For years now, Microsoft has been doing its level best to move you from desktop Office and Windows to Microsoft 365, Windows 365, and Azure Virtual Desktop (AVD). Since the company first started down this road, however, something changed: the AI revolution, which has become a huge deal for the guys from Redmond. 

So, it should come as no surprise that the company is now combining its efforts to push cloud-based PCs and get as many users working with its AI services as possible.

First, Microsoft has reduced pricing for Windows 365 and AVD in select configurations by 20%. In particular, the company is slashing prices for persistent desktop deployments and lower-tier virtual machines (VMs). These are the instances commonly used by task workers and call centers, not by developers or white-collar office worker bees. 

Microsoft is also expanding bundled discounts tied to existing enterprise agreements and Microsoft 365 subscriptions. This cuts the per-user cost for organizations already invested in its Desktop-as-a-Service (DaaS) ecosystem. 

Beyond that, the company is introducing an on‑demand start experience that allows Cloud PCs to hibernate when users disconnect. The change will lower infrastructure costs while preserving performance when sessions resume. 

In addition to lower base pricing, Microsoft is promoting new autoscaling and power management features in AVD. For example, unused instances will now shut down automatically. This addresses one of the key criticisms of cloud desktops: the cost of idle capacity. 

Considering how PC prices are skyrocketing, this new DaaS pricing makes a lot of sense. But what the company giveth, the company taketh. Turns out that price cut comes as Microsoft 365 costs are set to rise in July. Microsoft wants you to think that a per desktop price increase of up to 33% is worth it for all the brand-spanking new AI goodness. Me? I’m still not sure Notepad Copilot improved my work life by 0.33%, never mind 33%! 

Windows prices are also going up. After July 1, standalone Windows components (per user/month, commercial list), such as Windows E3 and E5 are going up while Windows Enterprise (per device/month) is set to jump by 31%, from $5.85 to $7.63.

Overall, according to US Cloud, a leading independent provider of third-party Microsoft support and enterprise licensing optimization, Microsoft’s pricing decisions will mean a cumulative cost increase of up to 25% on a typical $10 million Enterprise Agreement by mid-2026. That is, the company’s “AI Tax.” (Hey, those gigawatt AI centers aren’t going to build themselves!)

Meanwhile, back in DaaS land, Microsoft is positioning its AI‑enabled Windows 365 Cloud PCs as a higher‑end class of virtual desktops: Still in beta, they combine Windows 365 with AI acceleration to deliver integrated Windows AI features to any device via the cloud.

These high-end virtual AI desktops require Windows 365 Enterprise SKUs with at least 8 vCPU, 32GB RAM and 128GB storage. In other words, while the low-end virtual desktops are getting cheaper to use for AI, you’ll want the most expensive configurations. These currently cost $123 per user, per month.

By comparison, for serious AI use, Microsoft recommends Copilot+ PCs. These are high-end Windows 11 PCs powered by a turbocharged neural processing unit (NPU) capable of delivering more than 40 trillion operations per second (TOPS). These, such as Lenovo’s ThinkPad T14s Gen 6 Snapdragon, cost around $2,100. 

It might appear that the stand-alone PC is cheaper for AI. But Microsoft argues that its cloud PC — which you can run on any device — will scale well beyond what a fixed NPU can deliver in a Copilot+ PC configuration. 

What I see happening is Microsoft is using its lower-end DaaS price cut as a broadening of the funnel into Windows 365 while it keeps the AI‑heavy experiences as an upsell on more capable Cloud PCs. In other words, the low-end DaaS price cuts and the increases in PC prices are, Microsoft hopes, all about getting you to move to high-end AI cloud-based desktops. 

There’s also the rumor that Microsoft will be shifting its AI-cloud services from a fixed priced plan to a token-based one. True, for model APIs and gen‑AI services, the company had already standardized on token‑based pricing. But we always knew flat-pricing for AI services was a loss leader. If Microsoft can get you on a cloud-based AI desktop today, it’s betting it’ll get far more revenue from you tomorrow than it can with today’s Software-as-a-Service (SaaS) such as Copilot in Microsoft 365. 

If all this sounds complicated, you’re right — it is. As SAMexpert CEO Alexander Golev reports, “Microsoft AI uses two billing systems: Predictable per-user licensing and variable Azure consumption. Hybrid products like Copilot Studio and Security Copilot can charge through both, so costs land in different budgets, require separate monitoring, and complicate forecasting.” You think?

Of course, Microsoft has long been about shifting people from buying software to leasing it. Windows 365 AI‑enabled Cloud PCs is very much about using AI as the differentiator to justify running a Windows desktop from Azure instead of a cheaper, more generic VDI/DaaS stack or a more generic Windows DaaS. 

What all this boils down is that while Cloud PC list prices are coming down for small and mid-sized businesses, Microsoft is baking in more AI into its Enterprise Cloud PCs. Thus, AI will be the value‑add that keeps the high‑end of its desktop cloud premium. This will all, Microsoft hopes, continue to empower growth, which increasingly relies on Azure and AI. 

So, what does this all mean for you and me? While I admit AI can be valuable in some areas such as programming, I remain cynical about AI in broader business uses. After all as the MIT NANDA report, “GenAI Divide / State of AI in Business 2025,” states: “95% of organizations are getting zero return” from AI. 

Let’s say AI eventually does deliver the goods — or as I see it, we finally figure out how to get real value from the technology beyond just meeting summaries — that’s great. But, it begs the question, “Do you really want to tie yourself to Microsoft’s desktop and service?” I don’t think so. 

Personally, I’ve never wanted to put all my desktop eggs in one Microsoft basket, and I’m sure not going to do that now with AI.