Microsoft has announced a new premium Office suite, Microsoft 365 E7, priced at $99 per user per month, which will launch in May. The package includes the Copilot AI assistant, alongside AI agent management tools and employee identity management tools.

The CEO of Microsoft's Commercial Business division stated that this move aims to increase the adoption rate of Copilot, which currently has limited penetration among commercial Office software subscribers. Microsoft is seeking to generate more revenue from each commercial user through offerings like Copilot.

The new E7 tier represents a 65% price increase over the E5 subscription, which will cost $60 per month after an upcoming price adjustment. The E7 package bundles several services: the $30 Copilot, the $12 Entra identity management tool, and the newly introduced $15 Agent 365 for managing corporate AI agents.

Over the past year, Microsoft has invested over $100 billion in data center infrastructure, including Nvidia chips required to power AI models. Selling AI-enhanced products is one way the company aims to realize a return on this substantial investment.

For customers who purchase the E7 package or subscribe to Copilot separately, Microsoft will introduce a feature called Copilot Cowork. Developed in partnership with AI model developer Anthropic, this functionality can handle multi-step tasks, such as scheduling emails to colleagues or preparing for meetings by analyzing documents and internal discussions. A research preview of Copilot Cowork will be available this month for customers in Microsoft's Frontier program, which provides early access to AI features.

This development follows an update to Anthropic's Claude Cowork service, which had raised concerns among some investors that advanced AI models could pose a competitive threat to established software companies.

The Commercial Business CEO indicated that both the enhancements to Copilot and the introduction of the E7 package on May 1st are expected to drive broader Copilot adoption. He also suggested that the launch of E7 could encourage businesses to upgrade more employees to the E5 tier.

For Microsoft, increasing revenue from its Office software remains a critical priority alongside its cloud business expansion. In the last quarter, Microsoft 365 commercial products and cloud services accounted for 30% of the company's total revenue. However, Microsoft's reports indicate a slowdown in the growth of commercial subscription seats, with only a 6% increase in the most recent quarter.

The company is increasingly focused on maximizing revenue per commercial user through strategies that include Copilot. In January, Microsoft's CEO revealed that the company has 15 million paid Microsoft 365 Copilot seats, which represents only about 3% of the total commercial Microsoft 365 subscription base.

An analyst from technology research firm Gartner noted that including identity, management, and security software in the E7 package is crucial for helping large enterprises securely deploy a new generation of AI tools to enhance productivity.

Following a meeting with Microsoft's Vice President of Investor Relations, an analyst team from Jefferies reaffirmed their Buy rating on Microsoft stock. They reported that Microsoft's management expressed growing confidence, citing the company's ability to expand the total addressable market for Microsoft 365 based on its approximately 450 million-user base. Management highlighted that despite attention on third-party products, the vast majority of AI-driven work is still conducted within Microsoft's own applications, which is increasing usage of Microsoft's proprietary products like Outlook, Teams, Excel, and PowerPoint.