AI subscriptions are a ticking time bomb for enterprise
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AI subscriptions are a ticking time bomb for enterprise
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Re: AI subscriptions are a ticking time bomb for enterprise
#2It is "bait and switch" --- done on an industrial scale.
Re: AI subscriptions are a ticking time bomb for enterprise
#3Brad Gerstner confirmed that tokens aren't being sold at a loss. Whatever the formula, API + Subscription split, the companies are making a profit on net token sale.
They maybe running at loss after all the salaries and stock comp, but tokens are in profit now.
Re: AI subscriptions are a ticking time bomb for enterprise
#4Brad Gerstner confirmed that tokens aren't being sold at a loss. Whatever the formula, API + Subscription split, the companies are making a profit on net token sale. They maybe running at loss after all the salaries and stock comp, but tokens are in profit now.
He's an interested party. His investments are worth a lot more if he says that tokens are sold at a profit. I don't understand how anyone would trust him?
Re: AI subscriptions are a ticking time bomb for enterprise
#5I’ve said this before on HN, but there are two things that make me optimistic that we won’t see a big rug pull where price-to-capability ratio skyrockets relative to today:
* People keep finding ways of cramming more intelligence into smaller models, meaning that a given hardware spec delivers more model capability over time. I remember not that long ago when cutting edge 70B parameter models could kinda-sorta-sometimes write code that worked. Versus today, when Qwen 27BA3B (1/23 of the active parameters!) is actually *fun* to vibe code with in a good harness. It’s not opus smart, but the point is you don’t need a trillion parameters to do useful things.
* Hardware will continue to improve and supply will catch up to demand, meaning that a dollar will deliver more hardware spec over time. Right now the industry is massively supply constrained, but I don’t see any reason that has to continue forever. Every vendor knows that memory quality and memory bandwidth and the new metrics of note, and I expect to start seeing products that reflect that in a few years.
I hope that one day we’ll look back on the current model of “accessing AI through provider APIs” the same way we now look back on “everyone connecting to the company mainframe.”
Re: AI subscriptions are a ticking time bomb for enterprise
#6Brad Gerstner confirmed that tokens aren't being sold at a loss. Whatever the formula, API + Subscription split, the companies are making a profit on net token sale. They maybe running at loss after all the salaries and stock comp, but tokens are in profit now.
This is the sort of uncritical thinking that inflates bubbles in the aggregate.
Re: AI subscriptions are a ticking time bomb for enterprise
#7Brad Gerstner confirmed that tokens aren't being sold at a loss. Whatever the formula, API + Subscription split, the companies are making a profit on net token sale. They maybe running at loss after all the salaries and stock comp, but tokens are in profit now.
He's an interested party. His investments are worth a lot more if he says that tokens are sold at a profit. I don't understand how anyone would trust him?
There are plenty of various providers on OpenRouter serving very large Chinese models like GLM for a fraction of what OpenAI/Anthropic. Presumably they are making a profit.
It’s unlikely that Claude is proportionally that bigger and more expensive to serve so profit margins on inference must be pretty decent
Re: AI subscriptions are a ticking time bomb for enterprise
#8Brad Gerstner confirmed that tokens aren't being sold at a loss. Whatever the formula, API + Subscription split, the companies are making a profit on net token sale. They maybe running at loss after all the salaries and stock comp, but tokens are in profit now.
This is the sort of uncritical thinking that inflates bubbles in the aggregate.
Compared to the inference prices for open models it’s highly unlikely OpenAI/Anthropic are not making decent amounts of money from inference.
How many times bigger could Opus be than GLM or Kimi, it’s certainly not proportional to the price
Re: AI subscriptions are a ticking time bomb for enterprise
#9Brad Gerstner confirmed that tokens aren't being sold at a loss. Whatever the formula, API + Subscription split, the companies are making a profit on net token sale. They maybe running at loss after all the salaries and stock comp, but tokens are in profit now.
That isn't enough. Over time the need for growth and increasing profits will squeeze existing margins.
Re: AI subscriptions are a ticking time bomb for enterprise
#10Inference is profitable. Companies lose money because:
1. Training is expensive. Not just compute but getting the data, researchers salaries etc 2. You have to keep producing new models to ensure people use your inference and there seems to be no end to this. So they have to pour more billions to keep the cycle going on 3. People salary and other admin cost are not that high compared to 1 and 2.