Earlier this year, Microsoft celebrated its 50th anniversary, a journey powered by our partners from day one. As we begin the new fiscal year, I want to express my deepest gratitude for your bold innovation, trusted collaboration, and customer obsession. FY25 was one of the most transformative years in our history, and you made it possible.
At MCAPS Start for Partners, we outlined the next chapter of opportunity powered by AI: customizable agents, copilots, and a new class of AI-first organizations we call Frontier Firms. These are next-generation organizations that blend AI-powered solutions with human leadership to operate with agility, scale, and value creation. These firms are not just adopting AI; they are redesigning their business models, workflows, and cultures around it.
FY26 priorities and solution areas
As we look ahead to FY26, our focus is on translating this AI-powered vision into actionable priorities for our partners. To do this, we have made the decision to evolve our go-to-market approach around three solution areas, a strategic shift grounded in what customers are asking for and what’s resonating most in the market.
- AI Business Solutions: Scale Copilot across every device and role and drive strong execution in Microsoft 365 and Dynamics 365.
- Cloud & AI Platforms: Lead with Frontier AI innovations and accelerate cloud migrations and modernization.
- Security: Strengthen and secure the cyber foundation.
These solution areas are designed to mirror how customers think about their business challenges, making it easier for Microsoft and our partners to align solutions to those needs. They also provide a scalable, repeatable framework for how we engage across industries, segments, and geographies, enabling more consistent execution and deeper impact.
As a partner-first company, our partner ecosystem is an extension of our sales organization, and this alignment deepens our unified approach to engaging customers.
Microsoft AI Cloud Partner Program
The Microsoft AI Cloud Partner Program continues to be the primary way we engage and invest in our partner ecosystem. The program brings everything together across the whole of the partner lifecycle, including onboarding, skilling, go-to-market, co-selling, and incentives.
Our commitment is to make the AI Cloud Partner Program a home for all partner types and to be agile to keep up with the innovation we are bringing to market, as well as customer demand. FY26 represents another record year of investment in the program, supporting partners with market-leading capability across their journey.
Expanded program benefits
The program is designed to deliver value across every stage of the partner journey, offering targeted benefits that support growth and innovation.
For software development companies, key offerings include access to the Microsoft for Startups Founders Hub, which enables partners to build, publish, and scale well-architected software solutions.
To further support software partners, Microsoft is increasing Azure credits for those participating in Marketplace Rewards or who hold certified software designations. These benefits unlock valuable resources such as technical consultations, access to AI Foundry, GitHub and GitHub Copilot, exam vouchers, and additional rewards tied to marketplace performance.
For services partners, we are expanding our benefits offerings by including the latest Microsoft products, increasing Copilot seats, and introducing tools like Copilot Studio, Dragon Copilot, and Microsoft 365 E5 Security. Based on partner feedback, the company is also enhancing benefit delivery through Modern Benefit Provisioning in Partner Center.
In FY26, partners will also gain more flexibility by being able to combine or split their benefit packages across multiple tenants, enabling them to support operations in various global locations.
Skilling for the future and becoming customer zero
Capability is the new currency. Skilling is one of the most important steps partners can take to earn designations, build trust, and accelerate differentiation. And becoming their own customer zero by using Microsoft AI solutions within their organization is what separates partners who lead from those who follow. With fast-moving tech cycles, staying skilled and hands-on is no longer optional; it is essential.
In FY25, over three million learners upskilled across the Microsoft solution areas, with half of them in AI, Copilot, and Fabric. In FY26, we are expanding this momentum with additional opportunities:
- Agentic AI skilling: hands-on technical training to skill partners to design and deploy intelligent agent solutions using Copilot Studio and Azure AI Foundry.
- Hackathon-based training: enabling partners to build IP, earn certifications, and deliver revenue-generating AI engagements.
- Regional in-person workshops and AI roadshows: providing immersive, peer-based skilling experiences.
- CSP certification weeks and a Skilling in a Box initiative for distributors, scaling pre-sales and sales skilling to thousands of resellers.
We encourage every partner to become customer zero and use the very tools they bring to market. This builds credibility, deepens insight, and increases their ability to guide customers through transformation. When their teams are hands-on with AI, the customer experience improves.
Skilling is the engine behind that impact, and we are here to support partners every step of the way. Learn more about current skilling opportunities.
Unlocking growth through designations
Designations and specializations remain key to how we showcase partner capabilities both to customers and internally across Microsoft’s field organization. In FY26, we are launching several new recognitions, including a Copilot specialization (launching this month), a Distributor designation, a Support designation, and a Sovereign Cloud specialization.
In the second half of FY26, we will introduce two new device-driven designations in the Microsoft AI Cloud Partner Program. These are focused on unlocking commercial Windows growth, especially in SMB.
- One designation recognizes OEM partners building modern, hybrid-ready Windows devices.
- The second is for partners selling and deploying Windows Commercial devices, including Copilot+ PCs, with value across the full deployment lifecycle.
These designations are focused on supporting the Windows 10 refresh cycle, accelerating Microsoft 365 adoption, and building trusted relationships through secure, AI-ready devices.
We have also expanded SMB pathways for Security and Azure designations, with nearly 9,000 partners already achieving designations through these new routes.
Incentives to fuel growth
We are also significantly increasing our investment across the business:
- Enterprise Customer Investment Funds will grow ~20% year over year (YOY), enabling partners to deliver more AI design wins, migrations, and Copilot deployments.
- In AI Business Solutions, we have increased Copilot funding by 50%, reflecting strong momentum and broadening accessibility across the workforce.
- Microsoft 365 incentives are increasing by double digits.
- Azure outcome-based incentives are up 70% YOY, rewarding partners for expanding workloads, driving seat growth, and deepening solution adoption.
- We are strengthening our CSP incentives with a ~20% YOY increase to reward growth through new customer acquisition, upselling new workloads, and expanding existing relationships. To align our investments with our FY26 growth ambitions, we're pulling forward the effective date of these incentives to July 1. This shift ensures a fast start to the year, enabling partners to accelerate execution, capture opportunity earlier, and drive measurable impact from day one. We're structuring this opportunity to foster a more predictable and profitable environment as partners deliver strategic customer solutions.
- We are also investing 15% more in Security, an increase from a significant investment base, to empower partner-led engagements that protect customers and open new business opportunities.
Be sure to download our CSA incentives playbooks for guidance on the customer opportunity across each solution area, along with the resources available at each stage of customer engagement to help partners capture that opportunity.
The Microsoft AI Cloud Partner Program is the engine that fuels our ecosystem. We are committed to continual investment, flexibility, and shared success so that our program evolves in lockstep with our technology and the market.
Seizing the segment opportunity
Across customer segments, we see real momentum and value creation through Microsoft’s AI platform, especially through Copilot and agents. Organizations are using AI to reshape how work gets done, reduce costs, and unlock net-new value.
Microsoft estimates, based on IDC data, that in the small and medium enterprise (SME) segment, the total addressable market (TAM) will reach $777 billion by FY26 for organizations with fewer than 3,000 employees. This spans over 400 million organizations globally. Our Cloud Solution Provider (CSP) partners are playing a critical role as trusted advisors, with SMB and corporate seller-partner co-sell deals up significantly year over year.
In the enterprise segment, partners are leading large-scale AI and cloud transformations across a $592 billion TAM by reimagining customers’ core business processes and accelerating their journey toward fully agent-operated workflows.
Across both segments, Copilot is emerging as a strategic differentiator for partners. The data is clear: those who deploy Copilot internally and become their own customer zero see greater customer success and faster revenue growth. By using the same tools they bring to market, partners can deliver more authentic demos, demonstrate real business outcomes, and guide customers with confidence. If you have not started your internal Copilot journey, now is the time.
Looking ahead
AI is reshaping businesses, industries, and entire economies. This is a once-in-a-generation opportunity to define the future together, and Microsoft is dedicated to being a wholly committed partner along the way.
- If you missed the MCAPS Start for Partners keynote or want to revisit key announcements, I encourage you to watch the keynote on demand.
- Watch the breakout sessions on July 15 or check back on July 17 for a link to the recorded experience.
- We also invite you to attend our upcoming MCI Partner sessions dedicated to assisting partners with questions related to new and/or existing incentive offers in MCI.
- Join us for Microsoft Partner FY26 GTM Kickoff event on July 22 to learn about the go-to-market (GTM) priorities and initiatives planned for FY26 across Microsoft Business Applications and Modern Work.
- Register for a Cloud & AI Platforms FY26 partner playbook walkthrough for systems integrators. Sign in to Teams and register for a morning or evening session.
- Find out more about Azure Accelerate, our new holistic offering that brings together Azure Migrate and Modernize, Azure Innovate, and Cloud Accelerate Factory.
The opportunity ahead is immense, and we are building the platform, programs, and incentives to enable you to deliver market-leading capability and customer success through our partnership.
Thank you for all you have accomplished and all we will achieve together in FY26!