When Microsoft held its recent earnings call, CEO Satya Nadella proudly emphasized the company’s aggressive push into artificial intelligence. He highlighted the spectacular rise of Microsoft Copilot—its AI assistant integrated across productivity, cybersecurity, development, and business workflows. According to Nadella, more than 150 million people are now using some form of Copilot, a remarkable leap for a product that only launched commercially two years ago.
But while Microsoft paints a picture of unstoppable momentum, conversations on the ground reveal a more complicated reality. At the company’s Ignite conference in San Francisco, IT buyers and technology consultants expressed a mix of excitement, hesitation, and frustration about the product. Their feedback shows that enterprise adoption is not as effortless as Microsoft’s headlines might suggest.
A Gap Between Marketing and Reality
Adam Mansfield, an analyst at consulting firm UpperEdge who negotiates Microsoft contracts for large companies, illustrated the tension perfectly. He said many clients are looking to reduce or even eliminate their Copilot licenses.
“I know plenty of customers who say, ‘I want 300 licenses to go to zero,’” Mansfield explained. “Some tell me flat out, ‘I don’t even want it.’”
This doesn’t mean Copilot is a failure, but it does highlight a crucial challenge: companies need a clear return on investment. At $30 per user per month for the original Microsoft 365 Copilot subscription, organizations must be sure their employees will gain measurable value — and many say that hasn’t happened yet.
A Complex Product With High Expectations
Microsoft originally launched Copilot as an add-on for Microsoft 365 applications such as Outlook, Teams, Word, and Excel. The AI can summarize long email threads, extract action items from meetings, generate PowerPoint slides, and search corporate data for answers.
On paper, these features look transformative. But in practice, organizations must overcome several hurdles:
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Their data must be clean and properly structured.
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Employees must change their work habits.
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IT teams must configure tools, apply access rules, and train users.
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Leadership must justify the recurring cost.
In other words, the technology may be advanced, but successful usage still depends on human processes.
Microsoft’s Broader AI Play
Copilot is only one piece of Microsoft’s massive AI strategy. The company has invested heavily in Azure, its cloud platform, which powers AI workloads for businesses around the world. Its partnership with OpenAI has also become one of the most influential alliances in the tech industry. Microsoft has provided over $13 billion in support, and in October OpenAI announced a $250 billion multiyear cloud commitment, ensuring Azure remains its primary infrastructure partner.
These investments seem to be paying off: Azure posted 40% revenue growth in the latest quarter, outpacing Amazon Web Services and Google Cloud. But selling AI tools directly to end users is different from selling raw compute power. With Copilot, Microsoft is no longer just selling infrastructure—it’s selling a productivity tool that must prove its worth to every employee who touches it.
Competition Intensifies—Especially From Google
While Microsoft continues to expand its AI ecosystem, competitors are moving quickly. Google recently introduced Gemini 3, a major upgrade to its multimodal AI system. Early tests suggest it can answer more complex questions and perform a wider range of tasks with higher accuracy.
Julian Hamood, the founder of Microsoft partner TrustedTech, shared one striking example.
“A massive 16,000-employee company moved all their email back to Google because they wanted deeper integration with Gemini,” he said.
That’s a significant shift—and a sign that Microsoft cannot take its dominance in enterprise software for granted.
Customers Still Have Concerns About Value
One major friction point is pricing. Hamood noted that Microsoft has previously offered 50% discounts on Copilot to help companies test the tool. But he says the company is now becoming stricter about discounting, hoping to transition Copilot into a standard, full-price product.
Tim Crawford, a strategic adviser to CIOs, explained the customer mindset perfectly:
“Am I getting $30 of value per user per month? The short answer is no. And that’s slowing adoption.”
To address this, Microsoft announced a new $21 Copilot Business plan, launching in December, aimed at smaller organizations with up to 300 employees.
Signs of Momentum Despite the Pushback
Despite mixed feedback, Microsoft still holds powerful advantages. Nadella said more than 90% of the Fortune 500 now use some version of Microsoft 365 Copilot. While he didn’t specify how many seats each company purchased, he highlighted several large enterprises and a U.K. government department that each bought more than 15,000 licenses last quarter.
Some companies are going all-in.
Land O’Lakes, the major agriculture and food company, expanded Copilot from limited use to its entire base of nearly 5,000 knowledge workers. Its technology chief, Teddy Bekele, said Copilot (along with GitHub Copilot for software development) has helped the company streamline operations and cut reliance on off-the-shelf software.
Land O’Lakes is even experimenting with an agronomy agent called Oz, built using Microsoft Foundry tools. The agent assists retail agronomists in advising farmers and could replace older applications entirely.
Microsoft’s Deepening AI Ecosystem
At Ignite, Microsoft also revealed new model partnerships. Anthropic is bringing several Claude models—including Claude Haiku 4.5, Claude Opus 4.1, and Claude Sonnet 4.5—to Microsoft Foundry. Anthropic has committed $30 billion in Azure spending.
This strengthens Microsoft’s ability to offer businesses multiple AI model choices under one ecosystem, reducing the appeal of switching to competitors.
Dave Treat, the technology chief at Pearson, said this model diversity was a “big improvement.” Pearson recently activated Microsoft 365 Copilot for all 18,000 employees and introduced Communication Coach, a tool that uses OpenAI’s GPT-4o mini model to help staff refine their communication and presentation skills.
“Microsoft is dominant in the enterprise,” Treat said. “Choosing its AI platform was the natural choice.”
Microsoft’s Biggest Challenge: Proving Copilot’s Everyday Value
But even with more models, more partners, and more enterprise wins, Microsoft must address a deeper issue: daily engagement.
Pam Maynard, Microsoft’s Chief AI Transformation Officer, shared important internal data:
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A year ago, only 20% of Microsoft’s customer-facing teams used Copilot daily.
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Today, that number is 70%.
The goal is now to convert the remaining users into daily active users.
“It’s all part of change management,” Maynard said. “We just need to help people form new habits.”
A Market Still in Transition
Adam Mansfield believes competition is sharper than ever. Companies are seriously evaluating alternatives like Gemini and smaller AI startups. That has forced Microsoft’s sales teams to adapt.
“Microsoft is trying to catch up,” Mansfield said. “Their reps actually have to learn how to sell again.”
This is not the behavior of an uncontested monopoly, he added—it’s the behavior of a company facing real pressure.
In Summary
Microsoft Copilot is one of the most ambitious enterprise AI rollouts in history. But while adoption is growing, many companies still question its value, cost, and readiness. Competitors like Google are gaining momentum, and Microsoft must prove that Copilot is more than a buzzword.
With a massive AI ecosystem, deep cloud partnerships, and unmatched enterprise presence, Microsoft remains in a strong position. Yet its success will ultimately depend on whether Copilot can deliver consistent, measurable benefits to the people who use it every day.
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