AI threatens Microsoft's Office per-seat model, risking a $70B profit pool despite strong current revenue.

Stig Brodersen argues that generative AI could disrupt Microsoft's Office suite, which has long resisted competition due to its entrenched formats and per-seat subscription model. The core issue is that AI reduces the human labor needed for tasks, undermining the assumption that each user requires a full license. This could threaten a $70 billion profit pool. Microsoft is adapting by shifting to a usage-based pricing model, with early success shown by rapid growth in Microsoft 365 Copilot seats and AI revenue. Investors should watch if usage revenue can offset declines from fewer seats sold.