Now the AI $64 Question: Where Are the Profits?
October 26, 2023
This essay is the work of a dumb humanoid. No smart software required.
As happens with most over-hyped phenomena, AI is looking like a disappointment for investors. Gizmodo laments, “So Far, AI Is a Money Pit That Isn’t Paying Off.” Writer Lucas Ropek cites this report from the Wall Street Journal as he states tech companies are not, as of yet, profiting off AI as they had hoped. For example, Microsoft’s development automation tool GitHub Copilot lost an average of $20 a month for each $10-per-month user subscription. Even ChatGPT is seeing its user base decline while operating costs remain sky high. The write-up explains:
“The reasons why the AI business is struggling are diverse but one is quite well known: these platforms are notoriously expensive to operate. Content generators like ChatGPT and DALL-E burn through an enormous amount of computing power and companies are struggling to figure out how to reduce that footprint. At the same time, the infrastructure to run AI systems—like powerful, high-priced AI computer chips—can be quite expensive. The cloud capacity necessary to train algorithms and run AI systems, meanwhile, is also expanding at a frightening rate. All of this energy consumption also means that AI is about as environmentally unfriendly as you can get. To get around the fact that they’re hemorrhaging money, many tech platforms are experimenting with different strategies to cut down on costs and computing power while still delivering the kinds of services they’ve promised to customers. Still, it’s hard not to see this whole thing as a bit of a stumble for the tech industry. Not only is AI a solution in search of a problem, but it’s also swiftly becoming something of a problem in search of a solution.”
Ropek notes it would have been wise for companies to figure out how to turn a profit on AI before diving into the deep end. Perhaps, but leaping into the next big thing is a priority for tech firms lest they be left behind. After all, who could have predicted this result? Let’s ask Google Bard, OpenAI, or one of the numerous AI “players”? Even better perhaps will be deferring the question of costs until the AI factories go online.
Cynthia Murrell, October 26, 2023
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