Microsoft Warns Apps Will Lose Pricing Power as AI Agents Take Over

Microsoft executive Charles Lamanna warned that many business software apps will lose pricing leverage as AI agents become more prevalent. Speaking at Madrona's IA40 Summit, Lamanna said agents are 'harsh customers' who will choose the cheapest, fastest, and most reliable service.

Lamanna divided software into two categories: 'thick' apps that people spend most of their workweek on, and 'thin' apps that people drop in and leave. He predicted that most business software will end up running headless, with AI assistants like Copilot doing the work behind the scenes.

Even Microsoft's own apps won't be immune to this trend. Lamanna said that Word, Excel, and PowerPoint will still exist, but most people will use them inside Copilot, which can run Office without switching apps.