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AI is too expensive

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Re: AI is too expensive

#31

Post by doctorpangloss »

jayd16 wrote: post #24
changoplatanero wrote: post #16

Imagine you were looking at Google, a sustainable and profitable business, and you thought you saw a once in a lifetime opportunity to compete with them and take their position as a leading tech company. How much money would you need to spend to make a credible attempt? Google has had decades to accumulate intellectual and physical capital. Catching up quickly means spending >500 billion. If you can actually dethrone…

What a strange train of thought. Why would you need that amount in this hypothetical? Why would dethroning them alone be worth it? It would literally only be worth it if you could do so profitably. More realistically, it seems like someone calculated that it could still be profitable up to several hundreds of billions of dollars which explains the initial investment. And continued investment can be explained by tryin…

You: says someone has a strange train of thought, and then you also ask how can a company become profitable in a situation where it becomes a monopoly? Dude, the winner raises prices? "AI" is not expensive enough!

Re: AI is too expensive

#32

Post by larme »

citrin_ru wrote: post #7
b65e8bee43c2ed0 wrote: post #4

Earlier quoted context omitted.

Chinese 1T+ models are being offered at a fraction of GPT/Claude cost, and the margin is healthy enough for dozens of providers to compete, so I find it highly likely that ClosedAI and Misanthropic sell tokens at massive markup. they just still bleed billions on their free tier and san francisco salaries.

Why we should assume that whoever offers these Chinese models makes sufficient profits and will not rise the prices eventually too?

Some of these models are open weight. You can try hosting them and do the price calculation yourself.

They also publish papers talking about how to save kv cache and computation powers. Because currently they don't have the most powerful nvidia cards, training and inference efficiency is very import for them.

Re: AI is too expensive

#33

Post by edwin2 »

bensyverson wrote: post #13

If you're older than 30, you've seen this play out before… This is just how the VC game works. Cross-town Uber rides don't stay $5 forever. The bright side is: this is a golden era of subsidized tokens. It will not always be like this, so now is the time to churn out your passion projects.

Uber was an application of technologies sitting on top of many iterations of performance optimizations. (Think: the difference between 2009 internet speeds versus 2019 internet speeds. Or, 2009 smartphone specs versus 2019 smartphone specs.)

You could imagine a Moore’s Law-esque cheapening of the tech that coincides with the business raising their prices. That might look like a continuation of simply “using the tools” on the surface, but on the inside it would spell a gradual, meaningful increase in margin

Re: AI is too expensive

#34

Post by empath75 »

Havoc wrote: post #11

It’s a similar bet as Uber. They also started out with numbers that make no sense - overpaying drivers and undercharging users The math may look questionable but there are also senior people talking of automating all white color work in the next couple years. Even if that estimate is miles off on both time and % it’s still trillions. So crazy as the numbers seem it could still work out

Cars and gas and human labor do not get cheaper over time the way that computer hardware does.

Re: AI is too expensive

#35

Post by graydsl »

simianwords wrote: post #22
dosinga wrote: post #14

The counter argument (not mine): Software Engineers are willing to spend their own money on AI. The same people that wouldn't pay 10 dollars for code if there was a workaround that took hours.

I did a thought experiment: if you went back to 2019 and could use AI in your job at the current market price - like lets say using the latest Deepseek V4, would you pay for it? Hell yeah obviously. There's close to no doubt. So why do we think its not true now?

Am I the only one that has AI or does everyone? If everyone has it what is the thought experiment? Why 2019?

Re: AI is too expensive

#36

Post by czhu12 »

I really respected Ed Zitron, but I feel like he's very much lost the plot on AI.

Scroll back not too far and he was publishing criticisms that no one wants to spend actual money AI. Anthropic has shattered all notions of that since then.

Then there was the idea that even if people want it, we have way too much GPU capacity to ever be saturated. Now almost all providers are hitting limits.

Now, its the next iteration that even if people want to spend money and GPU's are at capacity, its just never going to be profitable. This may or may not be true, especially with more capable open source models that can be served at cost. But at this point, he mostly just brings up anything possible to downplay AI

Re: AI is too expensive

#37

Post by Aurornis »

bensyverson wrote: post #13

If you're older than 30, you've seen this play out before… This is just how the VC game works. Cross-town Uber rides don't stay $5 forever. The bright side is: this is a golden era of subsidized tokens. It will not always be like this, so now is the time to churn out your passion projects.

Uber is a good comparison because everyone was predicting the demise of ride sharing as soon as they tried to become profitable.

The subsidies went away gradually and the prices leveled out in a spot where the services are heavily used. Uber became profitable. Ride sharing is affordable.

I think our $20/month plans might become a little less generous and the $200/month plan won’t always allow non-stop vibe coding, but I don’t think the prices are going to rise so much that users are priced out. Like Uber, customers will grumble for a while and then adapt to the new normal.

The big difference is that compute hardware is getting better. I think we might overshoot with data center buildouts to the point that compute becomes cheap, while hardware improvements continue to lower the cost of serving models. Over time the same service becomes cheaper to operate, opposite of Uber where driver wages are creeping upward.

Re: AI is too expensive

#38

Post by neals »

bensyverson wrote: post #13

If you're older than 30, you've seen this play out before… This is just how the VC game works. Cross-town Uber rides don't stay $5 forever. The bright side is: this is a golden era of subsidized tokens. It will not always be like this, so now is the time to churn out your passion projects.

Token cost will come down in the future, it might even out

Re: AI is too expensive

#39

Post by happyPersonR »

ReptileMan wrote: post #5
happyPersonR wrote: post #3

Earlier quoted context omitted.

Next year is gonna be when the “switch” comes lollll

Next year we will have new deepseek.

I see a couple of possibilities

1) someone deepseeks deepseek lol:

Generates their own weights and figures out a way to determine all of the intermediate states.

2) places realize there’s real risk with using a model that might have things baked into it that produce specific flaws that could be security bugs, but only under certain conditions.

Re: AI is too expensive

#40

Post by TheSkyHasEyes »

BoredPositron wrote: post #25
bensyverson wrote: post #13

If you're older than 30, you've seen this play out before… This is just how the VC game works. Cross-town Uber rides don't stay $5 forever. The bright side is: this is a golden era of subsidized tokens. It will not always be like this, so now is the time to churn out your passion projects.

Probably the worst comparison I have seen on the topic. gz.

Eventually you come to realize the more things change the more they stay the same.
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