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(Never mind I was wrong -- deleting my comment to not spread misinformation. The definition of moat is wider than I was familiar with, thanks for the correction!)
A strong brand is most definitely a moat. So is habit. Any source you can find that defines economic moats will list those. https://corporatefinanceinstitute.com/resources/management/e...
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> I don't think you can call ChatGPT a product. It has zero switching cost. In consumer markets the moat is habits. The switching cost for Google Search is zero. The switching cost for Coke is zero. The switching cost for Crest toothpaste is zero. Yet nobody switches.
I used to work for Coke — they've been making a lot of money for a very long time. The size of a moat befits the size of a castle it protects. Coke absolutely has a moat, but it's not big enough to defend Coke as a trillion dollar company. The question isn't whether OpenAI has a moat or not, it's if its current moat is big enough to protect a trillion-dollar company.
I think they have realized that even if OpenAI is first, it won't last long so really its just compute at scale, which is something they already do themselves.
There is no moat in models (OpenAI). There is a moat in infra (hyperscalers, Azure, CoreWeave). There is a moat in compute platform (Nvidia, Cuda). Maybe there's a moat with good execution and product, but it isn't showing yet. We haven't seen real break out successes. (I don't think you can call ChatGPT a product. It has zero switching cost.)
Ironically if AI companies are actually able to deliver in terms of SWE agents, Nvidia's moat could start to disappear. I believe Nvidia's moat is basically in the form of software which can be automatically verified.
I sold my Nvidia stock when I realized this. The bull case for Nvidia is ultimately a bear case.
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There is a prominent subset of the tech crowd who are ladder climbers - ruthlessly pursuing what is rewarded with pay/title/prestige without regard to actually making good stuff. There are countless kidding-on-the-square jokes about projects where the innovators left at launch and passed it off to the maintenance team, or where a rebrand was in pursuit of someone's promo project. See also, killedbygoogle.com.
As an outsider looking at Microsoft, I've always been impressed by the attention to maintaining legacy APIs and backward compatibility in the Windows ecosystem. In my mind, Microsoft is at the opposite end of the killedbygoogle.com spectrum. However, none of this is grounded in real evidence (just perception). Red Hat is another company I'd put forth as an example of a long-term support culture, although I don't know…
> OpenAI’s models, including GPT-4, the backbone of Microsoft’s Copilot assistant, aren’t cheap to run. Keeping them live on Azure’s cloud infrastructure racks up significant costs, and Microsoft is eager to lower the bill with its own leaner alternatives. Am I reading this right? Does Microsoft not eat its own dog food? Their own infra is too expensive?
Just because you own a datacenter, doesn't mean it's free. For one, you still need to pay the power and bandwidth bills, both of which would be massive, and for two, every moment of compute you use internally is compute you're not selling for money.
Don't get me wrong, I think this is a good strategy for MS, but not for datacenter cost reasons.
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It's pretty funny that OpenAI wants to sell access to a "PhD level" model at a price with which you can hire like 3-5 real human PhDs full-time.
Don’t forget that this model would have a phd in everything and work around the clock
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Rust is pretty antithetical to resume-driven development because a lot of the stuff that's written in Rust is too well-written and free of the usual kinds of software defects. It immediately becomes "done" and enters low-effort maintenance mode, there's just very little reason to get involved with it anymore since "it just works". Believe it or not, this whole dynamic is behind a lot of the complaints about Rust in t…
Not from what I've seen. The compiler is slow af which plays badly with how fussy the thing is. It's easy to have no defects in functionality you never got around to writing because you ran out of time.
Doesn’t look like a con to me :)
Maybe I'm just cynical, but I wonder how much of this initiative and energy is driven by people at Microsoft who want their own star to rise higher than it can when it's bound by a third-party technology. I feel like this is something I've seen a fair amount in my career. About seven years ago, when Google was theoretically making a big push to stage Angular on par with React, I remember complaining that the document…
1) Cost -- beancounters got involved
2) Who Do You Think You Are? -- someone at Microsoft had enough of OpenAI stealing the limelight
3) Tactical Withdrawal -- MSFT is preparing to demote/drop AI over the next 5-10 years
AI is simply too useful and too important to be tied to some SaaS.