Microsoft’s 3 billion bet on Copilot is assessed to be a disaster

[Chrkeller]

curl-6 said:

Chrkeller said:

100%.  It shocks me that people don't realize this.  Amazing bleed money for over a decade.  Apple almost went under more than once.  Nvidia was a small player for decades.  

Now all 3 are top 5 companies on the planet.

As I explained previously, this is not an apples to apples comparison; the likes of Apple, Amazon, and Nvidia always had a viable, functional business model and a clear path to profitability. By contrast, Open AI for instance doesn't even have a plan for how to become profitable: https://www.startupbell.net/post/sam-altman-told-investors-bluntly-he-had-no-plans-on-how-to-generate-revenue

According to JP Morgan, to achieve a 10% return on capital expenditure, the AI sector needs to generate about $650 Billion a year in revenue. The actual run-rate is about $25 billion. In other words, run rate is only about 3.8% what it needs to be to justify the costs.

Meanwhile, AI's contributions to the economy? "Basically zero": https://finance.yahoo.com/news/ai-contributed-basically-zero-us-181419807.html

Sure, but look man I am old-ish.  I remember when people laughed when people said everything was going to have a .com because who needed to be connected all day long?  I remember when people scoffed at the idea of mobile phones for everyone.  AI is far from the first time, in my life, where people didn't see the long-term value.  

Yes — Amazon lost money in its first years after starting in 1994. The company was founded by Jeff Bezos in a garage in Bellevue, Washington, and launched as an online bookstore in 1995 Wikipedia+1.

In its early stages, Amazon reinvested heavily into infrastructure, technology, and expanding product categories, even though it was not making profits. This “growth over profit” strategy meant the company was spending more than it earned, leading to hundreds of millions in losses during the first several years LinkedIn.

Amazon’s first profitable quarter came in Q4 2001, about seven years after launch, with a profit of just $5 million on over $1 billion in sales LinkedIn. Even after going public in 1997, it continued to lose money for years, with total losses in 1996 still around $2.2 million LSA Technology Services.

So, while Amazon did not turn a profit until late 2001, it was not unusual for a company in its early stage to operate at a loss if it was focused on building long-term value rather than short-term earnings.