Finally a way to get endless Just Dance Vance videos combined with every type of kitten and alligator interaction video!
Get the sheriff of Nottingham to take care of it!
To put that in context, Alphabet (Google’s parent) is the biggest software company in the world. It’s the 3rd biggest company in the world after nVidia and Apple, but they’re mostly hardware companies.
Google’s annual revenues are creeping up towards $500b/year. So, the AI companies (Google included I suppose) would need 12x Google’s annual revenue just to break even.
There are 2 companies that have over $1b in annual revenue, Amazon and Wal*Mart. But, those are companies that sell goods to consumers, they’re not just digital services businesses. But, even then, you’d need 3x the revenue of Amazon and Wal*Mart combined to hit $6t.
Google, Apple, nVidia, Wal*Mart and Amazon each took decades to grow enough to capture hundreds of millions of dollars in revenue. So, somehow OpenAI and Anthropic are going to need to grow faster than any other company on earth to hit these trillion dollar targets.
Also putting this number into scale, there are about 8.3 billion people on the Earth. But, most of them are poor goat herders, subsistence farmers, sweatshop employees, and AI model trainers / reviewers living in Asia and Africa. These aren’t the kinds of people who are going to be buying a subscription to ChatGPT. There are maybe 1 billion people globally who have disposable cash they can spend on AI. So, to hit 6 trillion annually, each person living in a developed country would need to personally hit $6000 in AI spending on a yearly basis. Note, that includes children and the elderly. If you limit it to working-age people, that’s more like $10k per person per year.
Now, it doesn’t have to be that this is down to consumers. Maybe this is so valuable that Wal*Mart, the US government, and every other large employer pays for a ChatGPT subscription for each of their millions of employees. But, really, despite the fact that there have been very few actual successful AI deployments that saved companies money, or generated more profits, they’re suddenly going to be spending a significant fraction of each worker’s wage on AI subscriptions?
I think it’s pretty obvious that the AI companies thought that they were about to invent AI jesus. They thought they were just a few datacentres away from the machine god coming to life. They thought that AGI would change the world to such a degree that it might make the entire economy obsolete, so there was no limit on how much they should spend so either they would get there first (and maybe be seen as the god’s parents?) or out of some kind of altruism-type-feeling so that they could make a machine god which would align with their beliefs. But, that didn’t happen.
I saw a comment the other day about AI firms and CapEx vs OpEx. CapEx is Capital Expenditures – basically one-time costs for setting up a business. OpEx is Operational Expenses, basically ongoing costs for running a business. A good way to generate money from a business is to have a high CapEx and low OpEx. It’s hard for someone to set up a competing business because of the high initial costs, but once it’s up and running you can provide services for a low ongoing cost, and you can make a high profit on each customer. If CapEx is low but OpEx is high, sometimes it can work as a luxury business. Think an artist who hand-carves furniture. If both CapEx and OpEx are low, it’s basically a commodity business, think something like a nail salon. Cheap to set up, cheap to run, hard to fight off competitors.
The AI companies are stuck in a world where they have incredibly high CapEx (building DCs and training new models), and incredibly high OpEx (inference queries – basically talking to the chatbot, is also very expensive). Right now to try to hook customers they’re subsidizing the OpEx side of things, so each new customer costs them more money. Their paid tiers are even worse because people actually start really using the chatbots once they pay for them, and the money lost per customer goes way up for the paid tiers.
The only thing that would work is if the companies can somehow manage to get customers to pay incredibly high costs per token, so that not only are the OpEx costs covered, but the companies can start to pay down the initial CapEx. But, there’s just no justification for that yet. And the ruthless competition between all the AI companies means that if one of them starts trying to jack up costs to cover their OpEx, the others will keep theirs low to grab market share.
This is why the AI companies are doing all the things they’re doing. They’re talking about their models “escaping containment” and “hacking” other companies. Why? Because that makes it sound like these things are so powerful that they can’t be contained, rather than it being that the AI companies are incompetent and building a locked-down test environment, and how they are just running dumb scripts that they’re not even looking at before the execute. They’re boosting stories about the AIs being so powerful that they’ll destroy the world so that CEOs think they need to buy subscriptions to this powerful machine god for their companies. They’re inviting regulations and laws so that no new AI companies can enter the business, and so that they’re all forbidden from building new models, which is a massive CapEx (sorta) cost.
They can’t admit that the attempt to build a machine god has failed, because that will cause the bubble to pop. What they want to do is survive long enough to go public so that the costs they’ve spent can be foisted on the dumb retail investors – and at this point on pension funds and anybody holding index funds, because these companies are so huge that index fund managers would be obligated to buy them. So, they need to keep scaring people about how incredibly powerful and unstoppable their word-guessing-machines are until their investors have safely grabbed their profits and everything can be allowed to explode.
Just to add a soupcon of detail: both Codex (OpenAI) and Claude Code (Anthropic) have had significant price increases this year. Eg:
The goal (clearly) has always been B2B sales… with consumer tiers slowly being tightened or transitioned. At the moment, OpenAI is stupidly, unsustainably generous with their $20/month tier (which includes separate pools for chat and Codex). As we’ve seen with Anthropic, that will slowly winnow down to the point of non-utility.
IOW, the plan is proceeding as “intended”. See: Airbnb, Uber, etc.
IOW, the plan is proceeding as “intended”. See: Airbnb, Uber, etc.
That’s where I disagree. Uber maybe has a viable business as long as they keep finding gullible or desperate people to drive for them. Their OpEx costs are tiny, it’s nothing more than a system that receives a message that someone wants a ride and sends out a bid to take that customer. Then it’s a pricing algorithm that drops the price that they pay to drivers as low as possible, while driving the cost of the ride as high as possible. They get whatever slim margin is left.
AirBnB is similar, virtually no OpEx costs, a very simple set of algorithms to match places for rent with people wanting to rent them, then fiddle with the prices and extract a middle-man fee. As long as they keep staying ahead of government regulations, there’s a business there.
But, nobody had to go out and explain to drivers why they might want to drive for Uber. “You drive people, we pay you money”, it’s a simple sales pitch. Same with AirBnB. Hotels and taxis were annoying enough that it was easy for consumers too. But, nobody has yet found a long-term justification for chatbots.
Sure, some companies are trying to use them. But, not successfully. Air Canada replaced customer service reps (presumably in a call centre in India or something) with a chatbot. But, when that chatbot hallucinated a policy when talking to a customer, the courts found that Air Canada had to honour that policy. That’s a massive risk long term, especially once people get good at figuring out how to talk to them.
People are using them to generate vast amounts of code… but code is a liability, not an asset. The things code can do might be an asset, but you have to be able to understand and maintain the code for it to work. If people are using AI to generate the code, and other people are using AI to review it, nobody actually understands it. This is just a time bomb waiting to blow up.
If there really were some kind of guaranteed money making thing that chatbots could do (other than online scams), the AI companies wouldn’t be out there trying to sell AI in general, they’d be buying companies and/or starting divisions that did that one thing.
IMO, the AI companies intended to hit AGI, and hand everything over to the machine god. Now they realize that it really just is a clever word-guessing machine with some vague capabilities that niche users might want (but not at the price they can meet), and they’re scrambling to find a seat before the music stops.
I think you’ve answered a different question to the one I was making. I’m not claiming chatbots are a sound business. I’m saying the pricing path follows the Uber/Airbnb playbook: subsidise hard to build the user base, then tighten the consumer tier once the real money is elsewhere. That’s the “as intended” bit.
Uber’s also a shaky example for “virtually no OpEx”. It lost money for the better part of a decade, running on investor-funded rides and driver incentives, before it squeezed either side. That’s the pattern I was pointing at: generous now, worse later.
Whether the underlying business holds up is a separate argument, and you’ve got a fair point there (Air Canada is a good example of the liability risk). It just isn’t the argument I was making.
I think part of that is because Uber’s version of “AI companies chasing AGI” was self-driving cars. They were pretty obviously just relying on human drivers until they could replace them with self-driving cars. When it turned out that was going to take too long, that was when they really started raising prices and lowering pay. They also had to get into delivering food, competing with Doordash etc. I think the AI companies will try to follow this model: raise prices, lower services, and pivot to an alternative market that uses similar tech. I don’t know what that would be for AI, though. Ultimately, the real difference between Uber/Airbnb and the newer AI companies is that Uber and Airbnb worked on a technical level. This AI shit does not.
Another comparison, they’ll need to make token cost 100x to get those numbers. That’s because almost anyone who’s the target demographic of these AI tools is already using it. I don’t see what market is even left to cover. But let’s say their user base is 2 billion ( open AI has 1 billion, I’m extrapolating the rest based on market share) and they’re trying to get almost everyone on the planet with an internet connection to use these products, which is 6 billion, that still means at current prices, they’re only 3-4℅ of the way there.
Yeah this is going to be a freaking disaster.
open AI has 1 billion
I don’t really believe that. Have 1 billion people used it at least once? Maybe? Maybe part of that 1 billion is the same people on different accounts. I definitely don’t think there are 1 billion regular users.
Well put. This is just another version of the same old game. Over-leverage on hype, cash out, push the losses on the public, and the government cleans up the mess. 😡
So wild to see the mainstream media slowly accepting what I have been screaming to anyone who will listen for 4+ years now.
Better late than never?
I’m never letting anyone get over this. When I first heard about AI I was like, “oh, it might be interesting, but since it costs more to keep on than it makes in revenue it’s economically useless, right? Right, Anakin??” I now know how I would react during the Emperor’s New Clothes. That makes me feel good. Unfortunately, I also now know how most other people would react, too (“My, your grace, what a beautiful set of clothes you have! I can’t see your balls at all!”). That makes me feel scared for the future.
Fantastic. That’s USD 750 per Earth inhabitant. You could feed all of humanity for this, with is what is essentially needed.
You can still feed humanity with it… to Skynet.
how could you feed anyone for that little (per year, let alone permanently)?
In the global south, lots of people already spend less than that on food. $750 is more than double the average Ethiopian yearly expenditure on food.
Now all that is pissed away. We had our chance and threw it away.
Revenue is not profit. How are they going to pay their debts, for example? 6T in (fantasised) ARR is already about a third of US Fortune 500 total revenue over 2025, 21T. Good luck with that lol.
Their argument is going to be that AI is so good, it’ll just replace half of the Fortune 500 with their own agentic AI.
AWS: 128B Alphabet : 402B Microsoft: 281B Meta: 201B
Total : 1T
So watch out for everything they charge for to double/treble in a couple of years
Edit: I see that some text is huge. I don’t understand why putting in hyphens seems to be doing that
But those are full revenue, including say MS Office subscriptions etc. If AI revenue needs to be 6T, then we need to talk AI revenue.
Yeah the management would add AI features to MS Office subscription, call it an AI product, treble the price and justify their AI investment
True that, but even then the dark magic of the street of walls will not save them
All of those DRAMs you can’t buy are in that number.
Imagine if this was invested in arresting climate change.
Yeah, the party of “fiscal responsibility” is always like “WHERE WOULD WE GET THE MONEY FOR THAT?!!?!?” whenever it comes to a cause that’s actually important or would help people.
“The same place you always get the money for your greedy money-grubbing ventures that exclusively benefit you and your cronies” is what I would tell them.
If we just stop sending billions and trillions of dollars to the already rich, then maybe we could fix society and save the planet?
But no, there’s never “money for that”…
Instead they are literally posting trillions into accelerating climate change.
We always have money for other stuff.
Anthropic is claiming its total addressable market is over $30tn, so it’s all good, right? (No, that’s obviously crazy)
AI lab Anthropic, reportedly on the verge of a $2 trillion IPO, is preparing to tell investors that its total addressable market is worth more than $30 trillion, according to a report in the Wall Street Journal.
To put that figure in perspective, it eclipses the total GDP of China, is roughly equal to the entire GDP of the U.S., and represents about a quarter of the total world GDP of $120 trillion.
“Mercedes claims they have a total addressable market of $30 trillion by demonstrating that everyone has sold their vehicles and switched to driving a Mercedes on the new $20/month leasing program. Mercedes has not provided a response when asked how much their cars actually cost to own.”
I wonder how much of that proclaimed TAM will be addressed with open models. I’m running Qwen 3.8 27B on my 7900 XTX and have no need to give Anthropic or OpenAI any of my money or data.
Eh total addressable market is such a meaningless figure anyway. Total addressable market is everyone who has a device that they can use AI from, multiplied by the average annual cost of using them. Plus every company that exists in the world, multiplied by how much the AI spend is for the average company. Plus every government in the world. Etc. Boom, 30 trillion. It’s like a super optimistic “this is the maximum that any AI company could ever earn per year if they controlled the whole market and everyone who could use AI is a paying customer”.
That 2 trillion valuation they seek is hella bogus either way. For 30 trillion actual revenue with any real profit margin, it would be low, but we all know they’re not bringing in trillions in revenue.
The catch is that’s the amount of money it’ll be after inflations boom ;)
Great, now a phonetic Batman villain has a say in the economy. Good. It’s just a joy to see, really.
Waiting for the bubble to pop. I need a new GPU and maybe a SSD.
I assure you, if you are a brokie like the rest of us, you will not have the money to spare in the ensuing recession. Honestly I expect personal computing is dead, likely for a decade or more, if it ever comes back.
From one brokie to another, drowning in debt is indistinguishable from drowning in debt with a GPU and SSD.
Last night, my friends and I were talking about how we’re trying to spend more time at home to save money. Instead of going out to a bar, we’re starting to plan more hangouts at home. Why spend $2k/month on rent if we aren’t going to be there? It feels like anytime I leave the house, I’m spending $100 or more. We all were at a bar last weekend watching college football, and after spending $10/drink, we dipped out, bought $50 in beer and pizza, and played Mario Kart at a friend’s house. Much cheaper to just play games at home and hangout.
That’s awesome. You guys should stockpile a few good boardgames while you’re at it, for when you want to switch things up
Well, the downside of that is that it’s insular, you lose the opportunity of meeting new people
And sure, not everyone cares about doing that a lot of the time, but for me personally that’s a great loss at least. I love meeting new people, and everyone being priced out of existing in social meeting places… sucks. A lot
If I already had a solid group of friends, I wouldn’t really care for meeting new people. If someone cool comes along, awesome. Welcome to the group.
But why would I actively go out and try to sift through the 95%+ of people at bars who are either A) shitty, B) don’t give a fuck about me, or C) both; just to try to find one or two new people that I might exchange a couple texts with over the next two weeks before we proceed to forget about each other entirely?
If I already have friends at home who just wanna hang out and play Mario Kart or Magic: The Gathering or Catan or something? Why would I need to talk to strangers, most of whom would just tell me to get bent anyway…
With the amount of integration it achieved to facilitate services and transactions? I am very skeptical of that. I expect to happen a serious market feagmentation and a great number of bankrupties but the void will be filled by new presences.
It wont be like dead dead, but just stagnant. Companies like nvidia will just sell the barely passable hardware with even less reason to upgrade because the prices will rise and the performance jumps will decrease. The good thing is that even the entry level hardware was already good enough for 95% of use cases and what justified upgrades anyway was mostly AAA gaming graphics slop or heavy 3d renders for professionals.
The bad news is that entry level hardware will cost more than high end hardware did last year
The main thing will be the value of the dollar becoming next to null.
Putting some of your savings in foreign currencies can help dampen the blow a bit. That is, if you have savings to spare…
and they already bought years worth of chips, so no computing for a long time.
Unfortunately the bubble popping will not provide you with better or cheaper access to those. At this point it is artificially created scarcity because they don’t want consumers to own hardware anymore. Even with the AI bubble popping, the tech oligarchs (with NVIDA at the helm) will still be pursuing their wet dreams of consumers having to subscribe to their cloudbased computers for everything.
I will quit the internet before I become a renter of everything I used to just use free.
You might, I think I would (at least personally, professionally I may not have a choice) but the vast majority of people will gladly go with this plan I suspect.
Look at car purchasing, most people don’t look at the sticker price or the total cost of ownership, they stop paying attention as long as their income can (and in a lot of cases it technically can but really shouldn’t) support the monthly payment.
Similar thing with new phones, most people buy a service plan that includes a lease or loan on a device. Very few people buy their sevice outright, because that’s a big purchase vs. a smaller monthly payment.
If there was a market for this for laptops, regular folks would eat it up.
That’s all opinion, so take it for what it’s worth. I hope I’m wrong. I’m fearful I’m not.
I love computers but never enough to participate in their plans.
I know how to read. Write. Draw. Go on walks. Play sports. Basically sit and watch paint dry than give a shit about not using a computer again
Free or one time purchase and possible payments for once in a while big updates. I don’t mind paying when the offer is good and I have money.
I am not paying google shit. Or any of them. I will join a privateering crew first.
Other manufactures will arise then. Won’t be quick, won’t be painless, but the US is not the whole world.
You seem pretty sure about that. But where was the competition when they forced the switch to CD’s? The manufacturers are engaged in a shit-trust, and other anti-competitive behavior.
No one will step up.
Thats not… I feel like you weren’t alive yet when that transition happened.
Because CDs are objectively better in basically every way than VHS and cassette, especially for consumers. No more tapes stuck in the player, no more rewinding, no more randomly unspooled tapes, no more twisted ribbons, no more seeking static, no more heat warping, etc. plus cds take up less space overall, and you can easily use many-disc cd changers.
The market absolutely drove that transition, not manufacturers. VHS and cassette were still supported and produced for a LONG time after cds came about, because not everyone was willing to drop a ton of money to get their collection in a new format.
Also just to add that the transition from tapes to CDs and DVDs took decades, by the time tapes finally were fazed out blueray was a thing. I have a copy of Harry Potter and the Prisoner of Azkeban on VHS that’s what 04 I also have a copy of Sabatons Great War album on cassette because fuck it why not. Even now cassette still kinda alive.
CD’s are not better. They scratch easily, and the players break. Like right away. I have vhs that still work, no cd player still works outside of a laptop or game consul, and the disks scratch and get ruined.
That you think they are better, ruins your credibility with me personally on this. You clearly don’t fucking get it.
I’m going to have to agree with the other guy. I have working VHS tapes and working CDs/DVDs that are both over 30 years old. That just means that you didn’t abuse them and kept them away from bad temperature and humidity ranges. CDs were so much better than cassettes that it wasn’t even funny. If you were abusing your CDs so much that they were getting scratched to hell, I can’t imagine you weren’t running into similar issues with your tapes. DVD were vastly better than VHS in much the same way. And the “better” wasn’t even about durability which was probably a wash as they failed in different ways. CDs had better audio quality and better quality of life for the user. You had no need to rewind/fast-forward. The audio didn’t get continually more staticy as time went on. They took up less storage space, especially if you used a CD wallet/book. You didn’t need to clean the heads on a CD player. All these same issues applied to DVD vs VHS other than skipping around a DVD is less common than a CD as movies and shows tend to be viewed sequentially.
Wow. Ok have fun with that personality… eesh.
Oh, the personality of not believing the oligarchs in the face of some credulous half wit? I will, thanks.
Resist, resist, resist.
Boycott, boycott, boycott.Basically, this is a money pump to bleed out small and mid-sized corporations, they fire all their workers, pay out all their wages to AI, but their customers can no longer afford to use them, they run until they’re dry leaving Nvidia, X and Oracle as the only remaining companies, who can afford to (and are designed to) run mostly by AI
The world economy is about $126US trillion this year and $6tn if close to 5% of that total. Given that this is mainly US investment, the US economy is about $26tn so $6tn is about 23%. Huge numbers and I assume that there will be winnowing as the industry shakes out so most of that investment will evaporate as companies go under.
ez, just do some more hyperinflation. That’ll be about enough to buy a bag of rice
oh is that all?
jfc…