Today's Cheap AI Services Won't Last
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Today's Cheap AI Services Won't Last
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Re: Today's Cheap AI Services Won't Last
#2> Price increases: As VC funding dries up and companies face pressure to turn a profit, we'll likely see sharp increases in the cost of AI services.
I disagree. Yes, the VC funding will dry up, but hardware and algorithmic advances will decrease running costs by equal amounts.
Lack of a moat will prevent companies recouping past expenses, since any who try will be outcompeted by new market entrants who don't have those past expenses.
Re: Today's Cheap AI Services Won't Last
#3> Price increases: As VC funding dries up and companies face pressure to turn a profit, we'll likely see sharp increases in the cost of AI services. I disagree. Yes, the VC funding will dry up, but hardware and algorithmic advances will decrease running costs by equal amounts. Lack of a moat will prevent companies recouping past expenses, since any who try will be outcompeted by new market entrants who don't have tho…
This presumes that the SOTA models won't keep growing to fill any efficiency gains made. The models of today will get cheaper to run, sure, but surely the expectation is that AI will do a lot more than it does today in order to justify the staggering investments going into it?
Re: Today's Cheap AI Services Won't Last
#4> The current landscape bears a striking resemblance to the early days of cloud computing. Fifteen years ago, it was commonplace for individuals and businesses to pay less than $10 a month for shared hosting or a VPS. This pricing model seemed set in stone, with costs expected to continue declining.
A Digital Ocean VPS starts at $4 a month. It's not so much that we've lost the cheap part of the cloud, it's that the big cloud providers figured out how to do enterprise sales and capture the part of the market that was already overpriced and wasn't sophisticated enough to optimize itself.
Re: Today's Cheap AI Services Won't Last
#5> Price increases: As VC funding dries up and companies face pressure to turn a profit, we'll likely see sharp increases in the cost of AI services. I disagree. Yes, the VC funding will dry up, but hardware and algorithmic advances will decrease running costs by equal amounts. Lack of a moat will prevent companies recouping past expenses, since any who try will be outcompeted by new market entrants who don't have tho…
>Lack of a moat will prevent companies recouping past expenses
I think we'll see a lot of vendor lock in by introducing service complexity. We are already at a point where the hassle of switching from one big API provider to another is not always worth the hassle for a small reduction in price or a tiny improvement on some benchmarks. AI will go the same route as all SaaS products until we have GAI-level stuff running locally on affordable consumer hardware. And there's a lot of money to be made until then.
Re: Today's Cheap AI Services Won't Last
#6I think AI services will be generally free because there is too much juicy data that can be mined and a risk someone might just make it easy to make your own AI "server" so to speak.
Re: Today's Cheap AI Services Won't Last
#7This was a huge concern in 2022, before open models with useful IQ levels were released. Today, it's hard to imagine prohibitive prices at the end-user level, because it's hard to envision an application that won't eventually have a "good enough" open/free on-device inference implementation.
Two caveats: application-specific patents are still possible (and many torpedo patents are undoubtedly en route right now) and this argument might not hold at the middleman level (where wrapper apps might get their margins squeezed out.)
Re: Today's Cheap AI Services Won't Last
#8I have pretty much the opposite take: years from now we'll tell our grandchildren that the AI APIs we used to use were paid BY THE TOKEN!
We're in the dialup days of AI, where capabilities are in the hands of very few companies because hardware and training costs are prohibitively expensive. Sure, the apps we use are heavily subsidized by investment funding and the competition is very fierce. I'll also concede that 99% of the AI startups today will fail. But that doesn't mean only the 1% will be left: new ones will continuously enter the arena, compete for attention, and to do that they'll need to lower their prices. All the while, hardware costs will decrease, and incumbents like NVIDIA will inevitably grow stagnant and others will come to eat their lunch. It's the circle of (business) life.
Re: Today's Cheap AI Services Won't Last
#9[deleted]
Re: Today's Cheap AI Services Won't Last
#10> Price increases: As VC funding dries up and companies face pressure to turn a profit, we'll likely see sharp increases in the cost of AI services. I disagree. Yes, the VC funding will dry up, but hardware and algorithmic advances will decrease running costs by equal amounts. Lack of a moat will prevent companies recouping past expenses, since any who try will be outcompeted by new market entrants who don't have tho…
Yes, the new Ryzen APU's might have 128G, great for running LLMs.
https://videocardz.com/181601/amd-testing-strix-halo-apu-wit...
Perhaps some other party will come up with Groq like performant LPUs and LLMs will get more precise and efficient. I read that more and more people are running their LLMs locally.