# What’s better than OpenAI? Developers shop for alternatives Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-03-29 Category: TECHNOLOGY Category URL: https://financedigest.com/category/technology Meta Title: OpenAI Faces Strong Competition in Expanding AI Market Meta Description: Discover how startups and investors are turning to alternative AI foundation models to reduce reliance on industry leader OpenAI and create a more diverse URL: https://financedigest.com/whats-better-than-openai-developers-shop-for-alternativeshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-03-29t124035z3lynxmpej2s0firtroptp4tech-ai-openai-1736814230420-compressed.jpg) By Krystal Hu NEW YORK (Reuters) – Microsoft-backed OpenAI is no longer the only game in town for software developers looking to capitalize on an expected $90 billion market for artificial intelligence. Motivated by a wariness of relying on a single company, a desire for models tailored to specific tasks and the chance to cut costs, more than a dozen [startups and investors](https://www.financedigest.com/virgin-orbit-says-space-startup-in-talks-with-potential-investors.html "Virgin Orbit says space startup in talks with potential investors") said they are embracing competitors to industry leader OpenAI, casting a shadow on expectations that Microsoft Corp and OpenAI will dominate the young field. The shift by some software developers [toward alternative AI foundation models](https://www.financedigest.com/investment-advice-moving-towards-a-new-model.html "Investment advice – moving towards a new model") shows how the next chapter of generative AI – defined as technology capable of generating text, images, or other media in response to prompts – might unfold. George Mathew, an AI investor at Insight Partners, compared the AI foundation models to other [technological breakthroughs](https://www.financedigest.com/eseye-announces-breakthrough-iot-technology-with-launch-of-anynet-secure.html "Eseye announces breakthrough IoT technology with launch of AnyNet Secure™") which spawned competition. Foundation [models are AI systems that are trained on large sets of data with the ability to learn](https://www.financedigest.com/learning-from-the-disrupters-how-finance-brands-can-build-transformative-business-models.html "Learning from the disrupters – how finance brands can build transformative business models") to perform a variety of tasks. “Did we only have a single internet [service provider?”](https://www.financedigest.com/nets-acquires-polish-online-payment-service-providers-dotpay-ecard-from-mci-capital.html "Nets acquires Polish online payment service providers Dotpay/eCard from MCI Capital") Mathew said. In a similar manner, we will need multiple [foundational model providers](https://www.financedigest.com/patsnap-provides-foundation-block-for-clean-tech-rd-research.html "PatSnap provides “foundation block” for clean-tech R&D research") for a healthy functioning ecosystem.” He added: “The current head start that OpenAI has will not make it the only choice.” AI storytelling startup Tome, which helps users build slides faster, was originally built on GPT-3, a [foundation model first released](https://www.financedigest.com/lisk-foundation-continues-transparency-model-releases-quarterly-financial-report.html "Lisk Foundation Continues Transparency Model, Releases Quarterly Financial Report") by OpenAI in 2020. Tome said it has [hit 3 million](https://www.financedigest.com/pwc-hit-with-8-9-million-penalty-for-serious-breaches-on-babcock-audits.html "PwC hit with .9 million penalty for ‘serious breaches’ on Babcock audits") users this month, and it started to experiment with other models. It has added a text model from OpenAI rival Anthropic to the mix, and [plans to move](https://www.financedigest.com/planning-to-move-to-the-low-carbon-economy-how-banks-can-plan-today-for-new-stress-tests-arriving-soon-2.html "Planning to move to the low carbon economy: How Banks can plan today for new stress tests arriving soon") from DALL-E, OpenAI’s photo generation model, to open-source model Stable Diffusion, which is made by Stability AI. The goal is to find the model that [works best for each action with the least delay and the best quality](https://www.financedigest.com/voice-quality-matters-quarter-of-employees-working-from-home-still-experiencing-regular-connectivity-issues.html "Voice Quality Matters: Quarter of Employees Working From Home Still Experiencing Regular Connectivity Issues"), said Keith Peiris, Tome’s chief executive. AI [developers and investors](https://www.financedigest.com/southampton-development-continues-to-excite-local-investors.html "SOUTHAMPTON DEVELOPMENT CONTINUES TO EXCITE LOCAL INVESTORS") said there is a new industry consensus to reduce reliance on a single model, in a bid to provide more reliable services, rein in costs and take advantage of the specialization of different models. OpenAI shot to household-name status after its ChatGPT chatbot stunned many with its ability to answer complex questions in clear, grammatically correct language that appears human. It has [attracted a $10 billion in investment](https://www.financedigest.com/uk-becoming-less-attractive-for-investment-manufacturers-warn-2.html "UK becoming less attractive for investment, manufacturers warn") from Microsoft, as big rivals including Alphabet Inc’s Google as well as smaller firms are rushing to create new models. OpenAI’s [newly launched](https://www.financedigest.com/newly-launched-quintessential-to-provide-prestige-living-management-platform-for-prs.html "Newly launched Quintessential to provide ‘prestige living’ management platform for PRS") GPT-4 model is still the most powerful by many standards. OPENAI ALTERNATIVES The market for generative AI is [expected to grow to $98.1 billion](https://www.financedigest.com/factbox-big-banks-expected-to-rack-up-more-than-1-billion-in-fines-for-whatsapp-use.html "Factbox-Big banks expected to rack up more than billion in fines for WhatsApp use") by 2026, according to PitchBook. As the infrastructural layer of AI applications, foundation models have [attracted the most investment from venture capitalists and strategic investors](https://www.financedigest.com/5-ways-that-start-ups-can-attract-investors.html "5 Ways That Start-Ups Can Attract Investors"). How these foundation models are used by applications, which [pay for the services](https://www.financedigest.com/best-paying-jobs-in-finance-consumer-services.html "Best Paying Jobs in Finance Consumer Services"), is critical for players like OpenAI which has said it seeks to achieve $1 billion in revenue by 2024. OpenAI has [projected $200 million](https://www.financedigest.com/sse-to-invest-122-million-in-scottish-pumped-hydro-project.html "SSE to invest 2 million in Scottish pumped hydro project") in revenue this year. As an example of how it makes money, it charges 6 cents to process 1,000 tokens of prompts in its latest GPT-4 model, and has a subscription tier of ChatGPT that charges users $20 per month. Startups also worry that [Microsoft could compete with its AI customers as the tech](https://www.financedigest.com/microsoft-to-shed-10000-jobs-adding-to-glut-of-tech-layoffs.html "Microsoft to shed 10,000 jobs, adding to glut of tech layoffs") giant incorporates OpenAI models to products from search to Office Suites. Some of these [applications will use sensitive company data](https://www.financedigest.com/from-sec-edgar-to-business-applications-exploring-an-alternative-to-manual-data-extraction.html "From SEC EDGAR to Business Applications: Exploring an Alternative to Manual Data Extraction"), and the foundation models will see these companies’ interactions with their own customers,” said Mike Volpi, partner at Index Ventures, which backs OpenAI competitor Cohere. “Many of these companies will feel uncomfortable being dependent on Microsoft or a company generally controlled by Microsoft.” OpenAI and Microsoft declined to comment. Writing assistant Jasper.ai began with OpenAI’s models, but does not want to rely on a single model, CEO Dave Rogenmoser told Reuters. It has added Cohere and Anthropic, two other large language model companies that have [cloud computing](https://www.financedigest.com/how-hybrid-cloud-computing-offers-the-best-of-all-worlds.html "How hybrid cloud computing offers the best of all worlds") partnerships with Google, and is launching an AI engine to help marketers customize voices by using a mix of models. HyperWrite, another AI copywriting app, matches each [user actions with different models](https://www.financedigest.com/the-iphone-x-factor-over-a-quarter-of-smartphone-users-plan-to-upgrade-to-a-new-iphone-model.html "The iPhone X Factor: Over a quarter of smartphone users plan to upgrade to a new iPhone model") on a variety of considerations, said CEO Matt Shumer. For example, it uses OpenAI’s model to generate long articles, and Cohere to auto-complete sentences at faster speed and [lower cost](https://www.financedigest.com/just-eat-delivers-q3-profit-as-cost-cuts-outweigh-lower-order-volumes.html "Just Eat delivers Q3 profit as cost cuts outweigh lower order volumes"). Others turned to [alternatives simply because OpenAI has trouble keeping up with the rising](https://www.financedigest.com/the-rise-of-cardboard-packaging-alternatives.html "The Rise of Cardboard Packaging Alternatives") demand. “OpenAI’s servers are down a lot. We want our [users to have a better experience](https://www.financedigest.com/fintechs-how-to-increase-loyalty-through-user-experience-and-fraud-prevention.html "FinTechs: How to increase loyalty through user experience and fraud prevention"), and using multiple models helps us to process inquiries at lower cost,” said Srinath Sridhar, CEO at Regie.ai, a writing assistant serving sales team. To be sure, some startups, including customer-service software firm Intercom Inc, are still all-in with OpenAI. Fergal Reid, Intercom’s director of [machine learning](https://www.financedigest.com/machine-learning-engineer-jobs.html "Machine learning engineer jobs"), conceded that OpenAI’s GPT-4 is “very expensive.” But he added: “We currently believe we need to use GPT-4 in order to get the accuracy level that we need for customer service. (Reporting by Krystal Hu in New York; Editing by Peter Henderson and Matthew Lewis) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---