The True Cost of AI's Appetite: $100B Data Centers, $18B Earbuds, and Reality Checks
From Microsoft's Massive AI Infrastructure to Apple's Quiet Empire: Your Essential Guide to This Week's Tech Transformation
Dear Friend—
Halfway through the first month of the year, it feels like the breakneck pace of change we witnessed for most of 2024 just keeps coming. Or so say the headlines… This week’s edition features a bunch of dissenting voices when it comes to AI. From the insanity of the rising costs of data centers and their energy consumption to radical long-time favorite Rodney Brooks’ rant on AI (and his annual scoring of his own predictions) – the future is certainly more nuanced than many of the headlines make it sound.
With that being said: Enjoy the read!
Headlines from the Future
Still Wondering How Expensive AI's Energy Bill Truly Is? ↗
BloombergNEF’s deep dive into the insane costs of building super-scale data centers for AI is quite the eye-opener:
Microsoft and OpenAI are in discussions about a $100 billion, 5GW supercomputer complex called Stargate. Amazon has said it plans to spend $150 billion in the next 15 years on data centers. Last month KKR and energy investor Energy Capital Partners entered an agreement to invest up to $50 billion in AI data centers. BlackRock has launched a $30 billion AI infrastructure fund.
These huge data centers will be as complex and expensive as aircraft carriers or nuclear submarines. The building alone for a 1GW data center will set you back up to $12 billion – for vibration-proof construction, power supply, UPS systems, cooling, and so on. 100,000 GPUs could cost you another $4 billion, and that’s before you have installed chip-based or immersive liquid cooling, and super-high-bandwidth, low-latency communications.
Reading the report makes you realize that the old adage of “selling shovels to the gold diggers” is as true for AI as it was for most other technologies before that. Everyone in the datacenter space—rejoice! Your future is bright. ;)
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Building an AI Product? Better Consider the Bitter Lesson! ↗
Here’s some solid advice in case you are thinking about building (or even purchasing) an AI product:
AI products are typically an AI model wrapped in some packaging software. You can improve their performance in two ways:
1. Through engineering effort: using domain knowledge to build constraints into the packaging software
2. Through better models: waiting for AI labs to release more capable models
You can pursue both paths, but here’s the crucial insight: as models improve, the value of engineering effort diminishes. Right now, there are huge gains to be made in building better packaging software, but only because current models make many mistakes. As models become more reliable, this will change. Eventually, you’ll just need to connect a model to a computer to solve most problems - no complex engineering required.
That last sentence says it all.
Link to article.
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Rodney Brooks on AI ↗
Every year, legendary roboticist Rodney Brooks updates and publishes his prediction scorecard – a living document in which he takes a hard, honest look at his own predictions on topics such as autonomous vehicles and AI. Together with his scorecard, he provides some thoughtful commentary; we are big fans of Brooks here at radical.
His latest commentary includes some (much-needed) level set on the impending AI revolution:
That being said, we are not on the verge of replacing and eliminating humans in either white-collar jobs or blue-collar jobs. Their tasks may shift in both styles of jobs, but the jobs are not going away. We are not on the verge of a revolution in medicine and the role of human doctors. We are not on the verge of the elimination of coding as a job. We are not on the verge of replacing humans with humanoid robots to do jobs that involve physical interactions in the world. We are not on the verge of replacing human automobile and truck drivers worldwide. We are not on the verge of replacing scientists with AI programs.
His whole post is very well worth the read. You’ll find it here.
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Apple AirPods Are a $18BN Business ↗
Ever wondered why Apple is special? Their AirPods business (you know, those little white earbuds you see everywhere) is a whopping $18,000,000,000 per year revenue driver.
Bloomberg estimates that AirPods sales have exceeded $18 billion yearly since 2021. To put that number in perspective, it surpasses Nintendo's reported total net sales for 2023 (roughly $10 billion). Furthermore, PCMag recently calculated that AirPods generated more revenue than total annual earnings for companies like Spotify, eBay, Airbnb, DoorDash, and OpenAI.
Nearly twice as much as all of Nintendo, more revenue than a lot of Silicon Valley’s darlings. Chapeau, Tim Cook.
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Ethan Mollick on "Prophecies of the Flood" ↗
Speaking of people we tend to listen to when they speak or write, Wharton Professor Ethan Mollick is another favorite of ours. His recent exposé commenting on the flood of AI announcements and the newest round of “AGI will be here soon!” market screaming is pretty much spot on.
The important bit is in his last paragraph:
What concerns me most isn't whether the labs are right about this timeline - it's that we're not adequately preparing for what even current levels of AI can do, let alone the chance that they might be correct. […] The time to start having these conversations isn't after the water starts rising - it's now.
Amen. Here is his dispatch.
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Simon Willison's AI Predictions ↗
Willison, the creator of the data analytics tool Datasette and co-founder of the uber-popular Python framework Django, shared his AI predictions for the next one, three, and six years. We are big fans of Willison here at radical, as he’s extremely level-headed when it comes to the AI hype cycle and knows what he’s talking about since he’s actually working with AIs.
Here is his take on the “topic du jour” – AI Agents/Agentic AI:
I think we are going to see a lot more froth about agents in 2025, but I expect the results will be a great disappointment to most of the people who are excited about this term. I expect a lot of money will be lost chasing after several different poorly defined dreams that share that name.
Couldn’t agree more. The rest of his post is very well worth reading.
What We Are Reading
🌌 Part of Your Body Has Likely Traveled Outside the Galaxy New study suggests that our body's carbon atoms may have once roamed beyond the Milky Way before returning to Earth via a cosmic recycling system. @Jane
🚨 The Sports Story You Never Clicked on Could Be AI Slop During this AI era, always double-check the URL you are getting information from. Many sites are popping up, mimicking legitimate websites—think BBCSports vs. BBCSportss—and stealing their copy/plagiarizing their content with the objective of luring big advertisers. @Mafe
🌍 Eurasia Group's Top Risks for 2025 If you're only going to read one global risk analysis white paper for 2025, this one from Ian Bremmer's Eurasia Group is a good bet for orienting yourself ahead of a tumultuous year. @Jeffrey
🎯 Don't Let Growth Muddle Your Company's Strategy The core and edge of a company at large can be similarly applied to the core and edge aspects of its main offering. Pursuing growth, companies tend to pursue a multitude of alternative offerings that dilute the core positioning of the company. Focusing on meaningful innovation at the peripheries of the core offers a more sustainable path for growth. It depends on what you're looking for, of course... @Julian
🚗 Nvidia Is Taking Over the Autonomous Driving Market Nvidia is rapidly building partnerships and unveiling advanced technology to challenge Tesla's dominance in the autonomous driving market. @Pedro
🏛️ Ancient Roman Rule Continues to Shape Personality and Well-Being in Germany, Study Suggests Usually we talk about the future here. Occasionally, it is good to remember the past. This fascinating insight into how our (long-gone) past shapes our future is eye-opening and makes you think twice about what kind of ancestors we might be for future generations. @Pascal
Some Fun Stuff
🎨 A delightful blast from the past: The Nokia design archive is a good reminder that Nokia, indeed, had amazing design.
🚗 Ever wondered what it must be like when you are stuck in a self-driving car doing its thing – and this thing is not what you expected? This guy was stuck in a Waymo that started driving in circles.
👾 We all know that Doom (the iconic 1993 computer game) runs anywhere. Now it runs even inside a PDF document!
🎞️ Ever wondered how they made cars fall apart in those very old movies? Like this.
🐝 A frame-by-frame hand-drawn recreation of the Bee movie. Why not?