Sunday, November 26, 2023

How Big is the Large Language Model Industry? How Big Could it Get?

As a brand-new market, large language models are likely still in the single-digit-billions range, not counting all the other markets that are, or can be, built on the use of LLM. 


Estimate

Study Name

Date of Publication

Publisher

$2.1 billion

Allied Market Research

2022

Allied Market Research

$1.3 billion

MarketsandMarkets

2022

MarketsandMarkets

$3.2 billion

Grand View Research

2022

Grand View Research

$5.6 billion

Mordor Intelligence

2022

Mordor Intelligence

$6.9 billion

Precedence Research

2022

Precedence Research


Just how big the core LLM model business might be remains a guess, but if one believes LLM is a general-purpose technology, then like other forms of enabling infrastructure, the market could be substantial. 


What also remains unclear is where key revenue elements--especially fees for generating inferences--will be reaped. Use of an LLM includes both the license to use a model plus the recurring fees paid for deriving inferences. 


As with any other form of “computing as a service,” some parameters will vary. License fees might be one-time payment, a recurring fee, or a fee based on usage.


Inference fees are variable. Support and maintenance fees might also often be charged, to cover bug fixes, security updates, and documentation updates.


The ultimate analogy might determine market size. Are LLMs most akin to servers, operating systems or end-user software? More generally, are LLMs going to be infrastructure somewhat similar in function to electricity networks, road systems, airports or seaports, as enablers of commerce?


Underlying Technology

Market Size

Study Name

Publication Date

Publisher

Electricity

$2.3 trillion

Global Electricity Market Report 2023

March 2023

IEA

Roads

$1.2 trillion

Global Road Infrastructure Market 2023

June 2023

Grand View Research

Airports

$1.8 trillion

Global Airport Infrastructure Market 2023

July 2023

Allied Market Research

Seaports

$1.1 trillion

Global Seaport Infrastructure Market 2023

August 2023

MarketsandMarkets

Smartphone Operating Systems

$128 billion

Mobile Operating System Market by Platform 2023

September 2023

Statista

PC Operating Systems

$44 billion

PC Operating System Market by Platform 2023

October 2023

Gartner

Server Processors

$25 billion

Server Processor Market 2023

November 2023

IDC

Platforms such as Linux, Windows or IoS

$1.5 trillion

Cloud Platform Market 2023

December 2023

Synergy Research Group

Software as a Service

$167 billion

Global Software as a Service (SaaS) Market 2023

January 2024

Gartner


Beyond all that, where is the incidence of payments? Is revenue generated by direct fees charged to business and consumer end users, directly by business partners or indirectly in the form of value for third parties and end users? 


In many cases, AI is a capability that enhances the value of some product a buyer consumes, but might not be a distinct extra charge or involve a subscription for use of the product. 


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