Microsoft Price Increases and AI Strategy
MSFT 365 price increases: When Satya Nadella hops on MSFT’s December quarter EPS call and highlights 365’s strength, what Nadella will be referring to is 365’s price increases. It is not as though MSFT is adding thousands of 365 subs. I’m not sure the company is adding 365 subs on a net basis as I write this. Price increases are the game at MSFT. Here is our earlier article with MSFT’s 365 price increase detail: HERE.
Azure is having success, not Copilot Pro. As it relates to language models, MSFT is not gaining traction with Copilot Pro - MSFT’s Gen AI product. Where MSFT is seeing uptake is on the Azure side as Azure is the preferred delivery mechanism for OpenAI’s APIs.
Relevant thoughts:
How quickly could OpenAI build cloud infrastructure such that it could own a strong competitor to Azure? “Years” is the answer.
How quickly could MSFT develop proprietary language models that are strong comps to OpenAI’s LLMs? “Years” is the answer.
Google (GOOG) owns a cloud service (GCP) and a world class LLM family (Gemini). Perhaps it is time for MSFT to acquire OpenAI and for Amazon (AMZN) to acquire Anthropic in order to better compete with Google’s comprehensive LLM and Cloud offerings.
Related Podcast: HERE