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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

#61

Post by criley2 »

baal80spam wrote: post #25
Sharlin wrote: post #18

I think I'm going to puke if I see one more "It's not X. It's Y." phrase or the word "load-bearing" used metaphorically.

Managers in my org love using it in "their" Slack messages.

I've come to realize that folks are including "ai-slop" in their ~public use of AI to intentionally signal to others that they're using AI. To some, that signal results in revulsion. To others, that signal results in approval. In my opinion, the approval signal comes from investors, board members, c-suite, and now management. They want us to use AI? Let's make sure they know we are.

Re: AI subscriptions are a ticking time bomb for enterprise

#63

Post by JumpCrisscross »

> A knowledge worker running a few hours of Claude daily, uploading documents, drafting reports, analyzing data, can easily burn through several million tokens per week. At API rates, that same workload runs somewhere between $200 and $400 a month per seat. Some power users push well beyond that. But on a Pro subscription, the company is paying $20 per head. Anthropic is not the only one eating this cost.

What? Anthropic's costs aren't the API rate. The article never attempts to estimate that cost, which renders its thesis tautology.

Re: AI subscriptions are a ticking time bomb for enterprise

#64

Post by JumpCrisscross »

utopiah wrote: post #21
returnInfinity wrote: post #3

Brad 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.

It's like witnessing a rocket using the most powerful engine on Earth then once it escaped orbit turn off the engine and said "It is flying without power!". Yes, sure, right now it is ... but that's NOT how it got here. There are trillions invested to recoup and at most billions in sales. It doesn't add up to tokens making a profit any time soon.

> There are trillions invested to recoup and at most billions in sales. It doesn't add up to tokens making a profit any time soon

But this isn't "a ticking time bomb for enterprise." It's an issue for the AI companies' investors.

Re: AI subscriptions are a ticking time bomb for enterprise

#65

Post by JumpCrisscross »

mpalmer wrote: post #46
wqaatwt wrote: post #8

Earlier quoted context omitted.

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

it’s highly unlikely OpenAI/Anthropic are not making decent amounts of money from inference. Based on what ? Why are we all whispering about how profitable all this is? It is the absolute last thing these firms would keep secret.

> Why are we all whispering about how profitable all this is?

Nobody is whispering about anything. Everyone is loudly assuming what's convenient for their thesis. Even if you have access to the books, the accounting isn't straightforward–there are yet insufficient data for a meaningful answer.

> It is the absolute last thing these firms would keep secret

If you find an optimisation strategy that you don't think your competitors have, you absolutely keep your margins secret for as long as possible. Knowing something is possible is the first step to making it so.

Re: AI subscriptions are a ticking time bomb for enterprise

#66

Post by ml_basics »

ainch wrote: post #15
returnInfinity wrote: post #3

Brad 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.

Tokens can be sold at profit, but 70% of compute expenditure goes to R&D and model training[0]. Inference needs to cover all of that as well as being profitable in a vacuum. [0] https://epoch.ai/data-insights/openai-compute-spend

this will change as inference demand increases (which is happening right now faster than many people expected)

Re: AI subscriptions are a ticking time bomb for enterprise

#67

Post by notahacker »

StevenWaterman wrote: post #57
utopiah wrote: post #21

Earlier quoted context omitted.

It's like witnessing a rocket using the most powerful engine on Earth then once it escaped orbit turn off the engine and said "It is flying without power!". Yes, sure, right now it is ... but that's NOT how it got here. There are trillions invested to recoup and at most billions in sales. It doesn't add up to tokens making a profit any time soon.

The problem is, people see "they're not profitable once you account for training" and equate that to "AI will go away soon" But if all the AI companies stopped training new models, they would all instantly become profitable (and stick around) The thing that makes them unprofitable, is having to compete (which means training models). If / when enough companies exit the market, the cost to compete goes down and you end…

Sure, but if companies don't exit the market and FOSS alternatives don't end up being unable to get near them in quality, they have to keep spending on training. And conversely, if the market becomes uncompetitive and FOSS sucks, the winners of the AI arms race are very strongly incentivised to stick their prices up anyway...

Re: AI subscriptions are a ticking time bomb for enterprise

#68

Post by gobdovan »

returnInfinity wrote: post #3

Brad 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.

Do you think it will be the case for the Claude Code/Codex tokens as well? I think those are heavily subsidized, but they're the only ones I find real value in.

Re: AI subscriptions are a ticking time bomb for enterprise

#69

Post by shimman »

JumpCrisscross wrote: post #64
utopiah wrote: post #21

Earlier quoted context omitted.

It's like witnessing a rocket using the most powerful engine on Earth then once it escaped orbit turn off the engine and said "It is flying without power!". Yes, sure, right now it is ... but that's NOT how it got here. There are trillions invested to recoup and at most billions in sales. It doesn't add up to tokens making a profit any time soon.

> There are trillions invested to recoup and at most billions in sales. It doesn't add up to tokens making a profit any time soon But this isn't "a ticking time bomb for enterprise." It's an issue for the AI companies' investors.

Good thing the entire nation's economic growth outlook isn't tied to these companies then. For a second I thought we had a potentially dangerous situation on how we misappropriated trillions of capital.

Re: AI subscriptions are a ticking time bomb for enterprise

#70

Post by kamranjon »

smoghat wrote: post #55

How do the owners of that site correlate this with their business model, which is to use AI to write articles like this one, so as to get clients in the news?

It feels like they just pointed an AI model at Ed Zitron’s blog and asked it to make a super engaging and viral post.
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