OpenAI’s smaller, cheaper ChatGPT variant intensifies competition with Anthropic, Google

The news: OpenAI released GPT-4o Mini, a smaller and more affordable version of its GPT-4o large language model (LLM). 

The multimodal generative AI (genAI) solution can handle text and images and reportedly outperforms Google’s Gemini Flash and Anthropic’s Claude Haiku by 5% to 15% in certain benchmarks, per The Register.

AI offerings are diversifying: Understanding that there’s no one-size-fits-all approach to genAI solutions, companies are offering smaller models aimed at more focused applications and at a more affordable price.

• Despite strong benchmarks, OpenAI no longer holds a commanding lead in the LLM market. Competitors like Anthropic and Google have closed the gap with their own advanced models.
• Other notable mini models in the increasingly crowded LLM space include Nvidia and Mistral’s Nemotron-4-340B-Instruct and Meta’s Llama-3-70B-Instruct.
• GPT-4o Mini is cheaper than Claude 3 Haiku and Gemini 1.5 Flash, making it an attractive option for cost-conscious users preferring ChatGPT’s functionality.
• OpenAI’s Mini supports 128,000 input tokens (images and text) and 16,000 output tokens. Most models handle about 4,000 tokens—this makes GPT-4o Mini ideal for translation and transformation tasks with large outputs.

The trend: The launch of GPT-4o Mini underscores a growing trend toward smaller, more cost-effective LLMs. The trend is timely given the arrival of new hardware that can run on-device AI processes efficiently.

• These models reduce power and cloud computing requirements, making advanced AI accessible to a broader market. 
• This shift is crucial as it reduces the risk of monopoly in the AI industry, encouraging competition and providing users with more options.

Our take: Businesses and consumers will increasingly see a range of genAI solutions on a sliding scale of pricing, which makes adoption more affordable across the board and intensifies competition in terms of cost and performance.