Why OpenAI could lose $5 billion this year

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Welcome to Tech Creator, your inside scoop on tech trends. This edition covers Canva’s bold design takeover, OpenAI’s staggering $5 billion losses, and Apple's iOS 18.1 developer beta with new 'Apple Intelligence' AI features. Let’s dive in!

Canva’s latest power play: acquiring Leonardo.ai to challenge Adobe

Canva is making a bold move to challenge Adobe by acquiring Leonardo.ai, an AI image generation startup. This is Canva's second major acquisition this year, emphasizing its commitment to integrating advanced AI into its platform.

Leonardo.ai, founded in 2022 and backed by Blackbird Ventures, has quickly gained traction with its text-prompt image generation technology. Canva plans to incorporate these capabilities to enhance its suite of creative tools, aiming to attract Adobe’s enterprise customers.

“This is the quickest acquisition we’ve ever made,” said Canva co-founder Cameron Adams, highlighting the deal's strategic importance. With a $26 billion valuation and a series of recent acquisitions, including Affinity and Kaleido.ai, Canva is positioning itself as a major player in the creative software market.

As Adobe struggles with its own challenges, including a failed $20 billion deal to acquire Figma, Canva's aggressive expansion into AI suggests a dynamic shift in the industry. “Generative AI can’t be a one-trick pony,” Adams noted, pointing to a future where AI continuously evolves to meet creative needs.

With Canva’s growing influence and innovative approach, the competition in the creative software space is set to intensify.

Why OpenAI could lose $5 billion this year

OpenAI, the creator of ChatGPT, has rapidly built one of the fastest-growing businesses in history. However, it's also one of the costliest to run, potentially losing up to $5 billion this year according to an analysis by The Information. If accurate, OpenAI, valued at $80 billion, will need to secure additional funding within the next year.

• High costs: OpenAI’s AI training and inference costs could hit $7 billion this year, with staffing costs potentially reaching $1.5 billion.

• Revenue challenges: Despite generating around $2 billion annually from ChatGPT, the reliance on a free version increases computing costs without proportional revenue gains. OpenAI’s total revenue might range between $3.5 billion and $4.5 billion this year.

• Losses: With operating costs up to $8.5 billion, potential losses could range from $4 billion to $5 billion.

Cost breakdown:

• Inference costs: Nearly $4 billion on Microsoft’s servers to run ChatGPT and its underlying language models.

• Training costs: Expected to be as high as $3 billion, including data expenses.

• Staffing costs: With a workforce of about 1,500, OpenAI’s staffing costs could reach $1.5 billion due to intense competition for tech talent.

Revenue sources:

• ChatGPT and APIs: Generating about $283 million per month, totaling up to $4.5 billion annually.

• New products: Planned launches of a search engine and a computer-using agent could boost future revenue.

Comparison with competitors:

• Anthropic: OpenAI’s rival, backed by Amazon, is projected to lose about $2.7 billion this year. However, its revenue is significantly lower, estimated between $400 million and $600 million annually.

Future prospects:

• Cost Reduction: OpenAI aims to lower operating costs through improved techniques and expanded server access.

• Revenue Growth: With increasing business adoption of its AI tools, OpenAI's revenue growth is outpacing its costs, indicating potential for improved financial stability.

OpenAI’s financial challenges highlight the high stakes of the AI industry. Despite substantial costs, its revenue growth and strategic plans offer a path to eventual profitability. The company’s ability to innovate and adapt will be crucial in navigating these financial hurdles.

Apple releases iOS 18.1 developer beta with 'Apple Intelligence' AI features

Apple has launched the developer betas for iOS 18.1, iPadOS 18.1, and macOS Sequoia 15.1, introducing new 'Apple Intelligence' AI features.

Highlights:

• Siri enhancements: Updated design with contextual awareness across multiple requests.

• Smart mail: Features like smart replies and email summaries.

• Natural language search: Improved search in Photos using natural language queries.

Installation: Requires an iPhone 15 Pro/Pro Max or an Apple Silicon-equipped iPad or Mac. Users need to join a waitlist via the Settings menu post-update.

Background: Announced at WWDC in June, these features aim for a comprehensive rollout by 2025. The second public beta for iOS 18 also includes RCS support, new CarPlay wallpapers, and dark mode widgets in light mode.

By testing these features now, Apple seeks to ensure a bug-free launch alongside the iPhone 16 this fall.