Satya Nadella says high-price, low-use software faces an AI problem

Satya Nadella is chairman and CEO of Microsoft. He said business software that charges a lot per user but gets little use could struggle in the AI era. He said it on the podcast BG2, in an episode posted Oct. 31, 2025.

This touches the apps people use at work and the tools their employers pay for. Nadella thinks AI could change which software companies keep their customers.

Nadella said older business software tied together the data, the rules and the screen you see. He said AI doesn't respect that coupling. In his view, AI that keeps working on a task by itself, called an agent, now replaces the rules layer. He said Microsoft 365 and GitHub get used all the time, so they fill up with data that agents need. He described the risk for others at 55:42.

"high ARPU, low usage, then you have a little bit of a problem."

ARPU means the average revenue a company earns per user. Nadella said Microsoft is the opposite, with low ARPU and high usage.

Benzinga on MSN reported on Oct. 22 that Nadella says Microsoft is rebuilding around AI agents. Its description says the company is reorganizing around agents, model choice and cheaper computing.

Microsoft sells both the software and the AI tools he praised, so he has a plain interest here. He said the price of Microsoft 365 Copilot is higher than anything else Microsoft sells, yet it is getting deployed faster. He didn't name which software companies are at risk.

Watch the 3 minutes where he explains it.53:32