Inside Microsoft’s big Copilot rethink

Copilot is now being positioned as the ‘OS for work.’

Last week, Microsoft CEO Satya Nadella hosted an intimate, invite-only event for leaders from some of its key enterprise customers. Instead of a flashy media event, Nadella outlined the future of Copilot directly to the customers Microsoft really cares about, pitching its latest rethink of the AI assistant as the “OS for work.”

Microsoft is adding coding and agent capabilities directly into Copilot, as well as bringing the full power of Office into Copilot for the first time. Nadella is betting that AI will change the way people work in the same way that Microsoft Office did in the ’80s and ’90s.

“How did a multinational company do a forecast in 1981? You had interoffice memos and faxes and all of these artifacts that then just disappeared and you suddenly had an Excel spreadsheet in an email,” said Nadella. “We are the architects of a new frontier of work, using these new tools and capabilities.”

Microsoft has spent the past few months fusing together its consumer and enterprise Copilot apps into a single unified user interface, with a goal to make Copilot as influential as Office once was . The result is a big departure from the Copilot consumer design that Microsoft AI CEO Mustafa Suleyman launched two years ago. That design was heavily influenced by the work Inflection AI had done with the Pi personal AI assistant, after Microsoft hired many of the Inflection AI team just months prior.

The new Copilot app now looks a lot more like the commercial one, with separate tabs for chat, coding, and the new Autopilot AI agent. There are some small nods to the consumer UI that was available before, but overall it looks like the type of enterprise app you’d associate with Microsoft.

“There’s a really important reason why we decided to do this,” said Copilot chief Jacob Andreou at Microsoft’s customer-only event last week. “The bar for enterprise software is higher than it has ever been before. The expectations we have of the tools we adopt at work are set by the things we use after hours and at the weekends at home. What this means is that consumer UX and care needs to make its way into the workplace.”

Andreou joined Microsoft AI last year, focused on product and growth. In March, Nadella appointed him as the single boss of Copilot across both commercial and consumer, reporting directly to the Microsoft CEO. He’s now responsible for the design, engineering, and growth of Copilot.

Sources familiar with Microsoft’s Copilot plans tell me that redesigning Copilot over the last six months hasn’t been easy. There have been tensions between the team under Andreou, and those working for Charles Lamanna on the Copilot, Agents, and Platform (CAP) team. Lamanna’s team has been building Microsoft Scout, an always-on personal agent built on top of OpenClaw. Microsoft announced Scout at its Build developer conference in June, with just a desktop preview app. Less than six months later, I understand that the app has been put into maintenance mode, with Microsoft focusing on the cloud version, which has been rebranded to Autopilot.

I’m told the rebrand was driven in part by legal concerns around the Scout name, as Yahoo uses “Yahoo Scout” branding for its own AI-powered features. Sources tell me Microsoft had even considered using Mico, the Clippy-like character from the consumer Copilot, to replace Scout. Nadella favored Autopilot instead, allowing Microsoft to present its AI agent in a more enterprise-friendly way, instead of a bouncing blob.

Some of Microsoft’s caution around making Autopilot too cute comes at a time when rogue AI agents are hacking into businesses. Nadella addressed these concerns last week, laying out Microsoft’s design goals for Copilot. “[It’s] about organizations having control of their firms in an age of AI, where AI by definition is a learning machine,” said Nadella. “It can’t be about leaking the core of what your firm is about.”

Andreou also admitted that agents “have been almost impossible to bring into the enterprise,” due to them needing the autonomy and flexibility that businesses usually balk at. “It is their superpower, and it’s the same thing that makes them absolutely terrifying to an IT admin.”

Microsoft thinks it has solved the AI agent problem for businesses with its “OS for work,” but it also seems to be leaving the door open for competitors like Meta and OpenAI to build the “OS for life.” In a world where 1.2 billion people use ChatGPT every week, Microsoft is playing to its traditional business-focused strengths instead of trying to compete with consumer-friendly Muse and Dots agents.

Andreou isn’t giving up on Copilot for consumers just yet, however, and he seems to want to hone in on those that want the power of enterprise apps at home. “Microsoft consumers are a little bit special. There’s almost 90 million folks that pay for Microsoft 365 out of their own pocket,” said Andreou. “These are people who value the use of things like PowerPoint and Excel so much in their personal lives that they actually go ahead and pay for it themselves.”

With Office baked into Copilot, you’ll soon be able to create and edit inside Microsoft’s AI assistant instead of having to switch to Office apps like Word and PowerPoint. There’s a full ribbon interface, and it essentially looks like the web version of Office directly inside Copilot. I think this is Microsoft’s first real acknowledgement that we’re heading to a future where AI can create a lot of the documents that people used to rely on Office for. Microsoft’s move to bring Office into Copilot has the potential to fundamentally reshape the future of Word, Excel, and PowerPoint.

Nadella is now positioning Copilot as the platform for this new AI era of work, instead of just cramming AI features into Office itself. Microsoft has tried to sell business on Copilot in Office multiple times in recent years, but the response to a $30 per month, per user Copilot subscription was lukewarm two years ago .

Nadella still thinks Microsoft will nail AI at work, and in turn convince businesses to pay for it. “The way we think of Copilot is not just the product itself changing, it’s the contours of work inside the enterprise changing,” said Nadella. [It’s] the dance between the shape of the product and the organizational structural change to work.”

The pad

Note: I’m traveling to San Francisco next week for the Windows and Surface event on October 7th, so Notepad might not arrive on time.

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