[postflopclarity]

very clever! I hadn't seen anybody make this point before in any of these threads /s

obviously the nature of OpenAIs revenue is very different than selling $1 for $0.2 because their customers are buying an actual service, not anything with resale value or obviously fungible for $

[runako]

FWIW the selling $1 for $0.2 is widely applied to any business that is selling goods below cost.

For example: free shipping at Amazon does not have resale value and is not obviously fungible, but everyone understands they are eating a cost that otherwise would be borne by their customers. The suggestion is that OpenAI is doing similar, though it is harder to tease out because their books are opaque.

[djmips]

Can you explain why Amazon eats the cost of shipping? Are they like the "First CityWide Change Bank"? How do they make money? Answer: Volume.

[runako]

They don't eat all of it anymore, even for Prime members. To the extent they do, it's largely to reduce friction for what is still a purchase that will generally take longer to arrive than going to the store. Plus, it's a nice perk that makes you feel like you're getting a deal.

As for profits, I haven't looked recently, but IIRC profits are mostly:

1. AWS

2. Prime membership fees

The latter drives loyalty and therefore volume and predictability, which allows Amazon to e.g. operate their own mini-UPS in the quest to make money on most parcels. They also rolled back free shipping on everything over the years and use it more surgically and with minimum order sizes.

[array_key_first]

They're not selling a service, they're selling access to a service. You can access a more or less equivalent service from multiple companies.

The value of an LLM isn't an LLM. That's entirely 100% fungible. The value is exclusively what it produces.

If other people can produce the same thing, your LLM value approaches 0.

[rprend]

They sell a product, not a model. ChatGPT is a product, GPT5 is a technology.

If you hope that ChatGPT will be worthless because the underlying technology will commodify, then you are naive and will be disappointed.

If that logic made sense, why has it never happened before? Servers and computers have been commodified for decades! Salesforce is just a database, social media is just a relational database, Uber is just a GPS wrapper, AWS is just a server.

People pay money, setup subscriptions, and download apps to solve a problem, and once they solve that problem they rarely switch. ChatGPT is the fifth most visited website in the world! Facebook and Deepseek making opensource models means you can make your own ChatGPT, just like you can make your own Google, and nobody will use it, just like nobody uses the dozens of “better” search engines out there.

[array_key_first]

The underlying technology already is commodified - there are many, many other models that are extremely competitive.

The problem is: suppose Google has an equivalent model (they do, but if you disagree, just pretend). Suppose they do. What then is OpenAI offering that makes its product more intriguing? Nothing. They have a chat interface. An intern can make a chat interface.

> ChatGPT is the fifth most visited website in the world!

To me, this is absolutely worthless information. That DOES NOT mean that ChatGPT is in the clear and nobody else will overtake them.

Your analogies really paint the picture here aptly. Salesforce is not just a database, it's a lot of stuff on top of it. AWS is not just a server, it's a lot of stuff on top of it. Uber is not just a GPS wrapper, it's a taxi service. That's a different thing.

ChatGPT... is just a model. What they add on top approaches zero. Because that's just how the technology works. It takes text and gives it to a model and then spits out the output. What more can you add onto that system, removing the model? Make it easier to input text? Make it easier to get output? Well that's truly trivial to do, and I would argue ChatGPT isn't even in the top 10 when it comes to that. Today.

[rprend]

ChatGPT is not a model, it is a product. My credit card charges me for ChatGPT, not GPT5. Products have moats because once you solve the problem and become a habit, consumers never switch. Nobody switches from Google, nobody switches from Instagram, nobody switches from AWS to whatever godforsaken hertzner self hosted solution hackernews says is cheaper than the cloud.

Nobody wants the same thing but cheaper, or the same thing but marginally better. You either solve the problem first, or you lose. The first site to ever threaten the dominance of google.com is chatgpt.com! Why? Because it’s NOT just “google but better”, it’s an entirely new thing.

> To me, this is absolutely worthless information. That DOES NOT mean that ChatGPT is in the clear and nobody else will overtake them

Do you think chatgpt.com will be worse the 5th most visited website 5 years from now? I’ll gladly take that bet, let’s do $100, i’ll even give you 2:1 odds. Do you think openAI will be bankrupt in <10 years? Let’s bet $1000, hell I’ll give you 10:1 odds.

Chatgpt.com alone is clearly at least as valuable as instagram.com, soon to be as valuable as google.com, and long term more than either.