With the rapid advancement of large-scale generative AI technology, Microsoft has recently implemented a series of notable measures to offset its substantial operational costs across its products and services. The company has not only increased subscription prices for its Microsoft 365 software, with increases as high as 45%, but has also introduced ad-supported product versions and canceled some data center lease agreements.
Image Source Note: Image generated by AI, licensed from Midjourney
Microsoft CEO Satya Nadella recently stated that despite the company's massive investment in AI technology, the value generated so far has been insignificant. These measures seem to reflect Microsoft's efforts not to retreat from AI investment, but rather to explore new monetization models, attempting to shift costs to consumers.
The cost of generative AI is considerable. Take market leader OpenAI, for example. Despite generating $3.7 billion in revenue last year, its expenses reached $9 billion, resulting in a net loss of approximately $5 billion. OpenAI's operational costs are primarily comprised of model training and inference. As the user base grows, inference costs continue to rise.
As OpenAI's largest investor, Microsoft is also bearing the brunt of these cost pressures. Therefore, Microsoft is seeking to reduce these expenses by shifting more AI computation tasks to users' devices. Users would bear the cost of the hardware and its operation, potentially reducing Microsoft's operational burden.
In addition to price increases, Microsoft has added dedicated Copilot buttons to its new devices, encouraging users to perform AI processing on their own devices. This "edge computing" strategy aims to reduce data center energy consumption and resource waste, while also enhancing user privacy.
However, this strategy also presents challenges. With the shifting of AI computational costs, consumers may need to frequently update their devices, leading to increased e-waste. Furthermore, hardware disparities could lead to uneven user experiences, particularly in education, potentially exacerbating inequalities.
Key Points:
💰 Microsoft increased Microsoft 365 prices by up to 45% and launched ad-supported versions.
🔄 The training and inference costs of generative AI are high, with OpenAI's expenses significantly exceeding its revenue.
📱 Microsoft is shifting AI computation tasks to user devices, potentially exacerbating e-waste and user inequality issues.