Much like a modern Augustus Gloop or Marjorie Dursley, Copilot for Microsoft 365 keeps expanding!
On June 12th, Microsoft added several more eligible base licenses for the Copilot add-on meaning the full list is now:
Microsoft 365 Apps for Business
Microsoft 365 Apps for Enterprise
Microsoft 365 Business Basic
Microsoft 365 Business Standard
Microsoft 365 Business Premium
Microsoft 365 E3/E5 (A3/A5)
Microsoft 365 F1/F3
Office 365 E1/E3 (A3/A5)
Office 365 F3
Exchange Online
SharePoint Online
OneDrive for Business
Microsoft Clipchamp
Microsoft Teams EEA/Enterprise/Essentials
Planner Plan 1
Project Online
Visio Online
I haven’t seen any news that Copilot has new capabilities that relate to these new licenses so I struggle to see the point of these scenarios. If I have Project Online or Clipchamp or Visio but not Apps for Business/Enterprise…why would I buy Copilot for M365?
Perhaps we’re about to see an expansion in Copilot’s capabilities in the new FY?
As always at this point of the year (almost end of FY), it’s a quiet one with nothing major but, as we’re here, let’s take a look anyway shall we?! 😊
Azure GenAI terms updated re: Training content
Several products added to the “Core Online Services” table
Clause re: automatic updates for Microsoft Defender for Identity added
Microsoft Defender for Endpoint P2 for Student added to EES
Microsoft added several more base licenses for Copilot for M365 on June 12 – see the full list here
Microsoft have revealed that the previously announced end of Azure Compute Reservation exchanges has been postponed “until further notice“. They say:
“You may continue exchanging your compute reservations for different instance series and regions until we notify you again, which will be at least 6 months in advance. In addition, any compute reservations purchased during this extended grace period will retain the right to one more exchange after the grace period ends.”
Let’s take a look at Microsoft’s financial results for Q3 FY24 (Jan – Mar 24) and, in a not surprising move at all – they’re pretty good!
Headline Numbers
Revenue = $61.9 billion (17% increase)
Net income = $21.9 billion (20% increase)
Within that, “Microsoft Cloud” was $35.1 billion, an increase of 23% year on year.
Productivity & Business Processes
Revenue = $19.6 billion (up 12%)
Office 365 Commercial revenue increased 15%
Commercial seats grew 8% driven by SMB and Frontline SKUs again
LinkedIn increase 10%
Dynamics 365 grew 19%
Intelligent Cloud
Revenue = $26.7 billion (up 21%)
Azure grew 31% – yet again the growth percentage increases for another quarter. Interestingly, server licenses were up 6% due to hybrid and BYOL licensing.
Earnings Call Highlights
“Copilot” features 47 times in the transcript
Office 365 ARPU (Average Revenue Per User) grew thanks to E5 and Copilot
Enterprise Mobility & Security (EMS) now has 274 million seats, up 10%
Azure Arc now has 33,000 customers
The average size and length of Azure deals has increased
The number of 100 million dollar-plus Azure deals increased over 80% year-over-year (YoY) while the number of 10 million dollar-plus deals more than doubled
Over 11,000 customers for Microsoft Fabric <– How many of those are simply Power BI Premium users who have moved over early?
30,000 organisations using Copilot for Studio to customize Copilot for Microsoft 365 and/or make their own
PowerApps users are now at 25 million per month, a 40% increase YoY
Teams has been “consciously decoupled*” from Microsoft 365 on a global basis, so they’re now only available separately to new users. Existing users can continue to renew but if you need to buy both, it equals more cash more Microsoft.
Teams Enterprise is now listed, which appears to be the standalone version of Teams. From a naming perspective, “that “Enterprise” sounds “bigger” than “Premium” (which is a paid add-on) so I’d expect a rebrand at some point soon🤔
Dynamics 365 Supply Chain Premium has been added…plus another error as “Dynamics 365 Supply Chain Management” is listed as having a minimum purchase quantity of both 10 and 20…clearly one should say “Premium” at the end (the one with 10 I believe).
They’ve still not corrected the D364 error from last month either 🤣
Microsoft have announced the end of Power BI Premium Capacity SKUs in favour of the newer and shinier Microsoft Fabric. Note that the “Power BI Premium per-user” SKU is unaffected.
Key dates
New customers will not be able to purchase Power BI Premium after July 1st, 2024.
Existing non-EA customers can renew until Jan 1st, 2025. If your renewal date is after that, you will need to transition to Fabric at renewal. Additional Power BI Premium capacity can be purchased until the end of the agreement.
EA customers can continue with Power BI Premium until the end of their contract. If that is post Jan 1st, 2025 they will need to switch to Fabric at renewal. Additional Power BI Premium capacity can be purchased until the end of the agreement.
Sovereign Cloud customers are unaffected as they don’t currently have access to Fabric.
Benefits and differences
Fabric is the evolution of Power BI Premium and the next step in Microsoft’s organisation wide data analytics strategy. Thus, as well as the Power BI Premium functionality, Fabric contains additional services and features such as OneLake and various Azure services. Additional benefits include:
Fabric can be used to contribute towards your MACC (Microsoft Azure Consumption Commitment) agreement.
There is a Pay As You go (PAYG) option for Fabric.
Fabric SKUs start at a lower point that Power BI Premium. However, note that Copilot for Power BI (which I assume will become Copilot for Fabric) doesn’t work for the lower end SKUs.
Of course, there is always something that is removed or made more complicated with any product retirement and this is no different.
Each Power BI Premium capacity P-SKU includes the ability to run Power BI Report Server on-premises…but Microsoft Fabric does not, and is not compatible with it. To continue accessing Power BI Report Server, you will need to have SQL Server Enterprise w/SA instead.
Microsoft have announced expanded Copilot for M365 access to a range of new SKUs including:
M365 F1/F3 Office 365 E1 M365 Business Basic
The Microsoft post says “and more” so we’ll have to wait for the full list to appear soon.
This change means that a huge additional number of Microsoft users will be able to buy it the new AI tool.
I have a couple of initial questions:
1) Why do this now?
I thought it would take a lot longer to get to this point. This feels like Microsoft are not selling Copilot for M365 anywhere near the rate they expected/want/need and so, to help recoup more of the enormous amount of money that must have been spent, they’re widening the pool quickly.
2) What about the price?
Are orgs really going to spend an additional $30 per user on top of these low cost SKUs? Particularly where the users will likely have fewer opportunities to benefit from Copilot’s assistance? I think perhaps we’re about to see a price drop or tiered pricing… I.e. Copilot for M365 Standard and Premium.
Since the introduction of Copilot for Microsoft 365, one of the big questions I, and others, have been asking is “how do you determine value?”. I laid out my initial concerns, questions, and actions here and now want to look at Microsoft’s offerings to enable this kind of insight. Currently available in preview (https://insights.cloud.microsoft/#/CopilotDashboard) – although I couldn’t get it to work – Microsoft’s Copilot Dashboard is their option to get the much needed insights.
Microsoft Copilot Dashboard
Microsoft aim for this to help customers across the 3 stages of the adoption journey:
It will show:
Who is eligible for Copilot for M365
How people are currently using M365 apps
How people are using Copilot and in which different apps
Information on how Copilot is impacting productivity
Microsoft are referring to it as “Microsoft Copilot Dashboard, powered by Viva” and from “early 2024” there will be additional dashboard features available to users with Viva Insights licenses. According to Microsoft, these will include:
“Copilot adoption and usage metrics combined with collaboration data, out-of-the box reports for organizational leaders, before and after behavioral data and even insights from employee surveys.”
and will also show time spent in meetings, processing emails, and creating content with before and after Copilot information.
All in all, the Copilot dashboard will be useful for organisations looking to understand more about their Copilot readiness and then their Copilot usage. However, some may have concerns about the reliability and objectivity of the data and reports generated by Microsoft on their own software. Ideally, Microsoft will be transparent and accountable in how they collect, process, and share the data from the Copilot dashboard. They should also provide ways for users to verify, challenge, or complement the data with their own sources and feedback.
Let’s look at the numbers and main takeaways from Microsoft’s FY24 Q2 earnings. Not surprisingly, there’s a lot of talk about AI with Satya Nadella saying:
“We’ve moved from talking about AI to applying AI at scale.
By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains.”
Headline numbers
Revenue = $62 billion (increase of 18%)
Net Income = $21.9 billion (increase of 33%)
Within that, what they call “Microsoft Cloud” accounted for $33.7 billion of the revenue – an increase of 24%.
Productivity & Business Processes
Revenue = $19.2 billion (increase of 15%)
Office 365 Commercial up 17%
LinkedIn up 9% (better than expected)
Dynamics 365 up 27%
Intelligent Cloud
Revenue = $25.9 billion
Azure growth was 30% this quarter. That’s 1% higher than last quarter although, in constant currency (where the impact of exchange rates is minimised) it was 28% i.e. 1% lower. Either way, it’s strong growth from Azure again, in no small part thanks to 6 percentage points added by AI.
Side note: The latest quarterly results for Amazon AWS (Q4 FY23) was $24.2 billion -so Azure is, for the first time I think (?), bigger than it’s long standing – and still market leading rival…at least on a quarterly basis.
Earnings Call Highlights
Over 53,000 Azure AI customers and over 1/3 of them are new Azure customers within the last 12 months.
Nadella mentions “an increase in the number of billion-dollar-plus Azure commitments“, citing Vodafone’s $1.5 billion commitment over the next 10 years.
Cosmos DB gets another shout out – and 42% YoY increase in data transactions…definitely a golden child product at the moment.
Over 400 million paid Office 365 seats which is a 9% YoY increase, primarily driven by SMB and Frontline SKUs.
On-premises server revenue increased 3% – driven by Windows Server 2012 end of life. That could be customers upgrading to newer versions but I’d wager a lot of it is Extended Security Update (ESU) revenue…
Nadella mentions the upcoming dedicated “Copilot” key on new Windows devices…
Cloudy with a chance of Licensing 