Space is a vacuum. i.e. The lack-of-a-thing that makes a thermos great at keeping your drink hot. A satellite is, if nothing else, a fantastic thermos. A data center in space would necessarily rely completely on cooling by radiation, unlike a terrestrial data center that can make use of convection and conduction. You can't just pipe heat out into the atmosphere or build a heat exchanger. You can't exchange heat with vacuum. You can only radiate heat into it.
Heat is going to limit the compute that can be done in a satellite data centre and radiative cooling solutions are going to massively increase weight. It makes far more sense to build data centers in the arctic.
Musk is up to something here. This could be another hyperloop (i.e. A distracting promise meant to sabotage competition). It could be a legal dodge. It could be a power grab. What it will not be is a useful source of computing power. Anyone who takes this venture seriously is probably going to be burned.
It probably increases Elon's share of the combined entity.
It delivers on a promise to investors that he will make money for them, even as the underlying businesses are lousy.
You might only care about coding models, but text is dominating the market share right now and Grok is the #2 model for that in arena rankings.
They have no path to paying for their existence unless they drastically increase usage. There aren't going to be very many big winners in this segment and xAI's expenses are really really big.
Is the plan to have everyone so hopelessly dependent on their product that they grit their teeth and keep on paying?
Gemini is practically guaranteed. With the ad model already primed, their financial resources, their traffic to endlessly promote Gemini (ala Chrome), their R&D capabilities around AI, their own chips, crazy access to training data, and so on - they'd have to pull the ultimate goof to mess up here.
Microsoft is toast, short of a miracle. I'd bet against Office and Windows here. As Office goes down, it's going to take Windows down with it. The great Office moat is about to end. The company struggles, the stock struggles, Azure gets spun off (unlock value, institutional pressure), Office + Windows get spun off - the company splits into pieces. The LLMs are an inflection point for Office and Microsoft is super at risk, backwards regarding AI and they're slow. The OpenAI pursuit as it was done, was a gigantic mistake for Microsoft - one of the dumbest strategies in the history of tech, it left them with their pants down. Altman may have killed a king by getting him to be complacent.
Grok is very unlikely to make it (as is). The merger with SpaceX guarantees its death as a competitor to GPT/Gemini/Claude, it's over. Maybe they'll turn Grok into something useful to SpaceX. More likely they'll slip behind and it'll die rapidly like Llama. The merger is because they see the writing on the wall, this is a bailout to the investors (not named Elon) of xAI, as the forced Twitter rollup was a bailout for the investors of Twitter.
Claude is in a weird spot. What they have is not worth $300-$500 billion. Can they figure out how to build a lot more value out of what they have today (and get their finances sustainable), before the clock runs out? Or do they get purchased by Meta, Microsoft, etc.
OpenAI has to rapidly roll out the advertising model and get the burn rate down to meaningless levels, so they're no longer dependent on capital markets for financing (that party is going to end suddenly).
Meta is permanently on the outside looking in. They will never field an in-house competitor to GPT or Gemini that can persistently keep up. Meta doesn't know what it is or why it should be trying to compete with GPT/Gemini/Claude. Their failure (at this) is already guaranteed. They should just acquire GPT 4o and let their aging userbase on FB endlessly talk itself into the grave for the next 30 years while clicking ads.
If Amazon knew what they were doing (they don't right now), they would: immediately split retail + ads and AWS. The ad business ensures that the retail business will continue to thrive and would be highly lucrative. Then have AWS purchase Anthropic when valuations drop, bolt it on to AWS everything. Far less of an anti-trust issue than if what is presently known as Amazon attempted it here and now. Anthropic needs to build a lot on to itself to sustain itself and justify its valuation, AWS already has the answer to that.
If valuations plunge, and OpenAI is not yet sustainable, Microsoft should split itself into pieces and have the Windows-Office division purchase OpenAI as their AI option. It'd be their only path to avoiding anti-trust blocking that acquisition. As is Microsoft would not be allowed to buy OpenAI. Alternatively Microsoft can take a shot at acquiring Anthropic at some point - this seems likely given the internal usage going on at Redmond, the primary question is anti-trust (but in this case, Anthropic is viewed as the #3, so Microsoft would argue it bolsters competition with GPT & Gemini).
I still think a lot about the failed OpenAI coup, and how different things would be now if Microsoft hadn't backed Altman. Would this hype cycle and bubble grown so ridiculous if there were more conscientious people in charge at the front-runner? We will unfortunately never know. I really wish that board had planned out their coup better.