The Six Five team discusses Microsoft and OpenAI deepen partnership.
If you are interested in watching the full episode you can check it out here.
Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.
Transcript:.
Daniel Newman: So, yep, I think you some good analysis there, Pat. Let’s dive into another big piece of news before we kind of get to the earnings run here on the show. And that’s the Microsoft/OpenAI. So we all kind of had heard about the $10 billion investment that was planned for Microsoft in OpenAI, and so that one kind of deepened this week. Pulling up some notes here, I’ve got a research note that I’m finally going to get published, took me a little while. But they, basically, finally announced that the partnership has been expanded.
And what does this really mean? Well, what it really means is that Microsoft not only is investing the $10 billion, but it’s looking to democratize. I think as you know, every company on the planet is using some Microsoft software, whether you’re running Windows, whether you’re using Office, it’s pretty much pervasive. Well, OpenAI and it’s potential, is really in its earliest days. We’re hearing a lot about ChatGPT. And ChatGPT is interesting and powerful. There’s a lot of ethics and use rights and content rights that need to be explored further, especially in using it in the open domain.
Interestingly, Pat, my daughter came home and I guess it’s a whole ethics thing now in the high schools, because guess what kids immediately started doing when ChatGPT came out? Is they’re all cheating, on everything. And the bottom line is it is pretty much an enabler. But just as fast as they’re able to learn to cheat, there will be AI tools set to help catch them to cheat on different things.
But long and short is there’s a much bigger and more opportunistic part of the partnership with Microsoft and OpenAI, and that’s the more democratization of the OpenAI technology throughout the Microsoft portfolio, which is the Microsoft advantage. And then, of course, how this can potentially translate to other tools and technologies in the Microsoft ecosystem. Microsoft, some of the first things they’re looking at doing is supercomputing at scale. They’re looking at creating kind of AI powered experience, what they call it in the Azure AI, OpenAI services that’ll go across the portfolio. And then of course, this is the big Microsoft moment, that’s going to be the exclusivity of its cloud partnership, which means OpenAI will be running in how many clouds Pat?
Patrick Moorhead: One cloud.
Daniel Newman: One could. Sorry, I just felt so cool to do that. I was kind of getting your crowd, when you go on stage-
Patrick Moorhead: Also see if I’m paying attention, I get it.
Daniel Newman: No, I actually… Where are you paying attention? Because I’m really interesting.
Patrick Moorhead: I was.
Daniel Newman: So anyways, a couple of interesting things that I’ve been thinking about. I think we talked about this, Pat, a couple weeks ago, is the real opportunity for OpenAI is going to be in the proprietary data. So bottom line is we’re already seeing with what people are doing with ChatGPT, and say, I want to write a ethics paper at a 10th grade honor student level, that’s done. You figured it out. It can do it to some extent. As more data becomes available, that.
It’s able to scrape across the web, it’ll keep doing it better. But companies have masses of proprietary data: the data that comes off vehicles, smart city data, the data that lives in our ERP systems, the data that lives inside of our sales data, CX tools, that’s proprietary and unique. So if companies can start to use a tool like OpenAI to rapidly be able to implement meaningful customer journeys, or more intelligently understand customer behaviors, or being able to better understand safety profiles inside of municipalities, that’s going to be a really unique opportunity, where OpenAI as opposed to really extensive and complex data pipelines become more usable.
So I look at this as a democratization of AI as a whole, but also a very thoughtful investment from Microsoft. Because the exclusivity on Azure is obviously going to create a ton of demand for Azure services, and coming off Microsoft’s relatively tough earnings this quarter, which you’ll talk about here coming straight out of this topic, this is kind of what I call a silver lining to what people are saying is slowing growth in the cloud. Because with this partnership, and all the AI that could be done across the Microsoft portfolio and the way they account for cloud, Pat, this should be a way to accelerate their cloud growth coming into the next several quarters.
Patrick Moorhead: Yeah, this story gets more interesting and I don’t know if it’s brilliant communications people, but you and I have managed to talk about these two companies, I think this is our third time. So hats off on dribbling out the content to get us to do that. And that kind of reminds me of a tweet, I wouldn’t call it battle between Yann LeCun and the founder and CEO of OpenAI. But they kind of got into it, where Yann said, “To be clear, I’m not criticizing Open… By the way, Yann LeCun is the most famous AI person out there right now. He said, “To be clear, I’m not criticizing OpenAI’s work, nor their claims. I’m trying to correct a perception by the public and the media. You see ChatGPT as this incredibly new innovative and unique technological breakthrough that is far ahead of everyone else. It is just not.”
Now this is kind of endemic of really, really smart people this notion that just because you might have thought of it first, that that’s where it ends. It doesn’t. I mean OpenAI and now Microsoft are just telling a bigger and better story. LLMs have been around for a while, and I’m certain that Google and AWS both have something in the oven. Maybe for Google it’s going to be DeepMind, maybe it won’t. But the fact is, between OpenAI and Microsoft, they’re playing their A game.
So what was new here, first thing was, hey, they’re doubling down on supercomputer workloads. There were no details on which ones, but you’d have to think things like drug discovery would be out there to be able to do this even better. They said they were going to integrate it into Microsoft consumer and commercial applications and services. Absolutely no details. Right, Dan?, You and I will be on a fourth, fifth or sixth time talking about what this is. But man, I’d love to see this baked into PowerPoint, baked into Word, baked into Excel.
Today, Google Workspace has a lot of AI features already baked in into their tools, but the ability to go with these expensive LLMs, I’m pretty excited to see what it is. Last time we talked, I’m like, “Hey, where’s the differentiation here? Where’s the mote?” Well, I think there’s a short term mote that you called out, and that’s their exclusive, Azure is the exclusive LLM provider for OpenAI. There was no duration that was announced. There was no money that was discussed. But again, that’ll be for our sixth installment of this that we can talk about.
If nothing else, looking big picture, it has excited people. I mean, I don’t know if this is the new NFT, this is the big investment, where everybody’s going to get rich and everybody’s going to get into, and two people will make money and a million will lose money. But I am very positive though it is-
Daniel Newman: Pat, did you-
Patrick Moorhead: … showing a different look at what you can do with AI.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
