OpenAI Levels Up; Should Indian AI Startups Be Worried?

OpenAI, the leader in AI innovation, continues to revolutionise the tech landscape with each new update. Following its recent high-impact keynote event in San Francisco, the tech world finds itself in a state of both anticipation and apprehension.

During OpenAI’s DevDay organised on November 6, the Sam Altman-led company unveiled a series of new updates. It released GPT-4 Turbo, boasting a remarkable context length increase to 1,28,000 markers, 16 times that of GPT-4. New speech synthesis and image processing features were also introduced. Moreover, the company initiated copyright protection for API and ChatGPT Enterprise Edition for users, committing to customer support in legal matters.

Moreover, an Assistants API, offering session thread support, code interpretation, and a sandbox environment was also introduced during the event. The ChatGPT product now includes GPT-4 Turbo, streamlining interactions by removing the model selector and allowing web browsing, code execution, data analysis, and image processing.

Furthermore, OpenAI also said that over 100 Mn users are now using their tools weekly. Additionally, the company revealed that their API has attracted over 2 Mn developers who are actively building innovative solutions and applications using OpenAI’s technology. The numbers underscore the impact OpenAI has had on today’s tech landscape.

However, post the event, numerous industry experts raised concerns globally, expressing apprehensions that the new updates could spell trouble for smaller AI startups, potentially jeopardising their competitive standing in the field.

The updates introduced by OpenAI may pose challenges for smaller companies in the AI sector, making it imperative for them to constantly adapt or innovate to stay relevant.

Now, before we dive any deeper into discussing opportunities and threats, here is a quick sneak peek into OpenAi’s key updates.

GPT-4 Turbo

OpenAI introduced the GPT-4 Turbo during its developer event, offering an enhanced version of the popular GPT-4 model. This release comes in two variants, one for text analysis and another for understanding both text and images.

The pricing structure for the text-only model of GPT-4 Turbo is set at $0.01 for every 1,000 input tokens and $0.03 for every 1,000 output tokens. Additionally, for image processing, GPT-4 Turbo is available at $0.00765 per 1080×1080 pixel image.

While these developments are impressive, industry experts see OpenAI becoming a threat to smaller AI startups. This is because the pricing structure and capabilities of GPT-4 Turbo have the potential to outdo anyone in the competition.

The larger context window and updated knowledge cut-off give OpenAI a significant advantage, potentially making it harder for smaller players to carve out their space in the AI market.

Text-to-Speech APIs

OpenAI introduced an Audio API for text-to-speech conversion, offering six preset voices and two generative AI model options. Pricing starts at $0.015 per 1,000 input characters. This feature promises more natural and accessible app interactions, with applications spanning language learning and voice assistance.

Unlike some tools, OpenAI doesn’t provide direct emotional control over the generated audio, as factors like capitalisation and grammar can influence the voice’s emotional tone. However, results vary based on internal tests, the company clarified. According to industry experts, this may impact many startups that are working in the Speech-AI domain.

GPTs For Users And A New GPT Store

OpenAI has unveiled GPTs, enabling users to create their own versions of ChatGPT. “GPTs are tailored versions of ChatGPT for a specific purpose,” OpenAI CEO Sam Altman said at the OpenAI DevDay event in San Francisco.

Beyond personal use, there’s a plan to introduce the GPT Store, allowing users to publish their creations and potentially earn income.

“We designed GPTs so more people can build with us. Involving the community is critical to our mission of building a safe AGI that benefits humanity. It allows everyone to see a wide and varied range of useful GPTs and get a more concrete sense of what’s ahead,” OpenAI said in a blog post.

Assistants API

During OpenAI’s inaugural developer day event, the company introduced the Assistants API, enabling developers to create their own “agent-like experiences”.

OpenAI’s Assistants API will enable customers to construct customised “assistants” with precise instructions, the ability to access external information, and the capacity to use OpenAI’s generative AI models and tools for various tasks.

The potential applications are wide-ranging, from creating natural language-based data analysis applications to developing coding assistants.

OpenAI has launched the beta version of its Assistants API, which is now accessible to all developers. Usage of the API will incur charges based on the selected model’s per-token rates, with “tokens” representing individual components of raw text.

Why Startups And VCs Are Seeing Troubles Brewing For Startups

OpenAI’s introduction of smaller, specialised GPT models poses a threat to small AI startups that have built products by wrapping OpenAI’s API, according to many experts. These startups may find themselves outpaced and overshadowed by OpenAI’s similar offerings.

Moreover, the growing use of OpenAI’s GPTs may divert search traffic from Google and niche websites for specific queries, potentially impacting these platforms’ user engagement and revenue.

OpenAI’s plans to launch a GPT marketplace and a feature to create a GPT are expected to further intensify the above trends. This development could empower users to access and deploy GPTs with even greater ease.

Startups and venture capitalists speculate about changes in the SaaS landscape as well. They anticipate more cost-effective challenges emerging in various verticals, potentially reducing organisations’ reliance on SaaS for certain functions.

While some foresee the demise of numerous AI startups, others view OpenAI’s developments as an opportunity to unlock new possibilities for entrepreneurs. These tools could significantly lower the barriers to entry, making it more affordable to launch businesses that leverage AI.

Who Is Set To Gain?

OpenAI’s advancements are indeed poised to reshape the AI landscape. While they present a formidable challenge to foundational model providers, they are likely to catalyse the proliferation of consumer-based AI products, according to industry experts.

OpenAI is gradually becoming a foundational platform akin to Android, Apple, or web browsers. Startups focussing on consumer products seem poised to thrive, benefiting from OpenAI’s robust technology stacks. In contrast, those building foundational models, such as an API for image-to-text recognition, may face risk, as OpenAI’s advancements render their offerings less competitive. However, consumer-facing products like a PDF-scanning app appear less vulnerable, indicating a potentially prosperous future for consumer-centric AI innovations.

“OpenAI is a threat to other companies building similar stuff. That is because they have a superior product and most others will not have access to the resources and databases that OpenAI has,” Swapnil Vats, founder of AI-based femtech platform SocialBoat said.

As per an Inc42 report, “India’s Generative AI Startup Landscape, 2023”, the generative AI market in India is poised to see a substantial increase from $1.1 Bn in 2023 to over $17 Bn by 2030, growing at a CAGR of 48%.

India currently boasts over 70 generative AI startups. These startups have collectively secured more than $440 Mn in funding between 2019 and the third quarter of 2023.