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OpenAI is too cheap to beat

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Re: OpenAI is too cheap to beat

#241

Post by vikramkr »

user3939382 wrote: post #223
adam_arthur wrote: post #179

Earlier quoted context omitted.

The winner is going to be the consumers of AI. It's a race to the bottom on pricing on the provider/infra side. It seems very unlikely that any single LLM provider will achieve a sustained and durable advantage enough to achieve large margins on their product. Consumers can swap between providers with relative ease, and there is very little stickiness to these LLM APIs, since the interfaces are general and operate on…

> The winner is going to be the consumers Cloud infra may be a comparable market, since computation is a big share of AI costs. Did consumers win big from competition between AWS, Azure, and GCP? Not sure. I see an uptick in write ups saying “We switched off cloud and reduced costs by 2/3rds.” Not a scientific sample but may leave the question open.

There are a HUGE number of startups that would have had a massively harder time if they had to roll their own infra. Who cares if the companies eventually have to move off? (Though even Netflix seems ok with it overall for now). There are a ton of services that just wouldn't exist otherwise

Re: OpenAI is too cheap to beat

#242

Post by winddude »

not really. It's general purpose, running llama2 70b has been shown to work out to be cheaper if you have a high usage rate. And depending on use case with fine tuning can likely achieve far superior results.

The one thing openAI has that's hard to compete with is a metric shit ton of money and brand recognition.

Re: OpenAI is too cheap to beat

#243

Post by peteradio »

user3939382 wrote: post #223
adam_arthur wrote: post #179

Earlier quoted context omitted.

The winner is going to be the consumers of AI. It's a race to the bottom on pricing on the provider/infra side. It seems very unlikely that any single LLM provider will achieve a sustained and durable advantage enough to achieve large margins on their product. Consumers can swap between providers with relative ease, and there is very little stickiness to these LLM APIs, since the interfaces are general and operate on…

> The winner is going to be the consumers Cloud infra may be a comparable market, since computation is a big share of AI costs. Did consumers win big from competition between AWS, Azure, and GCP? Not sure. I see an uptick in write ups saying “We switched off cloud and reduced costs by 2/3rds.” Not a scientific sample but may leave the question open.

It's not the tech it's the data. As far as I know the data is not freely shared or at the very least there will be custom built models from data you can't get anywhere else.

Re: OpenAI is too cheap to beat

#244

Post by charlie0 »

appplication wrote: post #106

The premise of this is flawed. OpenAI is cheap because of has to be right now. They need to establish market dominance quickly, before competitors slide in. The winner of this horse race is not going to be the company with the best performing AI, it’s going to be the one who does the best job at creating an outstanding UX, ubiquitously presence, entrenching users, and building competitive moats that are not feature d…

Not if they pass that sweet sweet regulation. It's sure to start adding additional expenses to start-ups.

Re: OpenAI is too cheap to beat

#245

Post by throwaway50182 »

adam_arthur wrote: post #235
throwaway50182 wrote: post #233

Earlier quoted context omitted.

Well I'd have to change my Terraform provider and the managed Kubernetes resource... Other than that, it'd be the same. So half an hour of coding + half an hour of reconfiguring CI secrets?

Pretty obvious to most that switching cloud providers is not quick or painless for the majority of orgs. There's not really an argument in good faith to suggest otherwise. Especially given that many orgs use managed or cloud specific solutions that have no 1:1 mapping between vendors

I said I'd have to change that one managed resource. Actually it's two - the managed database. But no more.

Re: OpenAI is too cheap to beat

#246

Post by paulddraper »

Havoc wrote: post #45

Yep. Building a project that needs some LLMs. I'm very much of the self-hosting mindset so will try DIY, but it's very obviously the wrong choice by any reasonable metric. OpenAI will murder my solution by quality, by availability, by reliability and by scalability...all for the price of a coffee. It's a personal project though & partly intended for learning purposes so there is scope for accepting trainwreck level t…

> No idea how commercial projects are justifying this though.

* Specific purposes/verticals.

* Security/privacy/hosting requirements.

Re: OpenAI is too cheap to beat

#247

Post by paulddraper »

jonplackett wrote: post #3

Is this a reflection of OpenAI’s massive scale making it so cheap for them? Or is it the deal with Microsoft for cloud services making it cheap? Or are they just operating at a massive loss to kill off other competition? Or something else?

> Or something else?

They've got a landfill of cash.

Re: OpenAI is too cheap to beat

#248

Post by rco8786 »

appplication wrote: post #106

The premise of this is flawed. OpenAI is cheap because of has to be right now. They need to establish market dominance quickly, before competitors slide in. The winner of this horse race is not going to be the company with the best performing AI, it’s going to be the one who does the best job at creating an outstanding UX, ubiquitously presence, entrenching users, and building competitive moats that are not feature d…

Right exactly. The founder is basically the king of this business model. Should not be a surprise to anyone!

Re: OpenAI is too cheap to beat

#249

Post by charlie0 »

xmprt wrote: post #229
noah_buddy wrote: post #222

Earlier quoted context omitted.

It’s a funny point. After only taking Ubers and Lyfts all my adult life (young), I have recently switched to cabs because they are cheaper in my city (and I tell everyone I know to do the same). They have dominance now but if I had to guess whether cabs or Uber will still exist in 100 years… I know which I would bet on.

Cabs are an idea. Uber is a company. I can't think of any company that I'd predict to last 100 years. Even Google and Apple probably won't last 100 years. I honestly wouldn't even bet on cars being a dominant form of transportation in 100 years.

I think Apple will last 100 years. See their latest AR product. They continue to create amazing products that are relevant to the masses.

Re: OpenAI is too cheap to beat

#250

Post by eek2121 »

user3939382 wrote: post #223
adam_arthur wrote: post #179

Earlier quoted context omitted.

The winner is going to be the consumers of AI. It's a race to the bottom on pricing on the provider/infra side. It seems very unlikely that any single LLM provider will achieve a sustained and durable advantage enough to achieve large margins on their product. Consumers can swap between providers with relative ease, and there is very little stickiness to these LLM APIs, since the interfaces are general and operate on…

> The winner is going to be the consumers Cloud infra may be a comparable market, since computation is a big share of AI costs. Did consumers win big from competition between AWS, Azure, and GCP? Not sure. I see an uptick in write ups saying “We switched off cloud and reduced costs by 2/3rds.” Not a scientific sample but may leave the question open.

Can confirm: The cloud computing fad is well underway to dying...that is why AI is booming. One need only to follow the wall street dollars to figure that one out.

Several very big profile names have recently begun moving back to self-hosted, hybrid, or dedicated hosting solutions.

Cloud computing never was good in terms of value, however, it was only good in terms of scalability. AI solutions built on top of 'the cloud' will always be even worse.

Note that I pay a certain "third tier" cloud provider less than $100/mo total for hosting large websites that would cost me more than 10 grand a month on AWS/Azure/Google...while having better uptime. (the biggest differences? the complete lack of IO and bandwidth charges, and much lower storage charges)

That should tell you all you need about these types of bubbles, but then again, most of us that watched the entire tech field unfold since the pre-internet phase already knew this.

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