Everybody has been talking about OpenAI and its staggering $100 billion valuation. However, is this valuation just hype, or does it truly reflect the company's prospects? Here is my take on OpenAI's current position and explore whether the buzz is justified.

Consumer vs. Enterprise Adoption

One key argument against OpenAI's elevated valuation is the challenge it may face in the enterprise sector. The problem is that most companies won't use OpenAI's LLMs on their private data, regardless of what OpenAI does. OSS LLMs fine-tuned on their data is what enterprises will adopt. This leads to the conclusion that OpenAI will predominantly find its place on the consumer side. Which leaves OpenAI mainly consumer side.

ChatGPT vs. Competitors

ChatGPT will likely maintain its position against competitors like Bard(now Gemini) and Perplexity. Google's integration of GenAI in Google search will reduce ChatGPT usage, but despite potential competition, ChatGPT will likely remain a go-to product for many, especially in the consumer market.

Consumer Devices

There is a possibility that OpenAI could enter the market of consumer devices, which could potentially exceed the offerings of Humane and Rabbit. However, there is uncertainty about the success of such a venture, given the potential competition from Apple and Google. While it is unclear how Apple would fare in this market, Google's commitment to privacy and its extensive range of devices could make it a more appealing option for consumers

Revenue Realities

So the question remains whether OpenAI's revenue sources can justify its $100 billion valuation. Considering that a significant portion of ChatGPT users opt for the free version and only a fraction subscribes to ChatGPT Premium, I highly doubt about OpenAI's capacity to generate the tens of billions required to support its valuation.

Conclusion

OpenAI might be headed for a rough ride, with the $100 billion valuation appearing out of sync with the realistic revenue-generating potential. The looming threats from potential competitors, especially Apple, and the skepticism surrounding enterprise adoption make a compelling case against the overly optimistic outlook for OpenAI's future. As with any investment, only time will reveal the true trajectory of OpenAI's success or failure. It remains to be seen whether the company can live up to the colossal expectations set by its valuation.