From Cryptopolitan, October 10:
TLDR
- Despite high demand, tech giants struggle to profit from powerful, generative AI products.
- Companies consider raising prices and developing less potent AI models. To address financial challenges
- Investor enthusiasm remains strong, but industry experts anticipate a future reckoning on AI’s profitability.
In recent times, the tech industry has been abuzz with the proliferation of innovative AI technologies, particularly in generative AI. Prominent players such as Microsoft, Google, and OpenAI have eagerly embraced this wave of innovation. However, a substantial challenge lies beneath the excitement: transforming these groundbreaking AI products into profitable ventures.
The development and operation of generative AI are far from trivial tasks. They entail years of intricate model training and resource-intensive fine-tuning. Jean-Manuel Izaret, head of the marketing sales and pricing practice at Boston Consulting Group, succinctly captures the essence, stating that these systems demand massive computational power and intelligence.GitHub Copilot’s financial quandary
A prime example of this challenge is GitHub Copilot, an early entrant into the generative AI arena. Owned by Microsoft and boasting a user base of over 1.5 million, this tool assists programmers in various coding tasks. However, despite its popularity, it has become a fiscal puzzle. Users pay a monthly fee of $10 for Copilot, yet on average, Microsoft incurs an approximate monthly loss of $20 per customer.
To staunch financial losses, tech companies are actively exploring diverse pricing strategies. Some channel their efforts into developing less robust AI models tailored for simpler tasks, while others contemplate price increases.Microsoft’s AI-enhanced Office 365
For instance, Microsoft plans to introduce an AI-infused edition of its Office 365 suite, accompanied by a supplementary monthly fee of $30. This strategic move aims to provide subscribers with AI capabilities, including email composition, creating PowerPoint presentations, automatic Excel spreadsheets, and more. With the current monthly fee hovering around $10, this augmentation seeks to deliver substantial added value.Google’s generative AI integration...
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