The recent surge of interest in artificial intelligence has sent tremors through the global tech landscape, particularly with the emergence of DeepSeek, a startup from ChinaThis new player has not only caught the attention of investors but has also shifted the competitive dynamics within the AI industry, sparking a wave of excitement and uncertainty among established giants and newcomers alike.

In early February, the excitement around DeepSeek led to a remarkable uptick in the stock prices of approximately 20 companies in China’s A-share marketConcurrently, shares in parallel technology listed on the Beijing Stock Exchange surged by 30%, highlighting the optimism surrounding AI advancementsMeanwhile, the sentiment in the U.S. stock market seemed to take a different turn; Nvidia’s market value plummeted by 13.84%, and TSMC dropped by 3.52% since January 20. Although companies like Google and AMD recently reported strong earnings, Wall Street's reaction has been lukewarm, underscoring the fierce competition in tech and investor scrutiny.

DeepSeek has bolstered the confidence of Chinese tech firms and even sparked enthusiasm in Europe, where many believe they could still be key players in AI innovationHowever, amid this fervor, another AI model, Kimi, also launched a new version around the same time as DeepSeek but seems to be slipping into the sidelinesJust a year ago, Kimi was the talk of the town, but as attention turns to DeepSeek, it faces the daunting challenge of retaining its spotlight.

Last year marked the emergence of Kimi as a pioneering AI application, reaching significant prominence and scaleKimi’s team celebrated the launch of its latest model, Kimi K1.5, just when DeepSeek released its DeepSeek-R1 modelInitial fanfare surrounded both models, with Kimi fans buzzing about its potentialHowever, as DeepSeek’s AI rapidly gained traction, drawing international attention and praise, it swiftly overshadowed Kimi.

Major media outlets across Europe and America began reporting extensively on DeepSeek’s breakthrough, describing it as a jolt to the tech industry in Silicon Valley, emphasizing the significant innovation the R1 model brings to the table

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Nvidia even issued a rare endorsement, praising the R1 model as an exceptional leap forward in AI.

As user engagement with DeepSeek surged, Kimi’s new model faced comparison rather than applauseWithin 20 days of its launch, DeepSeek reported over 22 million daily active users, surpassing Kimi’s previous recordIn contrast, Kimi seems to struggle to maintain the same level of engagement, facing inevitable comparisons to DeepSeek that undermine its earlier successes.

Social media users have voiced their observations, with some claiming they only turn to Kimi when DeepSeek is unresponsive, with some dismissing Kimi as “average” compared to DeepSeek’s more impressive capabilities, particularly regarding imaginative responsesThese shifts in user sentiment are critical as they may affect the user retention rate moving forward and could hamper Kimi’s efforts to compete effectively.

The intense interest also emphasizes the contrasts in strategic approaches between marketing and technology in the AI industryKimi’s growth has arguably been driven more by ambitious marketing than by groundbreaking technologyThe company made substantial investments in online advertising, particularly targeting platforms like Bilibili, which propelled Kimi into the spotlight and contributed to its user growthYet, marketing alone may not be sustainable in an arena where technological prowess is increasingly lauded.

During the previous year, Kimi established itself as a potential “Killer APP,” raising expectations and demonstrating substantial C-end market potentialHowever, DeepSeek’s recent explosion onto the scene positions it as a contender for the title, potentially overshadowing Kimi’s accomplishmentsThe challenge for Kimi lies not just in creating buzz but in ensuring its technology meets evolving user demands.

The future of AI applications hinges on more than just user volume; it requires sustainable growth strategies emphasizing customer retention

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Despite Kimi's marketing triumphs, user retention rates in the industry have shown alarming figures, with reports suggesting that retention remains below 1% for many large model products after the first monthObservers note that marketing can attract users, but keeping them engaged is a different challenge altogether.

This ongoing debate surrounding technology versus market strategy raises questions on the long-term viability of current approaches in the AI sectorWhile Kimi’s previous lead may have hinted at a promising market strategy, DeepSeek's superior technology could redefine the competitive landscapeKimi’s reliance on marketing raises concerns about its sustainability, with questions about whether users will remain engaged with an application that does not innovate steadily.

Moreover, the competitive landscape is becoming increasingly dynamic, with many players vying for superiority in long-context promptsKimi originally leveraged its long-text input capacity as a unique selling propositionHowever, other companies are quickly catching up, with industry giants like Alibaba introducing new models capable of handling far larger contexts, making it harder for Kimi to maintain its edge.

For instance, Alibaba's Qwen2.5-Turbo model offers support for processing over a million tokens, highlighting the rapid advancements in technology and raising questions about Kimi’s ability to retain its competitive advantages amidst such developments.

Current trends suggest inevitable shifts in focus within the AI landscapeThe realization that merely lengthening text input may not significantly enhance reasoning capabilities will likely steer companies toward other avenues for innovationIn the race for supremacy, the stakes are rising, and the emphasis is shifting towards elements like cost-effectiveness and diversified technological initiatives.

As the industry progresses, lingering conflicts between investors and startups over business approaches and tactics may also surface

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