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It won't show up on their financials I reckon, they made equity investment into OpenAI - their P&L won't show on Microsoft's. If they have a sweetheart deal wit

It won't show up on their financials I reckon, they made equity investment into OpenAI - their P&L won't show on Microsoft's. If they have a sweetheart deal with MSFT, Azure revenues aren't going to change. Even if they built a new DC or bought a boatload of GPUs for OpenAI, it will get mixed into their massive Capex and they probably are using existing infrastructure

unmole 4y ago
They apparently got a lot of Azure credits and Microsoft isn't making any revenue from running OpenAI's workloads.
- dekhn 4y ago
  The value to microsoft is in the marketing around a premier training company using their hardware... their actual hardware in this case is a bespoke supercomputer, but performance watchers like me are paying attention. From what I can tell, of the top 3 cloud providers, azure is doing the best work with high speed interconnects right now.
- htss2013 4y ago
  But what are the workloads costing MSFT? If the credits are part of the acquisition deal, maybe they're considered capex not opex, and MSFT gets to amortize the credits' operating cost over decades. What is the true marginal cost to MSFT for gpt workloads anyway? As long as it's not bumping paying customers then it's what the cost of electricity?
- dereg 4y ago
  Creating credits out of thin air is impossible as all financial transactions must be accounted for. In the case of Azure credits, they will appear as increased revenue on Microsoft's balance sheet. However, if Microsoft decides to price Azure services below cost as part of their agreement with OpenAI, their profit margins will be affected. I highly doubt that is the case because the alleviation of cost is in the form of credits. I would wager against comment 0 that said that this will materially affect earnings.
  - rvz 4y ago
    It will, hence the MSFT layoffs happening at the same time. People here wanted Google scale of operations and replacing Google with ChatGPT as their search engine. But it seems that some here have forgotten about the high availability requirements and incalculable operational costs of running a search engine. Google.com's availability is a very high barrier of serving in the multi-billions of searches a day. Azure has lots of experience in unreliability and running services at a massive loss whilst minting credits to compete on cost.
    - Rastonbury 4y ago
      You realise that openAI is just one customer of Azure, the second largest cloud provider in the world. How much revenue do you think they are forgoing? 50m is a rounding error there, their guidance for next quarters revenue has a range of a billion

unmole 4y ago

They apparently got a lot of Azure credits and Microsoft isn't making any revenue from running OpenAI's workloads.

dekhn 4y ago
The value to microsoft is in the marketing around a premier training company using their hardware... their actual hardware in this case is a bespoke supercomputer, but performance watchers like me are paying attention. From what I can tell, of the top 3 cloud providers, azure is doing the best work with high speed interconnects right now.
htss2013 4y ago
But what are the workloads costing MSFT? If the credits are part of the acquisition deal, maybe they're considered capex not opex, and MSFT gets to amortize the credits' operating cost over decades. What is the true marginal cost to MSFT for gpt workloads anyway? As long as it's not bumping paying customers then it's what the cost of electricity?
dereg 4y ago
Creating credits out of thin air is impossible as all financial transactions must be accounted for. In the case of Azure credits, they will appear as increased revenue on Microsoft's balance sheet. However, if Microsoft decides to price Azure services below cost as part of their agreement with OpenAI, their profit margins will be affected. I highly doubt that is the case because the alleviation of cost is in the form of credits. I would wager against comment 0 that said that this will materially affect earnings.
- rvz 4y ago
  It will, hence the MSFT layoffs happening at the same time. People here wanted Google scale of operations and replacing Google with ChatGPT as their search engine. But it seems that some here have forgotten about the high availability requirements and incalculable operational costs of running a search engine. Google.com's availability is a very high barrier of serving in the multi-billions of searches a day. Azure has lots of experience in unreliability and running services at a massive loss whilst minting credits to compete on cost.
  - Rastonbury 4y ago
    You realise that openAI is just one customer of Azure, the second largest cloud provider in the world. How much revenue do you think they are forgoing? 50m is a rounding error there, their guidance for next quarters revenue has a range of a billion