Major AI players may have a big problem...😯
New kid on the block!
Here’s what we know:
📌 New open-source AI model, DeepSeek, launched on Jan 20.
📌 Performance? On par with the latest ChatGPT.
📌 Training costs? 10 times less than other LLMs.
📌 Stock market reaction? Nasdaq Composite and AI giants like Microsoft, Meta, and Alphabet dipped 3-4%, while Nvidia plunged 17%.
But here’s where it gets crazy...
Pricing vs. OpenAI
✅ Free plan rivals ChatGPT Plus ($20/p.m.) and partly ChatGPT Pro ($200/p.m.)
✅ API pricing? 1/27th the cost of OpenAI
✅ Despite being open-source, DeepSeek is for-profit.
Market shock waves
Is this Game over for major AI players like OpenAI? Nope!
DeepSeek’s launch is a market shift, not a knockout. Here’s why:
➡️ New player, new dynamics: DeepSeek has a serious cost advantage.
➡️ AI R&D race accelerates: Competitors will invest heavily in cost efficiency.
➡️ Funding war: OpenAI has the $500B Stargate initiative, DeepSeek has Chinese backers, and AI giants have deep pockets.
➡️ Power plays: Funding needs may lead to mergers & partnerships.
➡️ Geopolitical tensions: Rivaling big US companies, DeepSeek, a Chinese company, could trigger new dynamics in the ongoing US-China fight.
➡️ GPUs: Nvidia may feel most of the heat if the demand for GPUs drops.
➡️ Trust concerns: DeepSeek use of our data, hosting in China, and IP implications.
And how about DeepSeek’s Pricing? How will it affect the market?
▶ Competition response: Will this trigger a price war as it did in China in 2024?
▶ Customer reaction: Will its rock-bottom pricing raise red flags? (Van Westendorp-like, for pricing connoisseurs!)
▶ AI Pricing transformation: The market is experimenting with premium pricing (ChatGPT Pro) and Agent-based monetization (Salesforce.com). Will DeepSeek disrupt the pricing evolution?
A different approach
Pricing-wise, DeepSeek’s approach is questionable. The free access to build momentum is okay, but here’s what they could also consider:
✔️ Price APIs at 30-50% lower (not 1/27th of OpenAI’s pricing) to avoid triggering price wars & trust issues.
✔️ Secure cost advantage - competitors may be able to reverse-engineer this.
✔️ Prepare for funding needs - the market will respond, and sustaining penetration pricing hurts.
✔️ Secure further expansion - check for showstoppers like trust, legal issues, or geopolitical factors.
✔️ Hire experts - smart and AI-driven pricing wins battles.
Bottom line? DeepSeek might be the most cost-effective LLM yet, but can the market trust it? And how will competitors respond? We’re up for some exciting developments at both the tech and the monetization side of AI!
Interested in learning more about AI-Powered Price Optimization and Strategic Forecasting?
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