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OpenAI declares 'code red' as Google catches up in AI race

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Re: OpenAI declares 'code red' as Google catches up in AI race

#311

Post by rglullis »

bgirard wrote: post #290
stack_framer wrote: post #247

Earlier quoted context omitted.

I can generate $20 billion in ARR this year too! I just need you to give me $100 billion and allow me to sell each of your dollars for 0.2 dollars.

It's a fun trope to repeat but that's not what OpenAI is doing. I get a ton of value from ChatGPT and Codex from my subscription. As long as the inference is not done at a lost this analogy doesn't hold. They're not paying me to use it. They are generating output that is very valuable to me. Much more than my subscription cost. I've been able to help setup cross app automation for my partner's business, remodel my ho…

> They're not paying me to use it.

Of course they are.

> As long as the inference is not done at a loss.

If making money on inference alone was possible, there would be a dozen different smaller providers who'd be taking the open weights models and offering that as service. But it seems that every provider is anchored at $20/month, so you can bet that none of them can go any lower.

Re: OpenAI declares 'code red' as Google catches up in AI race

#312

Post by felixfurtak »

bgirard wrote: post #290
stack_framer wrote: post #247

Earlier quoted context omitted.

I can generate $20 billion in ARR this year too! I just need you to give me $100 billion and allow me to sell each of your dollars for 0.2 dollars.

It's a fun trope to repeat but that's not what OpenAI is doing. I get a ton of value from ChatGPT and Codex from my subscription. As long as the inference is not done at a lost this analogy doesn't hold. They're not paying me to use it. They are generating output that is very valuable to me. Much more than my subscription cost. I've been able to help setup cross app automation for my partner's business, remodel my ho…

All of which you will be able to do with your bundled assistant in the not-to-distant future.

OpenAI is a basket case:

- Too expensive and inconvenient to compete with commoditized, bundled assistants (from Google/ Microsoft/Apple)

- Too closed to compete with cheap, customizable open-source models

- Too dependent on partners

- Too late to establish its own platform lock-in

It echoes what happened to:

- Netscape (squeezed by Microsoft bundling + open protocols)

- BlackBerry (squeezed by Apple ecosystem + open Android OS)

- Dropbox (squeezed by iCloud, Google Drive, OneDrive + open tools like rclone)

When you live between giants and open-source, your margin collapses from both sides.

Re: OpenAI declares 'code red' as Google catches up in AI race

#313

Post by shkkmo »

gausswho wrote: post #204
echelon wrote: post #168

Earlier quoted context omitted.

I don't think this is about Google. This is about advertising being the make or break moment for OpenAI. The problem with ChatGPT advertising is that it's truly a "bet the farm" situation, unlike any of their projects in the past: - If it works and prints money like it should, then OpenAI is on a path to become the next Mag 7 company. All the money they raised makes sense. - If it fails to earn the expected revenue n…

I don't think one can both pull the fire alarm that AGI was a lie AND that if OAI has to act quickly. They can ride their current street rep the same way Kleenex did. They do need to build a business, but they've got time to play the long game.

> They can ride their current street rep the same way Kleenex did.

Kleenex was one product of many and launched by an already 50 year old company. I'm not sure in what sense they "rode" the Kleenex brand, but it would probably have involved being able to sell that product profitably...

> they've got time to play the long game.

They have a couple of years of runway, not sure how that gives them room to focus on the long game.

Re: OpenAI declares 'code red' as Google catches up in AI race

#314

Post by steveBK123 »

bgirard wrote: post #290
stack_framer wrote: post #247

Earlier quoted context omitted.

I can generate $20 billion in ARR this year too! I just need you to give me $100 billion and allow me to sell each of your dollars for 0.2 dollars.

It's a fun trope to repeat but that's not what OpenAI is doing. I get a ton of value from ChatGPT and Codex from my subscription. As long as the inference is not done at a lost this analogy doesn't hold. They're not paying me to use it. They are generating output that is very valuable to me. Much more than my subscription cost. I've been able to help setup cross app automation for my partner's business, remodel my ho…

If the subscription cost 5x as much would you still pay and feel you are getting such a great value?

Re: OpenAI declares 'code red' as Google catches up in AI race

#315

Post by debugnik »

cheschire wrote: post #286
echelon wrote: post #246

Earlier quoted context omitted.

In 2024, OpenAI claimed the bulk of its revenue was 70-80% through consumer ChatGPT subscriptions. That's wildly impressive. But now they've had an order of magnitude revenue growth. That can't still be consumer subscriptions, right? They've had to have saturated that? I haven't seen reports of the revenue breakdown, but I imagine it must be enterprise sales. If it's enterprise sales, I'd imagine that was sold to F50…

With less than 10% of users paying for a subscription, I doubt they have saturated.

I'm reading 5% on a quick search. Isn't that an unsurprising conversion rate for a successful app with a free tier? Why would it increase further in ChatGPT's case, other than by losing non-paying customers?

Re: OpenAI declares 'code red' as Google catches up in AI race

#316

Post by tokioyoyo »

scoofy wrote: post #258

Google literally publish the attention paper. Have people not been paying attention? Google has been the only company I’ve been watching that really understands what they are doing.

If Google wasn’t threatened by OpenAI et al., it wouldn’t be making Gemini today though.

Re: OpenAI declares 'code red' as Google catches up in AI race

#317

Post by alecco »

jdoliner wrote: post #274

I've seen a rumor going around that OpenAI hasn't had a successful pre-training run since mid 2024. This seemed insane to me but if you give ChatGPT 5.1 a query about current events and instruct it not to use the internet it will tell you its knowledge cutoff is June 2024. Not sure if maybe that's just the smaller model or what. But I don't think it's a good sign to get that from any frontier model today, that's 18 m…

SemiAnalysis said it last week and AFAIK it wasn't denied.

https://newsletter.semianalysis.com/p/tpuv7-google-takes-a-s...

Re: OpenAI declares 'code red' as Google catches up in AI race

#318

Post by bloppe »

bgirard wrote: post #290
stack_framer wrote: post #247

Earlier quoted context omitted.

I can generate $20 billion in ARR this year too! I just need you to give me $100 billion and allow me to sell each of your dollars for 0.2 dollars.

It's a fun trope to repeat but that's not what OpenAI is doing. I get a ton of value from ChatGPT and Codex from my subscription. As long as the inference is not done at a lost this analogy doesn't hold. They're not paying me to use it. They are generating output that is very valuable to me. Much more than my subscription cost. I've been able to help setup cross app automation for my partner's business, remodel my ho…

To be fair, I would get a ton of value out of someone selling dollars for 20 cents apiece.

But ya, OAI is clearly making a ton of revenue. That doesn't mean it's a good business, though. Giving them a 20 year horizon, shareholders will be very upset unless the firm can deliver about a trillion in profit, not revenue, to justify the 100B (so far) in investment, and that would barely beat the long term s&p 500 average return.

But Altman himself has said he'll need much more investment in the coming years. And even if OAI became profitable by jacking up prices and flooding gpt with ads, the underlying technology is so commodified, they'd never be able to achieve a high margin, assuming they can turn a profit at all.

Re: OpenAI declares 'code red' as Google catches up in AI race

#319

Post by echelon »

freediver wrote: post #300
echelon wrote: post #168

Earlier quoted context omitted.

I don't think this is about Google. This is about advertising being the make or break moment for OpenAI. The problem with ChatGPT advertising is that it's truly a "bet the farm" situation, unlike any of their projects in the past: - If it works and prints money like it should, then OpenAI is on a path to become the next Mag 7 company. All the money they raised makes sense. - If it fails to earn the expected revenue n…

> - If it works and prints money like it should, then OpenAI is on a path to become the next Mag 7 company. All the money they raised makes sense. Makes sense for whom? Certainly not the users. The entire purpose of ads is to change your behavior in ways that benefit someone else. In ad-based search, ads are at least visually separable (and blockable) but in a conversational AI they are indistinguishable and corrupt…

I like your attitude, but there is potentially a major business in there if they can get users to tolerate it. (Major business meaning greater than the GDP of most countries.)

Over 75% of Google's revenue is ads. A bulk of that from Google Search ads.

I just don't think the ads will be natural. And I think OpenAI has been testing this in quiet and is now "changing course" because the results didn't look great. Hypothesis, of course, but it lines up with the signals we're getting.

Re: OpenAI declares 'code red' as Google catches up in AI race

#320

Post by raw_anon_1111 »

bangaladore wrote: post #285
raw_anon_1111 wrote: post #270

Earlier quoted context omitted.

I will change a few lines of code and use another AI model?

Yeah- given all top AI models are more and more generalists, as time goes on there is less and less reason to use one over another.

It’s really even easier than that. I already do all my work on AWS and use Bedrock that hosts every popular model and its own except for OpenAIs closed source models.

I have a reusable library that lets me choose between any of the models I choose to support or any new model in the same family that uses the same request format.

Every project I’ve done, it’s a simple matter of changing a config setting and choosing a different model.

If the model provider goes out of business, it’s not like the model is going to disappear from AWS the next day.

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