also provides access to Microsoft Designer, an image-editing tool. Existing subscribers can opt for plans excluding Copilot or AI features, retaining current functionalities but needing the new plans to access certain innovations.
