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With first mover advantage disappearing for OpenAI and very good alternatives appearing, one wonders how long they can sustain a multi billion dollar per year
by averageRoyalty 2y ago
With first mover advantage disappearing for OpenAI and very good alternatives appearing, one wonders how long they can sustain a multi billion dollar per year loss[0].
The launch of ChatGPT was earth shaking, but what have they done since that impacts or excites the average consumer? Does their revenue even come from the average consumer, or primarily from API users that will lift and shift to a viable competitor?
I don't know, but I'm very curious to see how they can hold their lead and be attractive in the longer term.
0. https://www.cnbc.com/2024/09/27/openai-sees-5-billion-loss-this-year-on-3point7-billion-in-revenue.html https://www.cnbc.com/2024/09/27/openai-sees-5-billion-loss-t...
- sofixa 2y agoAccording to this analysis from a few months back: https://www.wheresyoured.at/oai-business/ https://www.wheresyoured.at/oai-business/ OpenAI are kind of fundamentally unsustainable as a business.
- senordevnyc 2y agoBefore I read this 32-minute long article, who is Edward Zitron and why should I care about his opinion or analysis?
- minimaxir 2y agoEd Zitron has written many newsletters chronicling the business economics of OpenAI/other AI companies and their incentives. They're the most comprehensive writeups in that aspect, although not as technically-oriented as most content on HN.
- sofixa 2y agoIt would have been easier to Google him, or ask Claude/Mistral to write you a summary of his article. I hadn't heard of the author before that article, but all the math and logic in it is sound. There is some guesswork on exact numbers (because OpenAI don't publish that sort of information) you can disagree with, but IMO it's fairly generous in their favour. And it still looks pretty bad for their financial prospects.
- snypher 2y agoWe're here for human interaction, it's pretty condescending to tell someone to "Google it".
- tmnvdb 2y agoFrom scrolling though his articles he is a guy who likes to write polemic articles declaring companies dead
- blah2244 2y agoZitron is a blogger whose content/internet personality is centered around being anti-Big Tech, and very much falls in the "AI is dumb/useless and will die any day now". He's a good writer, but his content is written through an extreme anti-AI lens, so take it with a pretty big grain of salt.
- VWWHFSfQ 2y agoMy understanding is that they sold a large chunk of the business to Microsoft in exchange for nearly unlimited Azure credits
- typs 2y agoThis is the modern version of 2010's "Amazon makes no money in retail"
- orwin 2y agoI see your overall point, i think it is the wrong comp. It compare more to SAP or Atlassian.
- eitally 2y agoI'm curious how you put OpenAI, SAP & Atlassian all in the same category. Do you mind explaining your thinking?
- orwin 2y agoIt's a comparison, not a same category. Leaders in their market, at first because of a small moat and large advance, then the advance shrink but the brand will stay first for at least a decade due to brand recognition. The Amazon comp works less, unless openAI start to suddenly build the sell their own chips.
- zoogeny 2y agoBut isn't it the case that the cash cow for Amazon is actually AWS? That is, without AWS would we consider Amazon to be the success we see it as today?
- machomaster 2y agoYes we would.
- stephenhuey 2y agoKeep in mind that while the store brings in a majority of revenue, it provides less than 20% of operating income. A majority of operating income comes from AWS (which provides less than 20% of revenue). https://www.fool.com/investing/2024/01/10/amazon-e-commerce-company-74-profit-this-instead/ https://www.fool.com/investing/2024/01/10/amazon-e-commerce-...
- serjester 2y agoIf someone has 0 understanding of what an embedding model is used for, I seriously question their ability to predict winners and loser in AI. > OpenAI has a "text embeddings" API that is used primarily for tasks where you want to identify anomalies or relationships in text, or classify stuff in text"
- typs 2y agoChatGPT is an extremely successful consumer product. Looking at Search traffic alone indicates they clearly have large brand value. Usage doesn't just depend on just benchmarks for most consumers.
- minimaxir 2y agoThere's large brand value, and then there's $300B brand value. Without a moat, it's hard to argue OpenAI's value is that high.
- rvnx 2y agoYou can choose as an investor between: a) Coca-Cola (~$300B, profitable, stable, stock-listed, well-known addictive brand, accepted business model with steady growth) b) OpenAI (bleeding cash: $5B lost last year, tech that is not really novel anymore, weird corporate setup, competition that offers similar products). It's not that easy to support the idea that OpenAI will be the winner.
- FactolSarin 2y agoI've been saying the same thing about Tesla for years, but here we are. The market can stay irrational blah blah blah
- throwawayffffas 2y agoWell now that the Donald is running the US and is about to cut subsidies for electric vehicles, add tariffs to aluminum and steel, now maybe the markets may see the light, I am not holding my breath though.
- SergeAx 2y agoSteel and aluminum tariffs will hit all car manufacturers simultaneously.
- mrtksn 2y agoDon't you think that the brand is huge though? It has become a household name and it's synonymous with artificial intelligence. They're also supposed to get grotesque amount of investments which is supposedly more than twice the value of what Musk offered(They have %40 stake in the project Stargate, which is supposedly $500B thing).
- ceejayoz 2y ago> Don't you think that the brand is huge though? The world is littered with old once-great brands.
- giarc 2y agoIntel would like a word.
- mouse_ 2y agoIt got mentioned in the new york times and South Park a handful of times. How many billions is that worth if your technology is obsolete, your prospects are poor, your employees are taking the piss in interviews...?
- jarsin 2y ago> your employees are taking the piss in interviews...? What does that mean?
- razodactyl 2y agoIt's an English term for mocking, teasing, ridiculing. I believe from the link of "piss" being alcohol. "He's on the piss again."
- philistine 2y agoYou talk numbers, so let me ask you a numbers question: at their current valuation, if the brand is 60% of the value that’s top 5 estimated brand value. Is OpenAI really one of the five most valuable brands in the world?
- stevage 2y agoYep. I use ChatGPT a lot, so much so that each day there is some point where it switches from version 4 to version 3. I don't even notice a difference.
- lucasfdacunha 2y agoI don't think you guys understand the reach of chatGPT. I live in Brazil and I was in line at a restaurant when I saw an older lady (around 60~70 years old) chatting with chatGPT on her smartphone. That's when I realized that chatGPT burst the bubble and by a lot. We in the tech bubble know all the competitors and all the other products related to AI, but I guarantee that 98% of the rest of the world just knows chatGPT and some of them use it, even people who struggle to turn the Bluetooth on/off. It's really hard to replicate this, I'm pretty sure this lady will never have the Claude or DeepSeek app installed on her phone, but she will be using chatGPT in the meantime.
- dyauspitr 2y agoFrom the first release? A lot. It is much much smarter and multi modal.