Comment on Not even OpenAI's $200/mo ChatGPT Pro plan can turn a profit
hark@lemmy.world 1 week ago
With OpenAI being at the center of the AI hype, I would’ve thought they’d be raking in the dough instead of losing $5 billion. So it’s really just Nvidia making money on this bullshit, huh? It’ll hurt when the hype dies down and Nvidia drops from the second top spot on the S&P 500. We’re all going to feel that one.
Eh all these companies operate as loss leaders until they capitalise the market.
- CNBC has confirmed that OpenAI expects about $5 billion in losses on $3.7 billion in revenue this year — figures first reported by The New York Times.
So yeah some small loses here and there to make back far more in the future.
The assumption is that they’ll develop some kind of moat, but there are plenty of other AI models on offer or in development. It would also be useless capturing a market when the companies that would be their customers realize they’re not making money on the AI themselves.
Which is fine in theory, but “expected” based on what?
They haven’t demonstrated any ability to meaningfully improve their models (“meaningfully” meaning "sufficient to actually address the very serious concerns about their practical usability), they haven’t shown any ability to meaningfully capture enterprise sales for their API, and their conversion rate on free users to paid users is abysmal. Their only stated plan to increase revenues is doubling their prices, which given their already terrible user retention doesn’t actually seem like a reliable way to bring revenue up. Jacking up prices only works when your users find you indespensible, and everything OpenAI offers can be found elsewhere for less.
You have to get people hooked on your product, though.
If they and every other AI company just evaporated no one would really be bothered.
You can’t capitalize a market that doesn’t really exist.
This is exactly the problem. There are plenty of people who will crawl out of the woodwork to tell you how they’ve found a way to make AI “useful”, but very, very few could put their hand on their heart and say that it was “essential” to their workflow or their own happiness and wellbeing in any meaningful way.
dustyData@lemmy.world 1 week ago
You know, to make money in a gold rush, don’t dig, sell shovels.
sugar_in_your_tea@sh.itjust.works 1 week ago
And Nvidia has really fancy shovels.
brie@programming.dev 1 week ago
What is AI gold then?
NotMyOldRedditName@lemmy.world 1 week ago
Autonomous vehicles, robotics, LLMs
funkless_eck@sh.itjust.works 1 week ago
nah its whitelabelling AI credits. You build an API connector, charge 3x for a credit and sell it to a business.
cmhe@lemmy.world 1 week ago
Obsolescence of human workers/employees.