In case you haven't heard, DeepSeek, a China-based company, released an alternative to ChatGPT and most people in the AI consumer world are saying that the products are very similar. The only difference is that it is around 30 times cheaper than ChatGPT because well… it's based in China. Everything is cheaper there.
The fact that DeepSeek was able to become a product that offers something ChatGPT offers for $60, but instead charges only $2 shows you how intense or how inflated the AI market is.
Yes, BYD is an alternative to Tesla in the Chinese market, but the price difference is not that big. It's not 30 times the same price.
The Inflated AI Market
This number is mainly due to the fact that everybody knew the AI market was becoming a big deal. OpenAI had investments worth billions just to become something more than a hype, to become something that doesn't exist.
They’re trying to create the concept of artificial general intelligence and this requires a lot of money. Money requires lifting the pricing so that revenue would somehow make sense of the huge payrolls they're paying.
So in reality, the API of ChatGPT, the reasoning model should not really cost $60 per 1 million token if DeepSeek offers it for two dollars only. That’s what GPT or OpenAI are going to be forced to do next. They're going to be forced to decrease the pricing in the near future, to lay off some of their talent, or raise more investments just to try to reach the concept of artificial general intelligence, which no one in this world actually knows whether it is achievable in our time or not.
So what happened with Sam Altman and OpenAI? They gambled hard and now we're seeing their cards. Is it a bluff? Is it not a bluff?
We don't know, but what we do know is that they are overcharging a premium for something that should cost a lot less.
Tomorrow’s AI
Even if all of this is not exactly accurate, even if ChatGPT barely makes any profit out of their pricing, DeepSeek will dominate the market in this sense. The average consumer won’t be able to differentiate between DeepSeek and GPT, except see the pricing difference.
Then why would any business, not even an average consumer - let's talk about businesses as they comprise the biggest part of the AI market - why would any business pay 30 times more for GPT when they can access the same thing in a much cheaper way with DeepSeek?
This happened and will keep happening over and over again. It happened with BYD and Tesla.
BYD is now excelling in some benchmarks vs Tesla.
The iPhones were for a very long time designed in the US, but actually manufactured in China.
Now in the AI world, when it comes to the global market, there has to be a reason for a difference in pricing. GPT will now need a new unique selling point to pitch their products.
It's not a game of AI anymore. It's a game of who's going to reach artificial general intelligence earlier, if it's actually reachable. Let's wait and see.