They give a potential to leapfrog the competition when nobody expects that is even possible.
Microsoft has confirmed a $XB investment in OpenAI, the biggest AI bet that any tech giant has made so far outside their own companies. What can we learn from this partnership?
What makes this partnership interesting to watch is that both companies are playing to their strengths. Let’s take a look.
💯 MSFT has distribution
1.4Bn monthly active devices running Windows 10/11
270m MAU - Teams (Slack competitor)
850m members - LinkedIn
60m Microsoft 365 consumer subscriptions
25m MAU - low/no-code Power Platform
Satya Nadella (last week, WSJ):
“We will incorporate this in our own application, so you can fully expect that obviously every product of Microsoft will have some of the same AI capabilities to completely transform the product.”
Here's an example, how OpenAI can be applied:
One of elite AI developers, Andrej Karpathy tweeted that 80% of the code he writes today is being written by GitHub Copilot, powered by OpenAI model.
☁️ Compute capacity
Azure cloud business is now ~$50 Bn/Q in revenue and needs to grow. The deal secures MSFT position as exclusive cloud computing provider to Open AI, boosting Azure further.
“In this next phase of our partnership, developers and organizations across industries will have access to the best AI infrastructure, models and toolchain with Azure to build and run their applications,” Satya Nadella
🗽 Open AI has talent
Sam Altman, CEO of OpenAI named their main advantage that they gathered the most talented AI scientists in the world. The talent of this caliber require certain leadership and culture to thrive and Open AI evidently has both.
🚀 Risk tolerance & Speed
It’s very difficult to launch a product like Chat GPT under the umbrella of an existing public company like MSFT, because any flaw may result in HUGE public scrutiny and backlash.
Some people say that Google has a GPT competitor, but it has been too cautious to release it. But OpenAI has risk tolerance and speed.
🤝 Culture fit: independence, trust & vision
OpenAI operates independently so far, but at the same time Sam Altman doesn’t shy away from presenting on MSFT events and talking about why working with MSFT is great.
Both companies indicate a strong trust in each other’s abilities and intentions, making the collaboration look like a natural fit.
“We formed our partnership with OpenAI around a shared ambition to responsibly advance cutting-edge AI research,” said Nadella in a blog post.
TBC - partnerships don't end on a handshake, they only start then.