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From the article: "It is important to note that the scale of investments being made by these cloud providers is dwarfed by actual cloud revenue. For example, A

From the article: "It is important to note that the scale of investments being made by these cloud providers is dwarfed by actual cloud revenue. For example, Azure from Microsoft generates $25B in revenue a quarter. The ~$10B OpenAI investment by Microsoft is roughly 6 weeks of Azure revenue. This suggests the cloud business (at least for now) is more important than any one model set for Azure." The most interesting implication in the short term is that the impact of model availability on cloud provider choice is more important than the models themselves. Will organizations choose Azure because it offers GPT-4, or AWS because it offers Claude? This also explains reciprocal VC structures whereby e.g. Amazon invests billions in Anthropic while Anthropic in turn promises to spend billions on AWS cloud resources. Anthropic gets a higher valuation and broader distribution, while AWS gets more customers. It would be a fascinating outcome if the predicted oligopoly in fact ends up as several exclusive partnerships.

infecto 3y ago
Doubtful, at the end of the day the models are just like any other API. No reason not to signup for all the big players (GCP/Azure/AWS) and have access to the various models. Should have no weight as to where you should build out your infra.
simpletone 3y ago
> The ~$10B OpenAI investment by Microsoft is roughly 6 weeks of Azure revenue. Revenue isn't what is important. Profit is since profit is the money you have after costs to invest. But since cloud is highly profitable as it is, the point still stands I suppose. > It would be a fascinating outcome if the predicted oligopoly in fact ends up as several exclusive partnerships. I thought people were predicting independent silos? Where highly profitable and cash rich companies like apple, microsoft, google, facebook, etc own their entire stack or exist as their own ecosystem. Where the likes of apple does everything in-house - AI, cloud, OS, chips, etc. The whole she-bang.
- bbor 3y ago
  Opened the comments for exactly this. This person seems very nice but also convinced that they’re a business maven, which I think leads them to making “clear” observations like that. Microsoft hasn’t invested a full year of revenue into OpenAI, so it’s not that invested? Meh
- jjjjj55555 3y ago
  Stupid question, but where would their competitive advantages be in these silos? Sounds like at that point cloud+AI is just a commodity.
- jffry 3y ago
  The relative scale still stands - Microsoft's net income in October, November, and December 2023 was over $21 billion, according to https://www.microsoft.com/en-us/Investor/earnings/FY-2024-Q2 https://www.microsoft.com/en-us/Investor/earnings/FY-2024-Q2

infecto 3y ago

Doubtful, at the end of the day the models are just like any other API. No reason not to signup for all the big players (GCP/Azure/AWS) and have access to the various models. Should have no weight as to where you should build out your infra.

simpletone 3y ago

> The ~$10B OpenAI investment by Microsoft is roughly 6 weeks of Azure revenue. Revenue isn't what is important. Profit is since profit is the money you have after costs to invest. But since cloud is highly profitable as it is, the point still stands I suppose. > It would be a fascinating outcome if the predicted oligopoly in fact ends up as several exclusive partnerships. I thought people were predicting independent silos? Where highly profitable and cash rich companies like apple, microsoft, google, facebook, etc own their entire stack or exist as their own ecosystem. Where the likes of apple does everything in-house - AI, cloud, OS, chips, etc. The whole she-bang.

bbor 3y ago
Opened the comments for exactly this. This person seems very nice but also convinced that they’re a business maven, which I think leads them to making “clear” observations like that. Microsoft hasn’t invested a full year of revenue into OpenAI, so it’s not that invested? Meh
jjjjj55555 3y ago
Stupid question, but where would their competitive advantages be in these silos? Sounds like at that point cloud+AI is just a commodity.
jffry 3y ago
The relative scale still stands - Microsoft's net income in October, November, and December 2023 was over $21 billion, according to https://www.microsoft.com/en-us/Investor/earnings/FY-2024-Q2 https://www.microsoft.com/en-us/Investor/earnings/FY-2024-Q2