Dive Brief:
- Microsoft is bundling agentic features an in update to Copilot, including coding capabilities to build custom tools and a rebrand of its productivity assistant, the company announced on Friday.
- The update brings Copilot’s AI assistant for knowledge workers closer together with its features from the GitHub Copilot coding agent, delivering tool building capabilities to those outside of traditional tech roles, the company said. Copilot’s latest version also added Fabric IQ to include context from enterprise data, and FinOps for AI tools to help manage AI spend and optimize it for business value.
- The move follows suit with recent agentic coding and knowledge work offerings from Anthropic, which may have influenced the timing of the rollout, Larry Cannell, senior director analyst at Gartner, told CIO Dive. “Normally Microsoft would wait until Ignite for a change of this magnitude, and the fact that they’re releasing it now just shows you how the competitive market has changed.”
Dive Insight:
Microsoft is reshaping its AI tools strategy, unifying a greater variety of capabilities to larger swaths of enterprise users as enterprise adoption efforts continue.
The company is aiming to pull more of its longtime software product users toward its agentic AI offerings by bundling features, a strategy competitors like Anthropic and OpenAI have offered with success, Cannell said.
The updated Copilot app will host three capabilities that will roll out in the coming weeks. Home offers a conversational chat and task-delegation feature that works with Word, Excel and PowerPoint. Code lets users build their own tools based on GitHub technology, while Autopilot acts as a productivity assistant. Microsoft said it plans to charge customers based on usage, not seats, which is in line with its other AI products.
“The fact that they have three tabs very much aligns, I think, with the industry direction of trying to pull all of these experiences together,” Cannell said.
The company reported more than 30 million 365 Copilot paid seats during its Q4 2026 call in July, with a growing number of customers with more than 50,000 paid seats.
“Across both our high-value agentic experiences and the AI platform and infrastructure, we are focused on helping customers turn AI into measurable outcomes,” Chairman and CEO Satya Nadella said on the call.
Businesses have become interested in how AI tools can make ground with productivity, Cannell said, though gains and cost savings aren’t necessarily being realized.
But coding agents are exploding in popularity, and changing how engineering work happens.
Microsoft has a long history and large market share in the digital workplace, Cannell said. Many CIOs would prefer for AI capabilities to become available through existing partners than to seek out new vendors.
Cannell said he’s a little surprised about Code’s offerings, because Microsoft has traditionally been conservative when it comes to low-or no-code environments, and this change puts coding capabilities into the hands of knowledge workers. But it follows suit with OpenAI, which said in June that 20% of Codex users were not developers.
Emerging competitors are likely pushing Microsoft to react quickly.
“It’s really their market to lose,” Cannell said.
