Microsoft Preps AI-Powered Microsoft 365

Microsoft 365 -- often shortened to M365 -- is a subscription-based suite of apps and cloud services from Microsoft designed for productivity, collaboration and security. It is built around classic apps -- Word, Excel, PowerPoint and Outlook -- plus Microsoft Teams, OneDrive cloud storage, and depending on the plan, SharePoint and Exchange Online.

The E7 subscription will include everything in E5 plus new features and functionality, starting with Microsoft 365 Copilot. It will be available in E7 and is only available as an add-on to E5 for an extra $30 per month.

E5 has no AI agent management or governance, but E7 will include the company's recently introduced Agent 365 agent-based service, and Entra Suite, a comprehensive, unified security solution that bundles identity and network access products to enforce Zero Trust principles. It replaces legacy VPNs with modern security, and protects against identity-based attack.

Agent 365 isn't a stand-alone product. There isn't a single official product named "Microsoft Agent 365." It's a series of AI-powered agents embedded across Microsoft 365 apps that are a part of Microsoft's broader push into AI assistants that can act on your behalf, not just respond to prompts.

These features include identity management using Entra, compliance controls using Purview, and security infrastructure using Defender XDR. Agent 365 supports agents built using Microsoft tools as well as third-party and open-source frameworks.

No doubt that some of that is attributable to the pricing structure, which isn't getting any better, it's getting worse. Starting July 1, the monthly subscription price for Office 365/Microsoft 365 are going up across the board. The entry level product, M365 E3, will go from $36 to $39 per user per month while E5 will increase from $57 to $60 per user per month.

Given how much is added to it, E7 is going to be more expensive than E5, but it is not all that much in the grand scheme of things. E 7 will run you $99 per month per user. If you have an E5 subscription along with Copilot, that's $90 per month per user. Agent is another $15 and Entra is $12, so the E7 package if sold separately is $117.

So the bundle is definitely a bargain, but the question remains as to how many people will bite even at $99 per month for what Gartner calls "a work-in-progress." The bigger the roll out, the bigger the bill and that can really add up. This might make people nostalgic for packaged software where you buy the software, install it and that was it.

Gartner believes that Microsoft's long‑term strategy for Agent 365 remains the backbone for its digital labor vision, where the platform could be used to "hire," "fire" and monetize agent work. "For 2026, however, Agent 365 is primarily an agent discovery and governance solution," it wrote in a report on Microsoft's AI initiatives.

Gardner said Microsoft got four things right with Agent 365: Improved discoverability and management, where Agent 365 provides a centralized inventory of most Microsoft agents with the ability to apply policies to manage; an emerging policy engine that allows policies too be applied at the agent or blueprint level; a clear licensing model; and identity-based focus that will allow to scale agent management as the product matures.

It also thought Microsoft got four things wrong: the product's relative immaturity versus the asking price; gaps in automation that make more advanced life cycle controls relatively embryonic; gaps in agent coverage Uh particularly surrounding agents that were created before Entra agent ID registration became available; and Agent 365 is dependent on base M365 licensing.

Posted by Andy Patrizio on 04/22/2026