According to The Information, internal data shows that by March, OpenAI had generated approximately $1 billion in annualized revenue by selling access to its AI models. This achievement is particularly notable given that OpenAI only began assembling a dedicated sales team last year. In comparison, Microsoft, the world's largest enterprise and cloud software seller, only recently reached $1 billion in annualized revenue with its Azure OpenAI Service.
In response to OpenAI's rapid growth, Microsoft has taken a series of countermeasures, including adjusting the pricing strategy of Azure OpenAI Service and reducing peak usage fees. Microsoft expects Azure OpenAI Service to achieve $2 billion in annualized revenue within a year.
Image source note: The image is generated by AI, provided by the image licensing service Midjourney
Despite Microsoft's strong market position, an increasing number of companies are choosing to collaborate directly with OpenAI. For example, European travel booking site Holiday Extras has opted to partner directly with OpenAI, saving $800,000 annually in employee time costs. This trend reflects a preference among businesses for obtaining services directly from the core AI technology developers.
In the enterprise AI tools market, Microsoft's Copilot and OpenAI's ChatGPT are engaged in fierce competition. Although 60% of Fortune 500 companies choose to use Copilot, Microsoft's Office applications have seen a slowdown in growth in enterprise sales, indicating the intensity of market competition.
Despite the competition, the collaboration between Microsoft and OpenAI continues. Both companies are working together to develop a large supercomputer, and Microsoft has the perpetual right to use OpenAI's technology in its own products. Financially, Microsoft is expected to reap long-term benefits from OpenAI's success, including potentially receiving up to 75% of the profits.
The two companies have also established a mutually beneficial revenue-sharing mechanism, with each receiving a share from the other's sales, essentially offsetting each other. Currently, the gross margin of Azure OpenAI Service is about 40%, with potential for further improvement. OpenAI's API business is expected to achieve a gross margin level similar to that of Microsoft.