INDIAN CASE CHALLENGE 2024

(ICC)

Indian Institute of Technology (IIT), Kharagpur

Case Study by: R-116
 EXECUTIVE SUMMARY
OpenAI is at the forefront of revolutionizing the chatbot industry with the introduction of the GPT Store and GPT Builder.
While this innovation offers high levels of customization and freedom to users, it poses several challenges and questions for
OpenAI to navigate successfully.
To address the aforementioned challenges, we have devised the following findings as a framework for crafting comprehensive
solutions.

GPT STORES Leveraging ads within the platform.

• FEASIBILITY ASSESSMENT
REVENUE MODEL Earning a percentage from code transactions.
•
Offering premium features for a fee.
• • Financial Feasibility
Providing tiered subscription plans for users.
• • Operational Feasibility
Charging for extended API usage.
• •Technical Feasiblity
PREVENTING ACQUISITION •Market Feasibility
FINANCIAL FEASIBILITY
OVERSATURATION AND MERGING SYNERGIES
• Cost-Benefit Analysis • Cost-Benefit Analysis
• Revenue Projections M&A Approach Economic Market
• Revenue Projections
• Risk Assessment • Risk Assessment • Market Analysis •Complementary •Competitive
• KPIs • KPIs • Major Players Strengths Edge
• Opportunities •Market Expansion •First Mover
SWOT ANALYSIS & TARGET MARKET and Challenges •Enhanced Profitability Advantage
• SWOT Analysis ADVANTAGE •Disruptive
SEMICONDUCTOR Innovation
•Target Market for GPT Store •For OpenAI
INDUSTRY ANALYSIS
• Risk Assessment •For Graph Core
 REVENUE MODEL FOR GPT STORE
Advertisement Monetization

Free 3-minute usage:

• User Traffic of Chat GPT crossed 100 million users in 2 months after its launch
( Discover, Jan1 2024).
• Capitalizing Chat GPT’s huge user traffic to improve the traffic for GPT store
• Advertisement monetization method allows users to experience the benefits of the
premium GPTs without direct monetary investment.
• Users are granted free access to a high quality customized GPT from GPT store
for 3 minutes on watching a sponsored advertisement.

Commission from Code Exchange

GPT store will facilitate the creation and exchange

of custom GPT models or code snippets among
builders. The GPT store takes a commission from
each transaction between builders, encourages a
collaborative and dynamic ecosystem of developers
contributing and benefiting from each other's work.
 REVENUE MODEL FOR GPT STORE
PROMOTION THROUGH NATURAL RESPONSE

Following each of Chat GPT's natural response, premium

GPTs, relevant software, and cutting-edge products take the
spotlight. This not only enhances user experience but also
generates revenue through strategically placed
advertisements. The clever integration of premium GPTs and
related products drives significant traffic to the GPT Store,
solidifying its position as a go-to hub for innovation.

EXTENSION OF LICENSE FOR UNDERPERFORMING GPTS

• Underperforming GPTs are issued a warning notice.

• GPT developers get to keep their custom GPT in the GPT store through a
paid license extension scheme.
• GPT developer can also sell their GPT to another builder in this scenario.
 REVENUE MODEL FOR GPT STORE
Subscription Models API Access and Integration

API Access: Developers and businesses can pay for API

Basic Subscription: Users can access essential GPT features
access to integrate GPT functionalities into their applications.
for free. This attracts broad user base and encourage initial
This allows for customization and embedding of GPT
adoption.
capabilities, allowing industries to leverage the power of the
Premium Subscription: A paid subscription tier is available,
GPT models.
offering users advanced capabilities, faster response times,
API Usage Fees: Revenue is generated through API usage
and exclusive features. The subscription model provides a
fees, creating a scalable income stream based on the
recurring revenue stream and caters to users with higher
integration and usage by external applications.
demands and specific requirements.

Existing Business Model of Open AI

Business Model Analysts

 FINANCIAL FEASIBILITY

COSTS 1. Development and maintenance of GPT models.

2. Marketing and user acquisition costs.
3. Infrastructure and server expenses. Total Revenue = Advertisement Revenue +
Code Exchange Commission + GPT YEAR 1
1. Advertisement revenue. Extension Sales + Subscription Revenue +
BENEFITS

2. Commission from code exchange. API Access Fees

3. Revenue from GPT extension sales.
4. Subscription revenue. Estimate growth in user base,
Cost-Benefit Revenue expanded services, and adjust YEAR 2
5. API access fees. Analysis Projections
revenue streams accordingly.

Adoption Rate: Key

In order to reduce users opting for free usage, Risk Assessment Performance
Indicators (KPIs)
Implement engaging ad content, offer Ad Click-Through Rate (CTR)
valuable free usage, and gather user feedback.
Competition and Substitution: Code Exchange Transaction Volume
In order to reduce competition, continuous innovation,
GPT Extension Sales Conversion Rate
strategic partnerships, and unique features to maintain a
competitive edge can be implemented. Subscription Renewal Rate
Subscription Churn:
In order to reduce high subscriber churn rate, regularly API Access Usage
update and improve subscription features, offer incentives for Customer Satisfaction Scores (CSAT)
long-term subscriptions.
 GO TO MARKET STRATEGY
Target Market for GPT Store
Software/GPT Developers: 3rdParty
• Build and Publish GPTs to Organisations
access a global Market • Educational
• Access resources to organisations and
optimize their GPTs travel booking
GPTUsers / Content firms can partner
with gpt store
Creators :
• Make tailor made
• Can generate content, gpts for specifc
automate tasks and industry
Credits: Business Model Analysts gain insights challenges
POSITIONING OF GPT STORE
A carefully curated marketplace offering high-quality, ready-to-use GPT
models with the opportunity to capitalize on the surging demand for
AI tools.

Ranked as the second-highest grossing productivity app on the Play

Store, OpenAI's ChatGPT stands as a testament to its unparalleled
credibility. Positioned as the harbinger of innovation, the GPT Store
will emerge as OpenAI's next breakthrough, offering a myriad of
possibilities for content creators, developers, and businesses.
 HOW TO PREVENT OVERSATURATION?
AVERAGE BOUNCE RATE AVERAGE TIME SPEND AVERAGE PAGE VISITS Average Bounce
36.36% 7 MIN 36 SEC 4.17
Rate = 36.36%
App Ranking Algorithm
This algorithm takes into account various factors such as GPT is operating GPT Bounce
NO
app quality, user ratings, and engagement metrics to well Rate > 36.36
determine the position of apps in search results and top %
charts.
NO WARNING YES
Quality Guidelines SIGN/ NOTICE
GPT needs
Enforces strict quality guidelines for apps listed on the improvements
Trial Licensing: Engage in trial
GPT Store. Apps that violate these guidelines may be licensing to assess and
removed, leading to a cleaner and more trustworthy app implement improvements aimed
at enhancing user engagement
ecosystem. and reducing the bounce rate.

Consideration of Sale: If the

Community Voting System challenges persist, it may be
Allow users to vote on the most useful and creative worthwhile to contemplate the
prospect of selling the GPT to
customizations. This will recognize and promote top-voted another professional developer
customizations, creating a sense of competition and who can bring fresh perspectives Recommendations
and technical expertise. provided if "Yes" is
collaboration within the builder community.
clicked
MARKET ANALYSIS OF SEMICONDUCTOR INDUSTRY

GLOBAL SEMICONDUCTOR MARKET SHARE

Market Size(2024) USD 0.72 Trillion
MAJOR PLAYERS BY APPLICATION

USD 1.21 Trillion

Market Size(2029)

CAGR(2024-2029) 10.86%

Cyclical nature of the

industry, geopolitical
uncertainities and complying
with evolving regulatory
standards while maintaining
Market operational efficiency
growth challenged by Heavy capital High Expansion
Manufacturing Expenditure Growing demand for The increasing adoption
capacity constraints Opportunities of digital technologies
And pressure due to green technologies
and Supply chain shortages global competition
from $ 0.72 trillion in 2024 and consumer electronics
due to changed demand to $1.21 trillion by 2029, at a worldwide.
Challenges CAGR of 10.86% .
Increased demand for energy- Deployment of 5G networks
Supply chain High barriers to entry due to globally opens up
efficient chips, security solutions,
vulnerabilities and substantial upfront costs, opportunities to provide
disruptions and over intellectual property
and customized SoCs, catering to Opportunities components for the infrastructure
dependency on end the unique requirements of IoT
challenges, and need for and devices that support 5G
markets specialized talent
and Edge Computing applications.
connectivity.
Short product life cycles, Specific advantages through application of
continuous innovation, and Development of numerous smart AI and ML like automated circuit design, Rising popularity and
evolving standards lead to cities supported by government optimization, predictive adoption of electric
Rapid Technological investments, rapid urbanization, maintenance for manufacturing
and industrialization
vehicles among consumers
Obsolescence​ equipment, and smart manufacturing
processes.
 ACQUISITION AND MERGING OF OPENAI AND GRAPHCORE - " A M&A APPROACH"

Defining the Construction of Conducting a post

Identification of Performance of a Execution of the
M&A strategy business case and merger integration
target due diligence transaction
financial modelling
companies
• Identify Potential • Includes strategic • Work plan • Deal structure • Post merger
• Company target companies benefit, financial including key • M&A integration
mission, vision and collect data business case negotiations strategy &
and values benefit and
• Conducting high feasibility hypotheses & • Signing and high-level
• M&A strategic level assessment assumptions closing the detailed plan
objectives and • Financial
• Shortlisting potential modelling to • Due diligence to M&A deal • Implementati
key performance targets. on and
estimate validate key
indicator • Financial hypotheses and monitoring
• M&A team transaction cost,
Statements analysis revenue synergy, assumptions
formation • Business valuation to • Updated business
• M&A guiding cost synergy, net
make informed present value, valuation
principles negotiation ROI, and internal • Recommendation
• Target screening strategies, to make (or not) a
criteria rate of return
assessing feasibility, • Letter on intent formal offer to
and minimizi or term sheet acquire the target
ng company
post-deal risks
• Targets approved for
business case phase.

STRATEGIC
Accelerating AI Research • Securing Long-Term Leadership in CONCEPT
• Gaining Competitive Advantage
and Development the AI Landscape BEHIND
in the AI Chip Market
ACQUISITION
 FINANCIAL FEASIBILITY
OPERATIONAL FEASIBILITY
MARKET DEMAND
AI chip market is booming, projected to reach USD 194.9 billion by 2030
OpenAI's research expertise and Graphcore's hardware capabilities can cater to high-demand tasks in segments
GRAPHCORE OPENAI
like healthcare and finance like medical image analysis and complex financial modelling.
If the partnership involves co- Integration might shift focus
COMPETITOR ANALYSIS developing solutions, from pure research towards co-
OpenAI-Graphcore combination offers unique advantages in cutting-edge AI research, co-designed solutions, Graphcore will need to dedicate designing solutions with
and niche market appeal as current dominators like NVIDIA and Intel lack OpenAI's software expertise resources for joint research and Graphcore's hardware, requiring
and Graphcore's specialized architecture development efforts. adaptation of research priorities
PRICING STRATEGY and methodologies
Competitive pricing initially to gain market share, with gradual adjustments based on value proposition and demand.
Direct sales for premium solutions, licensing for broader access, and cloud-based offerings for scalable deployment.
Focus could shift towards co- Dedicating resources for software
COST ANALYSIS
designing chips with OpenAI's development, training staff on new
Acquisition cost might potentially exceed $2.8 billion based on Graphcore's valuation(2020) software expertise, requiring hardware, and maintaining co-
Integration costs, R&D, manufacturing, and operational costs need close monitoring and efficient management
adaptation of design processes developed solutions can place
FINANCIAL PROJECTION
and collaboration with new teams additional demands on OpenAI's
Best case scenario project is profitable within 5-7years keeping in mind sensitivity to execution and unforseen challenges operational capacity.
Risk Analysis shows potential pitfalls like ntegration delays, market shifts, and competitor aggression

Providing technical support Establishing clear guidelines for data

TECHNICAL FEASIBILITY MARKET FEASIBILITY and integration assistance to access and control between both
OpenAI's unique needs could organizations, ensuring responsible
Technology Integration Scalability
require adjustments and ethical use of sensitive AI data
•Gra phcore IPUs high levels of •The expanding demands of OpenAI can to Graphcore's existing customer
compa tibility wi th OpenAI's software be met by s imply a dding IPUs to
tool s a nd frameworks l ike TensorFlow exi s ting cl usters, which ca n s cale support infrastructure.
a nd PyTorch. processing capacity horizontally.
•Gra phcore's commitment to open •Tra i ning of larger a nd more complex
s tandards aligns with OpenAI's open- models on single units through the
Access to OpenAI's expertise and Improved training speed and
s ource philosophy, fa cilitating seamless i nternal parallelism and efficient data can accelerate Graphcore's resource utilization through IPUs can
i ntegration and community memory ma nagement offered by IPUs hardware development and streamline operations in the long
contri butions
•Code modification required for improve IPU optimization for AI run.
a da pting existing OpenAI pipelines to research
effi ciently utilize IPUs' unique
a rchi tecture.
 ADVANTAGES FOR OPENAI
ECONOMIC
Hardware Acceleration
COMPLEMENTARY STRENGTHS COMPETITVE EDGE
OpenAI's software expertise Combining leading research Co-design Optimization
and research prowess with custom-designed
combined with Graphcore's hardware creates a
powerful AI hardware create formidable competitor to
a vertically integrated entity Market Leadership
dominant players like NVIDIA
with significant cost and Intel
advantages.
Enhanced Brand Recognition
MARKET EXPANSION THE SYNERGIES FIRST MOVER ADVANTAGE

Access to new market

ADVANTAGES FOR GRAPHCORE
Early entry into niche
segments markets with tailored AI
in healthcare, finance, and solutions leads to brand Software Expertise
other verticals through co- recognition and customer
developed AI solutions. loyalty.
ENHANCED PROFITABILITY DISRUPTIVE INNOVATION
Market Expansion
Potential for increased revenue Potential for groundbreaking
streams through expanded advancements in AI capabilities
market reach, premium through co-designed hardware Innovation Potential
solutions, and hardware sales. and software optimizations.

Financial Optimization
MARKET
 THANK YOU
R-116

1. Shreya Binu Sathyan 4. Sudipta John

(Indian Institute of Management, Jammu) (Indian Institute of Management, Jammu)

2. Nikitha M S 5. Roshan Biju

(Indian Institute of Management, Jammu) (Indian Institute of Technology, Madras)

3. Miya J Mohan 6. Navaneeth Anil

(Indian Institute of Management, Jammu) (National Institute of Design, Vijaywada)
 APPENDIX
• https://www.einfochips.com/blog/navigating-challenges-opportunities-for-semiconductor-design-manufacturing-in-
2023-beyond/

• https://www.mordorintelligence.com/industry-reports/semiconductor-industry-landscape

• https://businessmodelanalyst.com/openai-business-model