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> compared to his own closed and overpriced ones I don't understand how Anthropic or OpenAI can have overpriced models, yet losing money like there is no tomor
by otherme123 2mo ago
> compared to his own closed and overpriced ones
I don't understand how Anthropic or OpenAI can have overpriced models, yet losing money like there is no tomorrow. Taking their own numbers at face value, they claim a revenue of 24 billion (ARR, a dubious tool), spending 21 billion in operating losses and another 11 billion as "R&D" funneled straight to Microsoft pockets. That before all investments they are committing to in new data centers, equivalent to 20x their current revenue.
To be profitable (including capex), the cheapest subscription should at least $200/month for what is currently $20/month, that some already consider overpriced. Unless a miraculous collapse in inference costs happen in the next couple of years, or every single human being become a paying customer of ChatGPT (if they limit their usage to a couple of chats per day on average, to keep inference costs low!), maths don't add up.
- lwhi 2mo agoRe. 'overpriced', I'm assuming OP talking about their theoretical stock price.
- picture 2mo agoIt's possible for something to be overpriced to the customer and simultaneously underpriced for the business to be profitable. Theoretically speaking, they could just be selling such an inefficient product.
- rf15 2mo agoI guess that tracks with the brute force attempt at workable intelligence that is the Attention/stochastic token based system
- dwattttt 2mo agoIt's also not a law of nature that there be a valid/efficient form of a product that makes a business profitable. I'm in no place to judge whether that's the case here, but not all products are viable.
- gravypod 2mo agoYou would need to demonstrate an impact for a line item that big. A 3k person org at $200/seat would be >$7mill/year. That places you very well into self hosting Kimi K3 territory and the never having: price hikes, dependency on a 3rd party, etc. AMD would love to come by and plop one of these into your datacenters: https://www.amd.com/en/products/accelerators/instinct/mi400.html https://www.amd.com/en/products/accelerators/instinct/mi400..... Also, in a few generation, there will be a massive glut of used hardware. Unless frontier labs can surpass the current models significantly I don't know why I would pay them money instead of hosting K3.
- abalashov 2mo agoMarket failure! Market failure is the term you're looking for. Also see: childcare, healthcare, many forms of public transport and social infrastructure. Some things markets simply cannot deliver well, and that's okay. Daycare is the most easily reachable example because it's quite simple compared to the others. Daycare workers are simultaneously some of the lowest paid workers in the US, yet daycare costs are famously high and prohibitive, yet childcare centres are very far from money-printing machines. Margins in the daycare sector are most commonly < 1%.
- necovek 2mo agoOverpriced for the value provided, especially with the pay-as-you-go rates for enterprises; but also in stock prices. Pricing a product is generally about ensuring a profit on investment, but also a good RoI for your customers (or they will not pay). With these long-term profit exercises, it's always a lot of hand-waving though.
- shmichael 2mo agoNo one is forced into buying the product, so it feels like an emotional rather than a rational rant from OP.
- murderfs 2mo ago> I don't understand how Anthropic or OpenAI can have overpriced models, yet losing money like there is no tomorrow. The marginal cost of inference (which is roughly what you're going to pay to a provider that's running an open weight model) doesn't include the cost of training that model.
- joe_the_user 2mo agoI'd assume the gp was just inflating their rhetoric but cost of model is an interesting topic. I'd guess Anthropic and OpenAI's models are expensive relative to the cost of running the models but that the revenue still doesn't pay for building the next and next models. The challenge is how these next generation models are going to pay for themselves. Will everyone on earth find it useful to $200/month to talk to a thing more intelligent than themselves? The alternative is naturally that these are going to replace workers and employers will be the one paying.
- dgellow 2mo agoThe whole thing about replacing workers is such a perfect example of shooting yourself in the foot. The whole US economy is so strong because the population consumes so much. Get rid of the workers, you’re now damaging the consumer base. Repeat that a few times, across industries, and you now have a zombie economy. The idea that we can have an economy of virtual agents is a child idea that doesn’t make any sense in a serious situation
- catlifeonmars 2mo agoMost people on earth don’t make $200/mo.
- 21asdffdsa12 2mo agoInference is only priced in for a low usage window 6h a day per customer?
- dgellow 2mo agoAdd to that the >$700B OpenAI already committed to spend in infrastructure through 2030!