As AI begins to take over the mainstream lifestyle, Microsoft CEO Satya Nadella has disclosed that the company’s software business is overhauling its pricing strategy. The company is now moving from a traditional ‘per-user’ model to a ‘per-agent’ framework. The pricing transformation, unveiled during an appearance on the Dwarkesh Podcast, highlights a big change in the way the company looks at AI solutions.
Nadella emphasised the role of agentic AI systems in today’s business scenarios. “Our business, which today is an end-user tools business, will become essentially an infrastructure business in support of agents doing work,” Nadella stated. “The way to think about the per-user business is not just per user, it’s per agent.”
The price strategy revision keeps Microsoft’s flagship Microsoft 365 suite at the center, which already generates $100 billion in annual revenue. Nadella hailed it as the indispensable “core workspace” for these AI agents, ensuring continuity in data storage, archival, discovery, and management functions.
Microsoft 365 will remain relevant, says Nadella
“All the stuff we built underneath M365 still is going to be very relevant. You need some place to store it, some place to do archival, some place to do discovery, some place to manage all of these activities, even if you’re an AI agent,” he elaborated.
This infrastructure change will outpace user growth, says Nadella. “This new infrastructure business would grow faster than the number of users. Don’t think of the tool as the end thing. What is the entire substrate underneath that tool that humans use, and that entire substrate is the bootstrap for the AI agent as well… So in fact, that’s why I think we’re going to have essentially an end-user computing infrastructure business, which I think is going to just keep growing because guess what, it’s going to grow faster than the number of users.”
Earlier this year, the company rolled out a pay-as-you-go model for its AI agents, applied on top of the free Copilot chat for Microsoft 365 subscribers. This metered billing model is also used by industry rivals like Anthropic, which charges fees per million tokens processed for its Claude models, and Google’s usage-based Gemini API.
Nadella dived into practical integrations of AI, using the Excel Agent as a prime example. “Excel Agent is not a UI-level wrapper… We are taking [GPT family IPs] and putting it into the core middle tier of the office system,” he explained. “I’m building an analyst as essentially an AI agent, which happens to come with an a prior knowledge of how to use all of these analytical tools.”
Nadella also addressed the worries related to the Excel integration, stating, “Don’t worry about the Excel integration. After all Excel was built as a tool for analysts. So whoever this AI is, that is an analyst.”
