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Comment by pc_edwin | Hacker News Reader

I just don't understand how they can package all of this for $20/m. Is compute really that cheap at scale?

I also wonder how Apple (& Google) is going be able to provide this for free? I would love to be fly in the meetings they have about this, imagine all the innovators dilemma like discussions they'd be forced to have (we have to do this vs this will eat up our margins).

This might be a little out there but I think Apple is making the correct move in letting the dust settle. Similar to how Zuckerberg burned $20 billion dollars for Apple to come out with Vision Pro, I see something similar playing out with Llama. Although this a low conviction take because software is Facebooks ballgame (hardware not so much).

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Compute is not cheap! I think it is well known (Altman himself has said this) that openAI is burning a lot of money currently, but they are fine for now considering the 10B investment from MSFT and the revenue from subscription and API. It's a critical moment for AI companies and openAI is trying to get as large a share of the market as they can by undercutting virtually any other commercial model and offering 10x the value.

Additionally, compute has the unique property of becoming cheaper per-unit at a rate that isn’t comparable to any other commodity. GPT-4 itself gets cheaper to run the moment the next generation of chips comes out. Unlike, for example, Uber, the business environment and unit economics just naturally become more favorable the more time passes. By taking the lead in this space, they have secured mindshare which will actually increase in value with time as costs decline.

Of course bigger (and thus more expensive-to-run) models will be released later, but I trust OAI to navigate that curve.

> “I just don't understand how they can package all of this for $20/m. Is compute really that cheap at scale?”

It’s the same reason why an Uber in NYC used to cost $20 and now costs $80 for the same trip. Venture capital subventing market capture.

It's quite possible they are charging near or below cost because they want your data....

Imagine how much they would have to pay for testers at scale?

Probaby with Microsoft's money injection they're trying to raze the market and afterwards hike prices.

I think answering lots of queries in parallel can be a lot cheaper than answering them one at a time.

It's not about generating profits. It's about being an existential threat to Google. MS will happily burn money.

Why worry about money when you have enough money in the bank to last until Judgement Day?

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