[dudus]

First Windsurf and now this. OpenAI is spending billions like there's nothing else to use this money for while being seemingly cash strapped for model training since they already signaled more investment rounds would be needed to remain competitive. They're trying to become too big to fail before they have a moat which won't work well.

[Jackson__]

They've already claimed that there will be no "GPT-5" LLM, and that instead what they want to call "GPT-5" is a fusion of their various models like 4o, dalle, their video model, etc. That in and of itself is a move that makes it quite clear to me they've hit a wall on the intelligence side.

Add these purchases, and it seems like they are extremely desperate.

[mmaunder]

Models are getting smaller, faster, cheaper to make, reflecting on their own output, adding modes and running in more places. But they’re not getting much smarter because they can only be as smart as us and each other, because that’s where their training comes from. OpenAI is strongest in a world where models cost billions to train. A world filled with cheap open source models is their worst nightmare. This is what’s happening. So they have to pivot into being a product company and away from being a model company.

[mushufasa]

Userbase and customer relationships are valuable. If someone else creates GPT5, but doesn't have a large user base, then OpenAI the company could buy that invention. Or, as we saw with deepseek in January, fast-follow with a comparable model within a reasonable amount of time.

Brands have value. If someone has logged into ChatGPT for two years daily, they have built a habit. That habit certainly can be disrupted, but there's a level of inertia and barrier -- something else has to be 10x better and not just 2x better.

When DeepSeek came out, I tried it out but didn't fundamentally switch my habit. OpenAI + Claude + Gemini instead caught up.

[ivape]

There is a space to make a suite of products that synergize entirely. Glasses, watches, buttons, clothes (yes, clothes), and home devices/computers/tvs. The reason they are in a spearhead position is because unlike like Google and Apple, they don't need to maintain a legacy paradigm. They don't have to introduce new tech and make it work with old tech, while also maintaining usability familiarity (e.g You can't just change iOS and Android).

They take zero risk while attacking user fatigue (people just get bored of stuff). The current leaders take all the risk following OpenAI because everyone will complain about the changes no matter what they do, and just come up with a reason to switch. This is a human phenomenon that is truly fucked up, the same as when a partner in a relationship is ready to move on no matter what you do.

[grensley]

More like they see the future as more multi-modal, and they're probably right to think that is the best value approach vs. throwing more money at large language models.

[agentcoops]

I'm not so sure it's desperation. As an alternative hypothesis, we might simply view it as an attempt from a temporary position of strength to secure their tremendous lead as the primary consumer access point to intelligence. I don't think it's much of an exaggeration to suggest that this is one of the most important open questions at the moment -- one which will likely be relatively winner-takes-all (in contrast to the more commoditized B2B/API side) and where the winner likely won't be decided based on the intelligence side alone. The questions also aren't entirely separate since the winner, here, will have such incomparably valuable usage data...

Unlike most successful startups, OpenAI is not faced with the possibility that the giants (Apple, Google, Microsoft) decide to look their way, but the reality that these are their real competitors and that the stakes are existential for many of them (trends indicating a shift away from search etc). The most likely outcome remains that one if not all of the giants eventually manage to produce a halfway-decent product experience that reduces OpenAI to a B2B player.

[jhayward]

I don't think your conclusion of "hitting the wall on intelligence" is warranted.

It makes more sense to believe that scaling has hit the wall on available text data to train on, and that to continue scaling, along with whatever emergent properties arise they need much more data than exists as text.

There are orders of magnitude more data as video, audio, and images and this is what they intend to use to continue scaling.

[simmanian]

> and that what they want to call "GPT-5" is a fusion of their various models like 4o, dalle...

Do you have a source? I ask because I read the opposite.

[gnopgnip]

From the article 5 billion of the payment is equity in OpenAI. So they aren't spending cash

[alexey-salmin]

This still means 1.5B were paid in cash for a company from what I understood has neither clients nor even a product. Not exactly pocket money.

[mushufasa]

Honestly I think it's a great move if you know you have a hyped up valuation, to exchange that paper valuation for actual company acquisitions. Not every company has that ability.

[no_wizard]

I have a gut feeling alot of this is going to go negative for OpenAI. I simply don't see what they're going to produce in a reasonable amount of time that justifies hardware, for example.

I'm open to being wrong, very open, but I need to see evidence. Hard evidence.

[mlnj]

What else are they going to do with all that money?

Raise billions and billions under the guise of AGI coming tomorrow and they just become a too big to fail company gobbling up any competition.

You don't hear anyone touting AGI anymore do we?

[mattlondon]

> You don't hear anyone touting AGI anymore do we?

Apart from, y'know, DeepMind - remember those guys? The ones with the SOTA models at the top of the leaderboards? The ones who just launched Veo3 and blew everyone away?

It feels like OpenAI has kinda jumped-the-shark at this stage. They don't seem to be especially competitive any more, and all the news coming out of them is tinkering at the edges or acquisitions that no-one really cares about.

When are they going to start competing on actual AI again?

[rcarmo]

Well, Windsurf is no longer worth what they paid for it. Let's see how the rest goes.

[RC_ITR]

Just to stem pointless debates before they flame up - both these acquisitions appear to be primarily if not exclusively for stock.

Sure, if you want to get into theoretical finance, OpenAI could have sold these new shares for cash, so technically there's no difference, but OpenAI is only spending opportunity cost cash, rather than fiat.

OpenAI's fiat likely still goes to the things you'd expect, like training models and paying for inference.

[belter]

The AI hype seems driven more by stock valuations than genuine productivity gains.

Developers now spend excessive time crafting prompts and managing AI generated pull requests :-) tasks that a simple email to a junior coder could have handled efficiently. We need a study that shows the lost productivity.

When CEOs aggressively promote such tech solutions, it signals we're deep into bubble territory:

“If you go forward 24 months from now, or some amount of time — I can’t exactly predict where it is — it’s possible that most developers are not coding.”

  - Matt Garman – CEO of Amazon Web Services (AWS) - June 2024
 

"There will be no programmers in five years"

    - Stability AI CEO Emad Mostaque - 2023

“I’d say maybe 20%, 30% of the code that is inside of our repos today and some of our projects are probably all written by software.”

  - Satya Nadella – CEO of Microsoft - April 2025
    

“Coding is dead.”

  - Jensen Huang CEO, NVIDIA - Feb 2024
   

"This is the year (2025) that AI becomes better than humans at programming for ever..."

   - OpenAI's CPO Kevin Weil - March 2025 

“Probably in 2025, we at Meta are going to have an AI that can effectively function as a mid-level engineer that can write code."

  - Mark Zuckerberg - Jan 2025

"90% of code will be written by AI in the next 3 months"

    - Dario Amodei - Anthropic CEO  - March 2025

[kridsdale1]

Staff are not cheap either. 300k cash salary for most of them from what I hear. Plus 600 to 1M in funny money.

[magicink81]

One explanation:

The models will not be a moat, but the products can be. More specifically "sticky" products / killer apps like ChatGPT, and whatever forthcoming products this acquisition of Jony Ive's company may lead to.

Windsurf acquisition may be explained in part by the same logic of owning a strong and sticky product, as well as a good source of data for training.

[killerstorm]

It doesn't look like they're cash-strapped, more like they want to raise stakes.

To play in the same league as Google and Microsoft you have to be big. So they need to increase enterprise value to be taken seriously.

That's what investors expect them to do.

The only other option is to close it down, as OpenAI would quickly become obsolete if they can no longer produce frontier models.

As for the moat, it's not something you can just conjure, right? Perhaps the whole point of these acquisition is to create a moat, but only time will tell if that worked.

[zombiwoof]

Clearly foundation models don’t make money or a viable business on their own

[vonneumannstan]

You can say the same about any piece of software...

[eviks]

In what way can the be too big to fail? Who will be forced to bail them out and why?

[fakedang]

Don't forget their Abilene chip factory.

[butifnot0701]

Wasnt this all stock deal tho?

[sagarkamat]

Meh, all stock deal. They are not spending any raised cash on this.

[apples_oranges]

And nobody on this forum uses his brain to find out what’s going on ..