OpenAI Burns the Boats
12 days ago
- #AI
- #Tech Industry
- #Business Strategy
- Anthropic captured 32% of the enterprise LLM API market by mid-2025, up from 12% in 18 months, achieving profitability in inference.
- OpenAI responded by drastically reducing GPT-5 pricing to $10 per million tokens, undercutting Anthropic's pricing strategy.
- The strategy of commoditizing complements is key: businesses make profits on core offerings while subsidizing or reducing costs for complementary products/services.
- Four major profit centers in tech: Advertising ($334B), Cloud ($193B), Systems of Record ($132B), and Productivity ($132B).
- Anthropic focused on coding superiority and enterprise reliability, dominating the coding assistant market with 42% share.
- OpenAI is shifting focus towards advertising, leveraging consumer subscriptions and hiring ad industry veterans.
- Anthropic's future depends on maintaining API margins, while OpenAI can afford to burn inference margins to capture advertising revenue.
- The divergence highlights OpenAI's move towards advertising and Anthropic's focus on sustainable infrastructure profits.