In a recent keynote address at Madrona’s IA40 Summit, Charles Lamanna, the executive overseeing Microsoft 365 and the Copilot platform, discussed the future of business software. Lamanna believes that AI agents will play a significant role in how software is utilized, with most applications eventually operating behind these agents rather than directly in front of users.

According to Lamanna, these AI agents will essentially become the customers of these apps, choosing services based on factors like cost, speed, and reliability. This shift could potentially impact the pricing power and customer loyalty of many applications.

Lamanna categorizes software into two groups: “Thick” apps, which are heavily used for work tasks, and “Thin” apps, which are used briefly and intermittently. He predicts that the majority of business software will transition to a “headless” model, where AI assistants like Copilot and ChatGPT will handle the backend operations.

Even Microsoft’s own suite of applications, including Word, Excel, and PowerPoint, are expected to be integrated into the Copilot platform, emphasizing the shift towards AI-driven software interactions.

Lamanna draws parallels between headless apps and businesses that rely solely on platforms like Amazon, highlighting the potential challenges in maintaining pricing and differentiation when users are primarily interacting with AI agents.

The evolving landscape of AI agents is exemplified by Amazon’s recent actions, where the tech giant blocked Meta’s Muse agent due to privacy concerns. This move underscores the importance of transparency and user consent in AI interactions.

Despite these challenges, Lamanna remains optimistic about the future of AI agents and their widespread adoption. He envisions these agents becoming integral parts of everyday workflows, reshaping how people interact with software.

As Microsoft continues to innovate with Copilot and other AI-driven technologies, the company is positioned to lead the way in this transformative era of business software.