Posted by zerosizedweasle 2 days ago
If Microsoft were just Windows, Teams, Azure, Bing and whatever it is, Microsoft would actually feel like a competitor for firms like Canonical or Red Hat or SUSE which happens to be big but nothing special relative to the others, whereas it now, with with this very public service feels like a behemoth.
Although I don’t particularly like their cloud services they are undeniably an important part of Microsoft’s business. (And they also own a large chunk of the gaming industry nowadays).
They’re shuttering half their studios, cancelling half their games, and firing game devs by the thousands as they hand halo over to PlayStation lol. You’re technically right but they clearly aren’t taking that part of their business seriously anymore. IIRC Gamepass has plateaued on subscribers for years now even prior to their very aggressive price hikes over the last 18 months.
I saw an article the other day that said Microsoft is telling developers they have to have a 30% return on their games, which is almost double the industry standard. That’s just absurd.
Edit: worth mentioning that you have people openly speculating at this point that they might not even make another Xbox. I’m not quite in that camp, but I also think it is a distinct possibility given the back slide they are clearly in right own when it comes to gaming. Fun fact: It’s been 4 console cycles, almost 25 years, since we saw a major player drop out.
I did hear the speculation about Xbox as well and I hope it's not true. I quite like the Xbox as a console (Series X was the first one I bought, used to be on PlayStation before that). Competition is good for the console space, and Nintendo and PlayStation aren't really competitors IMO. The audience for Switch and PS/Xbox isn't the same.
They kind of took it from Apple to begin with. We almost had Halo on the iMac before Microsoft acquired Bungie [1].
Suddenly Microsoft has gone from being some software to being everywhere. I know that Azure is huge, but you don't see Azure.
Windows competitors are OSX (and the very good Apple hardware), Linux (which thanks to Valve is gaining users at an increased rate).
Teams competes against Slack/Discord
Azure competes against AWS/GCP.
Bing "competes" against Google Search
While they do have a share of each (and a big share of the desktop) they don't really have anywhere they can grow, they've filled their existing niches and are competing with other equally sized companies in all of them.
So spaffing some cash on AI on the off chance it pays off down the line might look smart.
Hell if AI does pay off then they look good and if it doesn't, it'll look bad for everyone who invested and they can at least shrug off the cash hit.
Now that OpenAI is starting to talk about ads and allowing "erotic" content, I feel more comfortable in my prediction that not only have OpenAI never turned a profit, they never will. They will be consumed by Microsoft or crash the market so hard it's not even funny. The technology will survive, and it will be useful, but OpenAI as a company is done.
Three generations of Twitter leadership couldn’t make ads on that platform profitable and that exposes far more useful user specific information than ChatGPT.
The hubris is incredible.
More and more OpenAI is drawing parallels to the Danish scandal of IT Factory. Self-proclaimed world leading innovation and technology in the front, financial sorcery in the back.
It's a giant money pit, funding a bunch of people who are not long off the crypto grift train if they are at all.
Like, where is this tech headed? Is it always going to be something that can only be run economically off shared hardware in a data center or is the day I can run a “near frontier model” on consumer grade hardware just around the corner? Is it always going to be trained and refined by massive centralized powers or will we someday soon be able to join a peer 2 peer training clan ran by denizens of 4chan?
This stuff is so overhyped and yet so under hyped at the same time. I can’t really wrap my head around it.
I suspect it is, in fact. But you can also see why a bunch of very very large, overinvested companies would have incentives to try to make sure it isn't. So it's going to be interesting.
Your last statement: are you implying that the AI-bubble is perhaps an attempt at building out more cryptocurrency mining outfits?
But specifically at least one of these people — Sam Altman —- is not, IMO, off the crypto grift train, because he's still chairman of Worldcoin, which strikes me (and more importantly strikes regulators around the world [0]) as a pretty shoddy operation (not to mention creepy and weird).
[0] https://en.wikipedia.org/wiki/World_(blockchain)#Legal_and_r...
There is much more manipulation potential with LLMs than typical ads. I am worried. It gets more and more difficult to distinct ads and the neutral information.
They should've made so much money on direct response and yet somehow they messed it all up.
Just like they should have been a few times as large in terms of users, but they executed really, really badly.
So I'm not sure Twitters failures imply anything about OpenAIs prospects.
> There’s a famous Sam Altman interview from 2019 in which he explained OpenAI’s revenue model [1] :
>> The honest answer is we have no idea. We have never made any revenue. We have no current plans to make revenue. We have no idea how we may one day generate revenue. We have made a soft promise to investors that once we’ve built this sort of generally intelligent system, basically, we will ask it to figure out a way to generate an investment return for you. [audience laughter] It sounds like an episode of Silicon Valley, it really does, I get it. You can laugh, it’s all right. But it is what I actually believe is going to happen.
> It really is the greatest business plan in the history of capitalism: “We will create God and then ask it for money.” Perfect in its simplicity. As a connoisseur of financial shenanigans, I of course have my own hopes for what the artificial superintelligence will come up with. “I know what every stock price will be tomorrow, so let’s get to day-trading,” would be a good one. “I can tell people what stocks to buy, so let’s get to pump-and-dumping.” “I can destroy any company, so let’s get to short selling.” “I know what every corporate executive is thinking about, so let’s get to insider trading.” That sort of thing. As a matter of science fiction it seems pretty trivial for an omniscient superintelligence to find cool ways make money. “Charge retail customers $20 per month to access the superintelligence,” what, no, obviously that’s not the answer.
> On a pure science-fiction suspension-of-disbelief basis, this business plan is perfect and should not need any updating until they finish building the superintelligent AI. Paying one billion dollars for a 0.2% stake in whatever God comes up with is a good trade. But in the six years since announcing this perfect business plan, Sam Altman has learned [2] that it will cost at least a few trillion dollars to build the super-AI, and it turns out that the supply of science-fiction-suspension-of-disbelief capital is really quite large but not trillions of dollars.
> [1] At about 31:49 in the video. A bit later he approvingly cites the South Park “underpants gnome” meme.
> [2] Perhaps a better word is “decided.” I wrote the other day about Altman’s above-consensus capital spending plans: “'The deals have surprised some competitors who have far more modest projections of their computing costs,’ because he is better at this than they are. If you go around saying ‘I am going to build transformative AI efficiently,’ how transformative can it be? If you go around saying ‘I am going to need 1,000 new nuclear plants to build my product,’ everyone knows that it will be a big deal.”
Not sure if increased availability of LLM porn or the gradual erosion of LLMs with ads and sponsored content would be the greater evil on a societal level. Neither is particularly great. But they will certainly drive shareholder value
A quick search seems to indicate that the porn industry has a $100B in revenue per year, 20% of which is from subscriptions. If OpenAI consumed the entire global market for subscriptions, $20B, would that cover their yearly operational cost?
I'm curious what you're referring to here. Did Sam Altman tweet something about this?
So the math is probably harder than it seems.
The exception might be Azure with their LLM services.
There's a mechanism here similar to a Laffer Curve: Charge too much, they lose; charge too little, they lose. OAI needs to strike a delicate balance vs. surging low-cost competition.
Profit is what you have when you have no confidence in how to reinvest what you earn already.
And then I listened to an Acquired podcast about Microsoft when they interviewed Ballmer as part of the research. He said “At the end of the day, it was only money”. In other words, Microsoft was throwing off so much money from their profitable businesses, they could afford to lose money and take risks without it having any meaningful impact on the company.
The deal with OpenAI is really a nothingburger as far as cash. They aren’t spending any. They are giving OpenAI Azure credits and in return have a huge upside potential.
"They just write it off."
"Write it off what?"
"Jerry, all these big companies, they write off everything."