Software groups dismiss the price premium for generative AI

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Leading US software companies such as Adobe, Salesforce and Zoom have ruled out charging extra for the use of generative artificial intelligence, leaving the industry with no immediate revenue from one of the year’s most important technology changes.

The pricing decisions have emerged in recent days as groups have released new AI features into widely used software applications, which have become part of the daily lives of millions of workers.

According to analysts, the lack of an AI premium shows that most technology companies remain uncertain about how valuable the technology will be to customers. “It’s still so new, no one knows how to value it,” said Wayne Kurtzman, an analyst at the tech research firm IDC. “No one knows what the consumption will be. It is not known where their value will be perceived. “

Microsoft’s announcement two months ago that it would charge $30 per user for generative AI in its Office productivity software, raising subscription costs by 83 percent, fueled expectations of a broader price hike in the software industry.

But many other companies, whose customers will be able to ask “smart” conversational assistants questions, for example, or automatically create emails or images for their work, have decided to follow Microsoft’s lead, at least for now.

Among the companies embedding generative AI into their applications in recent days are video conferencing company Zoom and Intuit, the maker of tax preparation software TurboTax and QuickBooks small business accounting package.

Both companies said their users will now be able to ask questions to AI assistants for free in their apps, while Zoom’s AI will also create meeting summaries.

Meanwhile, Adobe on Wednesday released a feature called Firefly that automatically creates images in its applications for designers and graphic artists, including Photoshop and Illustrator. The technology, which has been in trials since March, is free to customers, although Adobe has said customers will have to pay more or face slower processing speeds once they exceed a usage “cap”.

Salesforce, whose software is widely used by sales and marketing executives, said this week that it would add a free AI assistant to its applications, although it did not say when it would be available.

Eli Greenfield, Adobe’s chief technology officer, said not charging extra for generative AI was the best way to get the technology “into the hands of as many of our customers as possible.”

Adobe later said it would raise the price of its widely used subscription services by about 10 percent in November. That growth, however, reflects features added over the past 18 months rather than specifically the addition of generative AI, it said.

For Intuit, the new technology is a significant step toward using AI to provide financial advice, said Patrick Moorhead, an analyst at Moore Insights & Strategy, though he added that the company is treading carefully by directing customers to speak to a human expert. In most cases. “I’m a little surprised they haven’t raised the price” to reflect the advance, he added.

Some companies claimed that new forms of AI would have other benefits. Testing of Adobe’s image-generating AI showed that it increased customer retention and encouraged more people to use its services, Greenfield said. Moorhead, meanwhile, added that Intuit is adding new features “to face competitive threats from upstarts” that may use AI to try to lure customers from established software companies.

While revenue growth is likely to be modest in the short term, most face higher costs from generative AI, due to its high computational demands. Software companies that have to pay another AI provider like OpenAI to use their generative AI models are choosing to absorb the cost rather than trying to pass it on to users, said Kurtzman at IDC. He added that they can charge for new features once they better understand how people use them.

Generative AI services may incur other significant costs for some software companies. Adobe said this week that it would begin making regular payments to everyone who contributes images to its stock image library, to reflect the images that were used to train its AI models.

Contributors will receive an annual bonus based on factors such as the number of images they contribute and how many times they were licensed in the previous year, Adobe said. He declined to say how much it would pay, but Greenfield said payments for AI training would be “material” for contributors.

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