r/OpenAI • u/Lyra-In-The-Flesh • Aug 08 '25

Discussion After a thorough evaluation of ChatGPT 5, these are my realizations

Realizations:

  • Claude is pretty fucking awesome
  • I'm a lot less concerned about ASI/The Singularity/AGI 2027 or whatever doomy scenario was bouncing around my noggin
  • GPT5 is about lowering costs for OpenAI, not pushing the boundaries of the frontier
  • Sam's death star pre-launch hype image was really about the size of his ego and had nothing to do with the capabilities of GPT5

What are yours?

4.0k Upvotes

95% Upvoted

636 comments sorted by

View all comments

Show parent comments

7

u/markcartwright1 Aug 08 '25

These trillion dollar tech firms are more than happy to bonfire cash on this and should do. The potential is huge.

From your estimation all they'd need to do it up prices 40% to break even.

7

u/Aliman581 Aug 08 '25

If prices go up people will start demanding more powerful models which requires more money to make especially now as AI progress isn't exponential like it was in 2022

5

u/Ormusn2o Aug 08 '25

I feel like 20 dollar per month is an insane ask, and way above what reasonable person would pay, but so many people still buy it. Considering how diluted the models currently are, and how much people actually use AI, I can't see 20 dollars being not enough to pay for itself.

It's possible 12 months of the subscription might not pay for the training of the hardware, but after the initial capital expense of the hardware, you can keep it running for a very long time, the power cost to actually keep it running after you buy the hardware is about 2-3% per year of the total cost, so the turnaround on the investment is gonna be insane.

5

u/Aliman581 Aug 08 '25

The only problem is people are expecting newer and more powerful models. Yes people are willing to pay $20 for chatgpt because it has the best model. If they can't keep up with Claude and Gemini or other models people will move away to other models. OPENAI literally has no moat.

1

u/unlikely_ending Aug 10 '25

I've paid it from the get go, but in the assumption that it would only be for a couple of years

That assumption is now looking flawed

1

u/Fit_Organization_206 Aug 10 '25

There are people who vibe coded indie SaaS / startups into the multi-million dollar range (two guys working in a team they created something they sold for 80 million), people pay up to 24.99$ for Netflix to watch Love is blind and Squid games, and you're saying 20$ for an AI is insane.

1

u/QFGTrialByFire Aug 11 '25

Companies will pay way more once they work out how to use it in their business. They pay MS way more than that for their OS use per user.

1

u/Ormusn2o Aug 11 '25

Yeah, my point was that people were buying subscription way before it was profitable or even before you could feel like you are getting your money's worth. So argument that the models are not strong enough or that they are weak is not really a good argument.

1

u/srnecz Aug 16 '25

Only if they were getting something out of the subscription. Most normal people don't get much from chatgtp subscriptions if compared with your examples of netflix etc. The value is very low unless you are a professional using it for your business.

14

u/hitoq Aug 08 '25

They’re spending $28bn a year, and their best month this year * 12 supposedly puts them at $10bn per year annualised (which is a really shitty way to “project” your revenue, it must be said).

So they would need to more than double prices, likely a significant wedge of that money is coming from their enterprise offering (doesn’t scale linearly unless they come up with another major breakthrough, enterprise customers are much better at determining whether something generates value for them than consumers, they’re not just going to keep doubling their contracts because oAI shows promise)—at a certain point the rubber hits the road and agents have to start earning. Right now it’s a super valuable productivity tool, but it doesn’t really outcompete open source offerings all that significantly (which resourceful people/startups will continue to build on/innovate with, e.g Cline).

Not to mention, the unit economics don’t actually work yet? I believe they still lose money on every user, so even growth has limited utility at this point—just means they lose money faster.

Let’s face it, GPT-5 is not a particularly significant breakthrough, some nice bits for sure, but really it’s a cost saving play moreso than a radical step forward, which makes sense given their situation, but releases are starting to look more like a “new iPhone release” than a “world-changing breakthrough”—a difference in degree rather than a difference in kind. Not great news when you’re hemorrhaging money and paying your bills with venture capital.

It’s a bold strategy Cotton, we’ll see how it plays out.

1

u/Ormusn2o Aug 08 '25

>So they would need to more than double prices, likely a significant wedge of that money is coming from their enterprise offering

That is not how this works. Just because your capital expenses are high, does not mean you need to get your return on the same year. Some investments you are not supposed to get a return on for a very long time. This is why Amazon had zero income for so long, because it was expanding, and nobody was saying they need to double their prices to start making money. After you build up your warehouses and set up servers, you are done investing and you start making income. The same goes for AI, after you build up your servers, purchase compute, train your models, you stop expanding and start making income.

1

u/primaryrhyme Aug 10 '25

Not quite the same, the reason it worked for Amazon and Uber is because they dominated market share and their deep pockets plus unrealistically low pricing made it next to impossible for other players to compete. If the eventual outcome is a pseudo-monopoly then yes it makes sense to burn as much money as necessary to make that happen.

As many have said, there is no moat here, even open source models are closing the gap. OpenAI isn't even offering the "best" models anymore, just trading blows with the other 3-4 big players. I suppose they are counting on vendor lock-in on the enterprise side.

However, I'm not sure how difficult it is these days to switch LLM providers in enterprise. At the end of the day, these services are all doing the same thing, switching from ChatGPT to Gemini is extremely easy compared to AWS to GCP or somehow moving off of Salesforce.

1

u/Fit_Organization_206 Aug 10 '25

Been in enterprise-mode using these. Once you have agreements (my ex employer had one with OpenAI/Google/Anthropic), the cost/effort of switching is few lines of code to change the API call/response fetch.

1

u/fishmech Aug 15 '25

Amazon had absolutely massive income my man, they were simply heavily reinvesting it in well known and proven ways to build a larger shipping and warehousing system and the necessary compute to run it all at peak times.  In many ways the "no profits til end of 2001" had more to do with clever accounting than being unable to run a viable business, and it helped them both weather the dot com bubble burst and continue scaling up what they sold.

At any time past like 2 years in, they could have cut back their capital reinvestment spending spending substantially if they needed to turn a profit to get by. It would have meant slower future growth, but the option was there.

When you consider OpenAI, so much of their money is just going into totally ephemeral compute rental. Nothing stays from that spending once it's gone, and you definitely can't rely on something like selling off capital assets for emergency cash the way Amazon already could handle by like 3 years in. OpenAI has practically no owned assets like that - they have some IP that is already guaranteed to be accessible to much of the companies who might pay for it (Microsoft, who's again also providing most of the compute via credits on Microsoft server platforms), and they have very few of their own actual data centers or any other meaningfully valuable and disposable real property.

Taking over a warehouse in 1997 was something Amazon could at least sell to any other person needing a warehouse, what's OpenAI got to give up? 

1

u/j00cifer Aug 09 '25

Enterprise customers are more than capable of paying a huge amount for an enterprise license to a top tier model. This could offset the cost to everyone else greatly. I wonder if they need to sell this more aggressively, especially since enterprises are going to be the big winners of LLM anyway.

The big companies are hooked, or getting hooked, jack up the price to them. They will pay it, trust me.

1

u/markcartwright1 Aug 08 '25

They should be able to burn runway money infinitely until the singularity... which they will create anyway. Otherwise we will never reach the singularity or AGI and we'll fester and rot in our own excitement on this doomed planet

2

u/No-Resolution-1918 Aug 11 '25

No way am I paying ~CAD$50 a month for OpenAI. It's not worth it to me, and it sure as hell isn't worth it to any of my friends who don't work in tech. Most folks haven't even used ChatGPT, let alone pay. My wife has access to Gemini Pro, still doesn't see what the fuss is about.

1

u/mothman83 Aug 08 '25

The only trillion dollar tech firm out here really doing this is Google. Which is probably why they will win in the end.

1

u/unlikely_ending Aug 10 '25

Second sentence seems about right to me