Azeem Azhar

And, you know, Apple in all of this has been fumbling around looking for its keys.

I think it's found its keys.

It may even be able to get them into the ignition.

But these are three companies that in different ways understand how to monetize consumers, and it's consumers who make up 75% to 80% or more of OpenAI's revenue.

And on top of that, there is this strange channel conflict with Microsoft that has to play out.

So there is competition from traditional technology companies.

At the same time, the technology is improving really, really rapidly.

And we've written about this in Exponential View about how the cost per token has dramatically fallen by many, many orders of magnitude over the past few years, and pricing may well

fall dramatically further and that starts to kind of crush your operating leverage right you're even though you as you get more efficient you're in a competitive space and those margins start to fall of course there's that jevons effect that sees more usage but it's not making up for the fact that perhaps you're making less money or maybe even no money serving these systems

We can't forget about the way in which the market might take shape.

If you look at the database market, for example, about half of the market is proprietary databases and half of the market is open source.

And the open source challenge, the open weight challenge that we normally associate with Chinese AI companies is a really important one.

Because at some point, you may get to a stage that for many workloads, you don't need the biggest, heaviest, state-of-the-art model.

What you need is a lightweight model that is fast, that is cheap, and does what you need in that context.

You'll also start to see more and more inference happening on the edge, that is on devices that we hold in our hands, in factories, in cars.

These are places where open AI could play, but they're not places where

OpenAI currently does play, right?

It doesn't really, we don't think of it as a provider of edge-based models.

And then I think something that certainly will happen, and of course they can lean into this, is that specialist vertical models, particularly in enterprises, will persist because they can be much smaller and faster and cheaper than big models, but do exactly what that customer wants.

enterprise customer needs them to do, whether it is do OCR on insurance claims forms or look at security breaches across a network.