this post was submitted on 26 Oct 2024
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To the surprise of everyone but the engineers and the consumer.
This is fucking ridiculous.
What I don't understand is what's the game plan for all of this. The oligarchs are not the type to just burn their money for fun. Altman and Altman-wannabes, I can understand. They have an incentive to execute what is essentially a pump and dump and leverage other people's money for personal benefit.
But companies like microsoft? Is their plan to keep plowing tens of billions of dollars into "AI" in hopes of eventually discovering/creating the "next IT revolution"?
They have to want a return. Even Zuck eventually stopped burning billions on his metaverse fetish (and he has full cart blanch on FB's shareholders money).
Microsoft has roughly a market cap of 3.2 trillion dollar, so while tens of billions certainly isn't cheap, it also isn't going all in. I think one has to approach it from a betting perspective. Burning a few billion dollar is certainly not great, but also doesn't fundamentally hurt the company. Missing out on a major trend on the other hand is something even large companies can't afford. So it is at least as much about risk management as it is about returns.
He hasn't given up on it though, just maybe scaled back a bit. And honestly in theory i can see the appeal of what he is trying to do. Seems like he is trying to stay ahead and eventually become the default platform for ar/vr devices, similar to microsoft with windows and google with android. So while the costs are huge (and i still don't quite understand where all that money goes), the reward could be worth it in retrospective, if he succeeds.
Market cap is one thing. It's not like they have $3.2 trillion in cash. I understand that they don't want to potentially miss out, but they have to expect a return and have at least modicum accountability on such initiatives. Moreso that Microsoft management doesn't have a dual layer share structure like Zuck that essentially enables them to not be responsible to shareholders.
Have you read about some of the internal discussions on metaverse in FB? They didn't want to use their own products for meetings because it was a hassle and it was easier to just do a video/audio conference call.
They've spent over $46 billion on metaverse initiatives - can you point to any promising products or viable use cases that have come out of this initiative? Surely there has to be something, I understand it takes time, but after 3 years and $46 billion, I don't think it's unreasonable to have something to show.
True, i guess we could also look at other numbers instead of market cap. here are their most recent results: In the last quarter alone they had 22 billion net income. If this article for example is correct with their $13.75 billion that microsoft invested, then we are talking less than 2 months of profit.
However i am not sure if that is the right metric either. If i remember correctly they didn't use cash to pay for their stake either, but instead gave openAI compute credits to train their model on Microsofts cloud. At least for some of it.
In any case as the article above also mentions the whole ownership structure is pretty complicated, but unless the AI bubble bursts and openAI's valuation drops, their investment so far has grown on paper.
Yeah, i've read some articles on the topic. Their quest headsets are pretty solid and the Orion glasses they recently showcased seem like a step in the right direction. But i do share your criticism that it is hard to see where all that money went. Which i also tried to convey above by qualifying my opinion with "in theory i can see the appeal " and " (and i still don’t quite understand where all that money goes)"