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Microsoft and OpenAI end their exclusive and revenue-sharing deal

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Re: Microsoft and OpenAI end their exclusive and revenue-sharing deal

#831

Post by otabdeveloper4 »

nl wrote: post #685
ttul wrote: post #612

Earlier quoted context omitted.

If you do the math (I did), in 2 years, open source models that you can run on a future MacBook Pro will be as capable as the frontier cloud models are today. Memory bandwidth is growing rapidly, as is the die area dedicated to the neural cores. And all the while, we have the silicon getting more power efficient and increasingly dense (as it always does). These hardware improvements are coming along as the open sourc…

A Opus 4.7/Gpt5.5 class model is 5 trillion parameters[1]. To run a 8 bit quantized version of that you need roughly 5TB of RAM. Today that is around 18 NVidia B300. That's around $900,000, without including the computers to run them in. It's true that the capability of open source models is improving, but running actual frontier models on your MPB seems a way off. [1] https://x.com/elonmusk/status/204212356166685523…

> A Opus 4.7/Gpt5.5 class model is 5 trillion parameters.

Or so they say.

If it's true then that just shows how far behind the cloud providers are lagging while wasting investor money.

(There's a huge amount of diminishing returns in increasing parameter counts and the intelligent AI company should be hard at work figuring out the optimal count without overfitting.)

Re: Microsoft and OpenAI end their exclusive and revenue-sharing deal

#832

Post by KptMarchewa »

Zetaphor wrote: post #627
bandrami wrote: post #494

Earlier quoted context omitted.

You're asking why a businessman would downplay the use of a competing product line?

This is the same guy who said OpenClaw was the most important software release ever. Statements like this make me question how technically competent these tech CEOs are

You should instead question how honest they are.

Re: Microsoft and OpenAI end their exclusive and revenue-sharing deal

#833

Post by bartwr »

danpalmer wrote: post #747
zobzu wrote: post #739

Earlier quoted context omitted.

even google doesnt only use TPUs.

Google is in a different position to others in that they're the only frontier lab with a cloud infra business. It obviously makes sense to sell GPUs on cloud infra as people want to rent them. In that respect Google buys a ton of GPUs to rent out. What's unclear to me is how much Google uses GPUs for their own stuff. Yes Gemini runs on GPUs now, so that Google can sell Gemini on-prem boxes (recent release announced l…

I have most likely outdated info, I left Google Research 4y ago. Back then, available TPU instances were plenty and GPU scarce. Nobody wanted to mess with an immature crashing compiler and very steep performance cliffs (performance was excellent only if you stayed within the guardrails, and being outside was supported and not even resulting in a warning - as it was so common in code). But I believe most of it has changed for the better for TPUs.

Re: Microsoft and OpenAI end their exclusive and revenue-sharing deal

#834

Post by JKCalhoun »

lesuorac wrote: post #318
snek_case wrote: post #248

Earlier quoted context omitted.

The metaverse is another example if anyone doubts the bounds of corporate stupidity.

Why? FaceBook largely requires an Apple iPhone, Apple computer, "Microsoft" computer, "Google" phone, or a "Google" computer to use it. At any point one of those companies could cut FaceBook off (ex. [1]). The Metaverse was a long term goal to get people onto a device (Occulus) that Meta controlled. While I think an AR device is much more useful than VR; I'm not convinced that it's a mistake for Meta to peruse not be…

"I'm not convinced that it's a mistake for Meta to peruse not being beholden to other platforms."

But thinking AR/VR was the way to go is a failure to read the room. If anything the up and coming generations seem to be recoiling from tech.

Regardless, as Microsoft found, it's too late for a 3rd platform and it seems somehow that there's only room in the world for two.

(Meta would have done better to start up a line of caffeinated sugar drinks.)

Re: Microsoft and OpenAI end their exclusive and revenue-sharing deal

#835

Post by dijit »

senordevnyc wrote: post #684
dijit wrote: post #554

Earlier quoted context omitted.

Right. Going to take "inference is quite profitable" apart, because there's nothing else in your reply. OpenAI's adjusted gross margin: 40% in 2024, 33% in 2025. Reason cited: inference costs quadrupled in one year. https://sacra.com/c/openai/ Internal projections leaked to The Information: ~$14B loss on ~$13B revenue in 2026. Cumulative losses through 2028: ~$44B. https://finance.yahoo.com/news/openais-own-forecast-…

Pointing at the API margin and calling the whole business profitable is the financial equivalent of weighing yourself with one foot off the scale. I didn’t call the business profitable, I said that inference is profitable. I was responding to your assertion that they’re speculating by selling below cost. Which isn’t true; they’re selling inference, profitably. They’re losing money because they’re investing in the nex…

Granted on the narrow point: inference itself runs at a positive margin. Where it falls apart is the implicit claim that the training spend is separable.

It isn't. Frontier model training is the cost of having a product to sell inference on next year. Stop training and the inference margin decays on the timescale of the next competitor release, which in 2026 is measured in weeks. So "the product is profitable, the company is just investing" describes a business where the investment is structurally non-optional and structurally larger than the product margin. That's the definition of selling below cost at the level that matters, which is the level you're hedging at when you hold 49%.

McDonald's is profitable because a Big Mac in 2027 costs roughly what a Big Mac in 2026 cost to make. OpenAI's product depreciates to zero on a 12-month cycle unless they spend ~$40B keeping it ahead. That's the disagreement, and "but inference itself has positive margin" doesn't resolve it, it just relocates it.

Re: Microsoft and OpenAI end their exclusive and revenue-sharing deal

#836

Post by celeritascelery »

thanhhaimai wrote: post #241

Opinions are my own. I think the biggest winner of this might be Google. Virtually all the frontier AI labs use TPU. The only one that doesn't use TPU is OpenAI due to the exclusive deal with Microsoft. Given the newly launched Gen 8 TPU this month, it's likely OpenAI will contemplate using TPU too.

Maybe I am missing something here, but if all the frontier AI labs use TPU, why is Nvidia making so much money?

Re: Microsoft and OpenAI end their exclusive and revenue-sharing deal

#837

Post by gadders »

OlivOnTech wrote: post #777
freakynit wrote: post #702

Earlier quoted context omitted.

Had written a blog post on the same a few days back, if anyone's interested in readng (hardly 5 minute read): Can Google Win the AI Hardware Race Through TPUs? https://google-ai-race.pagey.site/

Hello, your link says "~20 min read" wich seems to be the case!

Well, I guess in that case it is hardly a 5 minute read.

Re: Microsoft and OpenAI end their exclusive and revenue-sharing deal

#838

Post by johndough »

danpalmer wrote: post #747
zobzu wrote: post #739

Earlier quoted context omitted.

even google doesnt only use TPUs.

Google is in a different position to others in that they're the only frontier lab with a cloud infra business. It obviously makes sense to sell GPUs on cloud infra as people want to rent them. In that respect Google buys a ton of GPUs to rent out. What's unclear to me is how much Google uses GPUs for their own stuff. Yes Gemini runs on GPUs now, so that Google can sell Gemini on-prem boxes (recent release announced l…

> Gemini on-prem boxes (recent release announced last week)

Do you have any more information on this? I only found this article about it: https://venturebeat.com/technology/googles-gemini-can-now-ru...

It mentions that Gemini can run on eight NVIDIA GPUs, but not which GPU and which Gemini model. Either way, this puts an upper bound of 288 * 8 = 2304 GB on the size of the Gemini model, which as far as I know has been a secret until now.

Re: Microsoft and OpenAI end their exclusive and revenue-sharing deal

#839

Post by unixhero »

thanhhaimai wrote: post #241

Opinions are my own. I think the biggest winner of this might be Google. Virtually all the frontier AI labs use TPU. The only one that doesn't use TPU is OpenAI due to the exclusive deal with Microsoft. Given the newly launched Gen 8 TPU this month, it's likely OpenAI will contemplate using TPU too.

Why is it called frontier and why is it called a frontier ai lab?

Re: Microsoft and OpenAI end their exclusive and revenue-sharing deal

#840

Post by modriano »

philippta wrote: post #372
thanhhaimai wrote: post #241

Opinions are my own. I think the biggest winner of this might be Google. Virtually all the frontier AI labs use TPU. The only one that doesn't use TPU is OpenAI due to the exclusive deal with Microsoft. Given the newly launched Gen 8 TPU this month, it's likely OpenAI will contemplate using TPU too.

In the recent Dwarkesh Podcast episode Jensen Huang (Nvidia) said that virtually nobody but Anthropic uses TPUs. How does that add up?

Maybe he's never heard of Google.
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