Below the Wave: How Long Before Tech Giants Recover Costs Amid AIGC Losses?

Since the launch of the ChatGPT chatbot last November, tech giants have been striving to find ways to monetize their artificial intelligence (AI) products. Currently, most generative AI tools come with high operational costs, requiring advanced chip-based servers and substantial electricity consumption. In response, companies like Microsoft, Google, and Adobe are experimenting with various strategies for developing, marketing, and pricing their offerings.

Despite its early lead, Microsoft’s initial AIGC (AI-Generated Content) products are still operating at a loss. Meanwhile, Google is releasing software upgrades at higher prices, and Zoom is working on developing simplified AI solutions to cut costs. Adobe has implemented usage limits and charges based on consumption. The development and training of these AI products not only take years but also require hundreds of millions of dollars in investment, leading to significantly higher pricing compared to traditional software.

Adam Selipsky, CEO of Amazon AWS, revealed that many customers are dissatisfied with the costs associated with certain models. Microsoft executive Chris Young emphasized that businesses and consumers need time to learn how to use these tools effectively, stating, “Clearly, we need to convert customer excitement and interest into practical applications.” Microsoft's AI programming assistant, GitHub Copilot, which leverages OpenAI technology, has gained popularity among developers, with over 1.5 million users worldwide. Despite its ability to significantly reduce the time and effort needed for programming, the service remains unprofitable due to high operational costs. Reports indicate that GitHub Copilot charges individual users $10 a month, offering a discounted annual subscription of $100; however, each user results in a loss of over $20 per month for Microsoft, with some losses reaching as high as $80.

In light of these challenges, Microsoft plans to increase the pricing for its next AI software upgrade. Starting November 1, “Microsoft 365 Copilot” will be charged at $30 for enterprise users, an increase of 83% compared to Office 365 subscription fees. Adobe is implementing a points system for its AI image generator, “Firefly,” to prevent significant losses. Once clients exhaust their allocated points, their service speed will be reduced to avoid overuse. Adobe CEO Shantanu Narayen stated, “We are committed to providing immense value while safeguarding our costs.”

A report from tech research firm CCS Insight highlights a key prediction for 2024: as costs, risks, and complexities become increasingly apparent, investor enthusiasm for AI technology may wane, leading to a “cold shower” for AIGC in the coming year.