New reports suggest that investors are becoming wary of rising costs and that generative AI will be getting a cold shower in 2024. AI has definitely been a big buzzword through 2023 but now as more reports of its costs come in, the hype train could be slowing down. One such report comes via The Wall Street Journal which detailed how Microsoft worked with OpenAI to launch its CoPilot AI service at $10/month on GitHub. According to the WSJ’s findings, Microsoft was losing more than $20 per user, per month, and in some cases up to $80. While it is common to lose money when investing in a new business venture the sustainability of such losses comes into question. Google is also mentioned in the report, in regard to the strategies that some companies may employ to make AI profitable. The short end of it is increased service prices.
Per Tom’s Hardware:
“The source report suggests both Microsoft and Google intend to increase prices for AI-backed software and services. Multiple pricing tiers and more restricted AI access levels are being considered. Specifically, Microsoft and Google will charge $30 on top of their regular workplace software suite subscriptions for access to AI enhancements, it is claimed.”
Meanwhile, as the hype for Generative AI services spread across various technological sectors throughout 2023, others such as Google launched its version, Bard, while OpenAI’s ChatGPT largely dominated headlines. Now as the reality is setting in for companies, and investors, who’ve jumped onto the AI hype train another report suggests that things could be very different in the coming year.
“But the hype around generative AI in 2023 has just been so immense, that we think it’s overhyped, and there’s lots of obstacles that need to get through to bring it to market.”
Ben Wood (CCS Insight chief analyst)
One of the biggest obstacles to AI implementation is the cost of the hardware involved. Presently the biggest seller of such hardware is NVIDIA whose enterprise graphics cards can cost well into the tens of thousands of dollars per unit and are highly sought after for its AI-focused advanced technology. NVIDIA, and its CEO, have seen billions in profits throughout 2023. One analyst recently forecast NVIDIA’s profits to increase tenfold by 2027.
However, as also mentioned in that forecast, factors that could affect such predictions could be added competition. A report from CCS Insight (via CNBC) states that in order to help reign in hardware costs multiple companies such as Amazon, Meta, Alibaba, Google, and even ChatGPT creator OpenAI, are now working on developing their own AI technology. It will take time and even greater investments, to get their own AI trains out of the station but the costs and amount of time involved could leave many smaller businesses out in the cold.
“And it’s all very well for these massive companies to be doing it. But for many organizations, many developers, it’s just going to become too expensive.”
Ben Wood (CCS Insight chief analyst)