Source: Science and Technology Board Daily
Author: Song Ziqiao
Science and Technology Board Daily News on September 23 (Editor: Song Ziqiao) In the initial stage of the generative AI revolution, chatbots represented by ChatGPT have amazed the world and successfully popularized technical terms such as AIGC, large models, and emergence to the public. Now, the second stage of generative AI—the era of paid services—is accelerating.
This is manifested in the proliferation of various niche paid products and services, with a long prelude but a strong impact. We can observe this industry change from multiple perspectives:
- Establishment of the launch time for heavyweight paid products
From the imminent launch of Google's multimodal large model Gemini to OpenAI's plan to release a similar large model, Gobi, and the rapid introduction of the new generation text-to-image tool DALL•E 3, September has seen significant progress in many star applications.
The confirmation of the launch time for Microsoft's Copilot is undoubtedly a milestone event in the commercialization of AI products.
According to the Microsoft official website on September 21, the initial version of Copilot will be launched on September 26 with the Windows 11 update, and Microsoft 365 Copilot will be available to enterprise users starting from November 1 ($30 per month, 83% higher than the Office 365 subscription price).
This quarter, Microsoft has announced the pricing of 365 Copilot at $30 per month. Wu Yanjing from China Galaxy Securities stated that users have responded positively to the $30 per month Copilot service. With 1.6 billion users of Microsoft 365, as new AI products continue to be introduced, there is hope for a continuous increase in the conversion rate and ARPU value of AI products. It is expected that paid services for AI will be fully embraced overseas.
He Lichao from Guotai Junan Securities stated that Microsoft 365 Copilot will be fully integrated with GPT, potentially initiating a new round of revolution in the office field. Liu Xuefeng from GF Securities commented that the full launch of 365 Copilot is just the beginning, and its successful commercialization will make application vendors more determined in their investment in AIGC. The breakthrough event of industry application software products with AI empowerment (domestically) and commercialization (overseas) is expected to emerge one after another in the fourth quarter of 2023.
- More companies attempting to adopt a paid model
Currently, many generative AI products and services are still in the free trial mode, such as video conferencing service provider Zoom, CRM software leader Salesforce, and AI assistants for financial software provider Intuit.
However, this situation will not last long. Software companies such as Adobe, Salesforce, and Zoom have all announced plans for monetizing AIGC. Among them, Adobe has announced the full commercialization of its "Firefly" AI, launching a subscription plan at $4.99 per month for 100 points.
In addition, some companies have transitioned from free to paid models, and products for subscription users are being iteratively optimized.
For example, Anthropic, a company invested in by Google and supported by Google's computing power and known as a competitor to OpenAI, has launched a paid version of its chatbot Claude in the UK and the US. Claude was previously only available in a free version, and the professional version now available is priced at $20 per month in the US and £18 per month in the UK. After purchase, users can enjoy features such as priority response, early access to new features, and sending more messages.
One of the earliest players to adopt a paid model, the CEO of the AI drawing tool company Midjourney, recently revealed that Midjourney 6 will bring a significant leap in quality. He did not disclose the exact release date but indicated that it will definitely be this year.
- Increased willingness of consumers to pay for generative AI products
The well-known Silicon Valley venture capital firm a16z has compiled a list of the current top 50 generative AI products based on monthly visits (data as of June 2023). Their report shows that most companies on this list have not engaged in paid marketing, yet consumers are willing to pay for generative AI. 90% of the companies on the list have achieved profitability through subscription models, with an average revenue of $21 per month (for monthly package users), totaling $252 per year.
As a comparison, non-generative AI companies (such as Calm, Headspace, Duolingo) generally have annual subscription fees below $70, with an average monthly subscription fee of $10.
What do these changes signify? What kind of butterfly effect will they produce?
The commercialization of AI applications is crucial for the prosperity of the AI application ecosystem. It is foreseeable that the increase in product value will greatly promote the development of AIGC technology in other application fields.
Sonya Huang and Pat Grady, partners at Sequoia Capital, examined the latest developments in this round of AI revolution. As they put it, as we approach the frontier paradox, the nature of the generative AI market is changing as the novelty of Transformers and diffusion models gradually fades. Hype and rapid demonstrations are being replaced by real value and complete product experiences.
In addition, it is widely recognized that the demand for computing power will continue to increase.
Taking Microsoft as an example, Copilot's content generation requires dedicated AI computing power support. GF Securities stated that the full launch of 365 Copilot to enterprise-level customers indirectly confirms that there has likely been a significant breakthrough in underlying models and computing power infrastructure. The open availability of Copilot to B-end users reflects that Microsoft may have made sufficient preparations in AI infrastructure. The future operational rhythm of products and the sustained growth of computing power are of great forward-looking significance.
According to the content of the financial report conference call, Microsoft expects its capital expenditure for 2023 to continue to increase quarter by quarter, mainly for the construction of cloud services and AI infrastructure. On one hand, Microsoft's continued stable investment in AI infrastructure provides technical support for the widespread use of Copilot by large customer groups; on the other hand, in the future, with the rapid penetration of office and enterprise management software embedded with Copilot, Microsoft's procurement of AI chips and related capital expenditure may continue to increase.
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