16 ms·
If these numbers are right, it's actually not that bad. Cut r&d costs and they are mostly profitable.
by smashed 3mo ago
If these numbers are right, it's actually not that bad. Cut r&d costs and they are mostly profitable.
- vjsrinivas 3mo agoCut down on the one thing they need to keep themselves relevant in this space?
- pevansgreenwood 3mo ago[dead]
- stogot 3mo agoWatch them flare out like a star… but there is lots of questions re the the return on RnD. Is it worth spending another order of magnitude for only marginal frontier gains?
- deleted 3mo ago[deleted]
- deepsun 3mo agoI bet any FAANG spend is mostly R&D. If it's not materials, not energy or taxes, not manufacturing, not licensing or rental fees, then I can only think of R&D.
- windexh8er 3mo agoPeople keep overlooking the fact that costs for these providers scale along with customer acquisition. Most startups don't have that linear expense. Also, training costs are accelerating to get new models out faster. One doesn't simply "get rid of R&D" costs as a comment upstream mentioned. I can't actually imagine R&D goes down anytime soon unless you're willing to play third fiddle. Unless these frontier providers feel some type of squeeze or constraint the Chinese are well positioned to leave the US bag holders of an NVidia bound system. And if anyone has to wonder how one provider for a critical piece of infrastructure will go, well...
- matt-p 3mo agoEven if they keep the R&D costs, more efficient inference and 0 Marketing spend also gets you there. Inference is honestly super inefficient at this point, we can do far better than GPUs, push utilisation up, build more efficient datacentres.
- darth_avocado 3mo agoSo you’re saying if you cut all the cost centers a company would only have profit centers? If you ignore all the losses you’ll only have profits?
- fearmerchant 3mo agoIt's more like once you figure out how to make a really good lamp then producing lots of lamps will be profitable. But the lamps are currently suboptimal so we'll be in the red until that time.
- darth_avocado 3mo agoAnd then someone will come up with lamp pro max and you’ll be out of business. You realize why R&D exists in tech companies even though it’s a cost center right?
- ndiddy 3mo agoOpenAI won't be able to cut R&D spend and collect rent on their existing models as long as the Chinese models keep up the pace of being ~6 months behind them for a fraction of the price.
- rwmj 3mo agoAnd if you wait 12 months, someone will be giving away lamps for free that work just as well.
- strken 3mo agoIt's more like you have a business making engines, each generation of engine has eventually turned out to be profitable over its lifespan, but each generation has an exponentially increasing R&D cost and your customers will switch from the old engines to a competitor if they don't like the newest generation. You're stuck racing against your competitors with the distinct possibility that your R&D costs will outgrow the market demand, and you can't stop because otherwise your customers will stop investing in your dead end tech and switch.
- 3mo ago
- Gigachad 3mo agoIf they cut down on R&D they will be no better than the open source models you can run at cost yourself.
- 4d4m 3mo agoWhile you cant discount 100% R&D they are close, agreed
- cmiles8 3mo agoYes if you ignore all the reasons why they’re horribly unprofitable, they’re profitable. R&D costs are hurting profit side and while you can cut that one just becomes irrelevant overnight in this space if you do, hence the problem.
- taneq 3mo ago> R&D costs are hurting profit That’s quite the hot take, considering it’s literally an R&D company that got to where it is by doing R&D.
- ses1984 3mo agoIsn’t the post above saying the same thing after the part where you cut it off…?
- taneq 3mo ago> R&D costs are hurting profit side and while you can cut that one just becomes irrelevant overnight in this space if you do, hence the problem. I see where you're coming from but I still make a distinction between "R&D costs hurt profits but are necessary to stay relevant" and "R&D costs money but is the source of future profits". It's the difference between a necessary expense and an investment.
- chartpath 3mo agoNot to mention they will need to research how to make their models faster and cheaper to run in order to fit some margin within what people are actually willing to pay.
- bijowo1676 3mo agoOpenAI can easily cut R&D costs by replacing engineers with Claude Code
- root-parent 3mo agoI am having difficulty parsing this sentence ... :-)
- fsuts 3mo agoNumbers are probably not right as classifying everything aa r&d is going to the temptation
- mjamesaustin 3mo agoActually reduce R&D to ZERO and they are still losing money.
- throwaway613746 3mo ago[dead]