In a recent X post, Sam Altman announced that OpenAI has decided to cancel the release of the full o3 model, which was scheduled to launch in February or March.
He cited the 'complexity' of their model and product offerings as a contributing factor and that they wished to simplify their product range. As part of the new strategy, OpenAI will be focusing all efforts towards the release of GPT-5. Which will incorporate elements of o3, along with its own features.
Last month, Sam Altman also cautioned AI fans to temper their expectations surrounding the company's progress towards superintelligence. He stated in his personal blog, "Twitter hype is out of control again," and that OpenAI will not be deploying AGI next month. He went on to mention that OpenAI is building some 'cool stuff', but for fans to cut their expectations 'by 100x'.

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Since DeepSeek's R1 model burst onto the scene in late January, OpenAI was quick to push out the o3-mini, a free but slightly less powerful version of the upcoming model. There's speculation that the arrival of DeepSeek and the lack of a generational leap between OpenAI's latest models are part of the reason for retracting the full release of o3.
DeepSeek's advancements towards powerful, high cost AI have created a deep hole in the wallets of heavy investors in the AI space. Utilizing the method of distillation, AI researchers have been able to build competitive models for a fraction of the cost. In a recent example, researchers from Stanford managed to build a model competitive to OpenAI for as little as $50.
While it's difficult to predict what's happening internally with OpenAI, the recent decisions will place high expectations on the release of GPT-5 if they wish to stay ahead.