If investors think that the acquisition will increase the valuation of the company by 3B (or more), and the acquisition is paid fully or mostly in stock - then one can it basically for free.
The "Windsurf" brand has little value in comparison to OpenAI's, but $3B lets them hit the ground running with a proven developer product (better than Cursor IMHO), the team who created it, and a customer base.
Maybe ChatGPT told them it was a good idea? Considering the proliferation of these tools there's no way it's worth $3B. This functionality is going to be built into every IDE eventually: vscode just got an agent mode, it might not be great yet but it's only a matter of time until Windsurf is essentially just management tools because there won't be much editor value add available.
Precisely. For most users, there is hardly value in moving off of VSCode. Granted, if Windsurf can make itself into a VSCode extension, there may be some competitive value to it.
Isn’t Windsurf a VSCode-based IDE anyway (just like Cursor)? Basing it off the screenshots from their website.
I haven’t tried it, but if it is similar to Cursor (which I tried), then it hardly counts as “moving off VSCode”, which was one of the reasons I found switching to it easy. Cannot even really call it a move, if I can just quickly export-import all of my VSCode settings over (including themes and extensions), and they will all pretty much “just work” the exact same way and autoupdate from the exact same extension hub out of the box. Hell, even the UI is pretty much the same, so everything feels familiar, and i can be at least just as productive as usual immediately.
One of the biggest wins of VSCode (to me personally) is how functionally interoperable it is with other IDEs that are built off it.
Not necessarily. When growth is the priority, companies tend to expand along the value chain once they've established a foothold. For OpenAI, an IDE is a natural extension in a market where they're competing with Microsoft. It would be surprising if Anthropic didn't do the same soon.
This week OpenAI released newer models, so it could now use a reassessment. They are: gpt-4.1 family, o3, o4-mini. Users are benefiting from the ongoing competition which hopefully will last all the way to self-improving AGI.
You're soon going to find a rugpull whereby Windsurf will remove all Claude models. This is to be expected considering Windsurf has been bought by OpenAI.
If that does happen, good thing that Cursor is very similar. Being dependent on any one tool in this environment is folly. Though to be honest, in either case, I am personally dependent on Anthropic. Comparing Claude Code costs to Cursor/Windsurf using Sonnet, it certainly feels like I am temporarily VC subsidized, like early Uber.
It seems to me that all of this is going to be a giant rugpull in the end. "Oh, you are saving the cost of a $40/per hour contractor? Well, we'll just charge you $35.99."
Until then, we might be in the golden era of cheap building, maybe?
I do not regularly use either, but my impression is that Cursor's users have primarily been using Claude and are largely switching to Gemini, while Windsurf has a lot of existing enterprise contracts that wouldn't even notice an underlying model switch from the proprietary Codeium model to o3 mini or whatever.
This would make a lot of sense for both sides I think. Owning the part of the stack that decides where the inference requests go is like Google owning the browser.
I wonder what Cursor's market value is at this point. Definitey north of $10B right? Their founders and investors would be wise to exit while the AI market is still hot (and the rest is not).
To play devils advocate, software engineering is currently proving to be a hugely valuable use case for AI, and will almost certainly grow over time. I’m not sure what the market cap for software engineering tooling is, but I assume $5B or even $10B would only represent a tiny fraction of the TAM.
Here is one report that projects a $25B market by 2030. It would not take long to recoup their investment if that prediction comes true.
The software engineering market is one thing, but these editors are all basically VS Code + custom theme + calls to ChatGPT/Claude/Gemini. Useful, sure, but worth $5-10B each? Without users, revenue or even a brand?
The value right now is learning which prompts work, which strategies work, what is the sweet spot in terms of model size, is it better to run a model that costs 10 times more per token vs smaller inferior models that might need have 3 attempts at it, what are the best RAG and other enrichment strategies etc.
You can only really get that when you have a large market share.
When your IDE makes a call to OpenAI they get to see only half the picture they don’t know how the user reacts to the output.
So there is a lot of value in being in the client loop also and seeing the full picture.
> Here is one report that projects a $25B market by 2030
My guess it's much larger than $25B
This is no longer a market for software tooling, it's started to eat the software engineering salaries, freelancer marketplaces and consulting/outsourcing/bodyshop revenues...
If there are ~ 30M developers now globally, earning $100K/yr on average, and this will reduce it to 20M, so we get 10M * $100K = $1T
Even assuming that 90% will go to foundational models, not IDEs / coding agents SW, we still get ~ $100B
I’m putting most of my energy into AI these days but I don’t know anyone who doesn’t think there is a bubble, but an overvaluation early doesn’t mean the value isn’t there and won’t come later (see .com crash).
