Microsoft’s AI Push Notches Early Profits

Microsoft’s strategy to install artificial intelligence (AI) as a default feature on its software may be paying off.

The company is seeing a 10% rise in revenue from consumer subscriptions to Office 365 in the three months ending in March compared to a year ago, according to a Thursday (May 1) report from The Information, citing Microsoft. The company added that this growth rate was faster than each of the past four quarters.

Microsoft raised the lowest price of its software by 30% in January, which cost users $10 a month for individuals and $13 a month for households.

Following the relative success of the price hike rollout, Microsoft may consider doing something similar for its corporate Office 365 users, The Information noted, adding that the company has weighed adding AI features to the platform for many years.

Currently, enterprise users can choose to pay $30 per month per user for access to Microsoft’s AI chatbot, which enables them to search through documents, transcribe meetings on Teams and create emails or PowerPoint presentations.

In other Microsoft news, the company said Thursday it was going to raise prices for its gaming console Xbox, as well as its controllers, citing “market conditions.”

The company also said expects to raise the price of its new, first-party games starting during the holiday season.

“We understand that these changes are challenging, and they were made with careful consideration given market conditions and the rising cost of development,” Microsoft said in a blog post. “Looking ahead, we continue to focus on offering more ways to play more games across any screen and ensuring value for Xbox players.”

Per PYMNTS’ report, the pricing for Xbox headsets will only change in the United States and Canada, and some Xbox controllers will remain the same price.

Microsoft didn’t say if U.S. tariffs played a role in the price hikes, but the company relies on overseas manufacturing, including in China, according to a Bloomberg report. During its Wednesday (April 30) earnings call, the company said tariff uncertainty has caused computer makers’ inventory to rise to higher-than-usual levels.

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