Six days ago, we published a piece arguing that every AI subscription is a ticking time bomb for enterprise. We did not expect the fuse to be quite this short.

Excerpt:

The IPO Math Forces the Issue

Both OpenAI and Anthropic are on IPO timelines for the second half of 2026. OpenAI completed the largest private funding round in history in April, $122 billion at an $852 billion post-money valuation. Anthropic has reportedly surpassed $30 billion in annualized revenue. Massive numbers, both of them. Also both attached to companies that are still burning cash at extraordinary rates.

Public markets will not tolerate the gap between subscription revenue and compute cost that has defined the past three years. The moment either company files, analysts will demand unit economics that show a path to margin. Usage-based billing is the fastest way to demonstrate that path.

None of this contradicts the repricing thesis. The pricing war is the last land grab before the gate closes. Both companies are spending aggressively now to lock in users whose switching costs will make them sticky when prices rise. OpenAI offers two months free. Anthropic offers 50% more capacity. Both expire in July. What comes after July is the real pricing.

  • Damage@feddit.it
    62·
    7 days ago

    Didn’t Amazon sail on while losing money for years as a public company? Why would super-hyped businesses like these have issues?

    • I Cast Fist@programming.dev
      4·
      6 days ago

      Adding more context to what phcorcoran said, AWS was something that actually had an “end goal”. A new company offering cloud servers where you can host your stuff to be reached by the internet at large, which was already a proven necessity even back in 2003.

      AI is still trying to sell itself as something useful. Not only that, the fixed monthly cost makes zero sense, because tokens have an actual monetary value - there is a cost in processing, cooling, network, etc, which can be attached to it. You’d need an army of low-usage users to pay for the power users[1] to have it make any sense. The alternative is actually charging per token, like pay 10 dollars and get 1k tokens or whatever.

      1. you know those f2p games where the players who use their credit cards are above all others? The free players’ value is in being the punching bag of the paying players. Now imagine the reverse: you need to recruit 20 paying players, who are ok to take a beating, to keep one unprofitable whale in the game. It makes no business sense, but it’s exactly what’s going on at the moment with their monthly rates. It’s no wonder every other week, AI users are reaching their monthly limit faster and faster ↩︎

      • humanspiral@lemmy.ca
        2·
        5 days ago

        a lot of that article is about too big to fail (title, even! though its mostly at the end). We do need to worry about the last gasps of the empire clinging to the bubble by grasping for such bailouts.