This is bogus.
Outsourcing plus local AI will soon become more economical vs. frontier labs
71–80 of 408 posts
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#72The current closed source frontier models are more capable than the latest from DeepSeek. But is the capability difference enough to justify a 30x price difference? "Frontier models" are caught in a financial dilemma of their own making --- they have spent such huge sums on development and as a result, they may have inadvertently priced themselves out of the market. Energy costs are a huge factor for AI. He who has t…
I’ve been on this issue for a while now, models are not going to matter as much in the future. Pure energy cost will be the determining factor in who is most successful. The US just cannot build cheap energy the way other China can and at the scale that China will build it. 10 years from now it will be seen as the single source of advantage
> The US just cannot build cheap energy
Nuclear power anyone?
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#73I've been pretty happy sticking with codex 5.4 medium. I don't see a good case for switching to 5.5 at the cost of going through my token budget quicker. There are misaligned incentives here between users just trying to get stuff done and AI companies competing on having the "smartest" model that passes benchmarks and continuously does some nobel peace price winning stuff. It's mostly overkill for the more mundane st…
I used to be on 5.4 high for most of my work. I have switched completely to 5.5 medium now. I would highly recommend trying it out - 5.5 is significantly more token efficient than 5.4 - the same task takes often a third of the tokens - because of this, is it also much faster to do the task - you get high "intelligence" per token even after accounting for token efficiency - 5.5 medium is just under 5.4 pro levels of i…
This is embarrassing but I find 5.4-mini on Low covers a substantial part of my and my colleagues work.
Back when it became expensive I learned to live with it and I find my "AI skills" (mainly communication) have a substantial impact on the efficiency of the model. Not saying my work is difficult, it's not, but I find there is quite a bit of wiggle room. Smaller models can still perform useful work, but you have to do the heavy lifting yourself. It saves a ton of money.
I used to burn through 75% of my tokens in an hour or two. Now I can work all day and hit maybe 50-60% if I use it heavily.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#74The current closed source frontier models are more capable than the latest from DeepSeek. But is the capability difference enough to justify a 30x price difference? "Frontier models" are caught in a financial dilemma of their own making --- they have spent such huge sums on development and as a result, they may have inadvertently priced themselves out of the market. Energy costs are a huge factor for AI. He who has t…
I’ve been on this issue for a while now, models are not going to matter as much in the future. Pure energy cost will be the determining factor in who is most successful. The US just cannot build cheap energy the way other China can and at the scale that China will build it. 10 years from now it will be seen as the single source of advantage
Same as bitcoin then.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#75Earlier quoted context omitted.
I’ve been on this issue for a while now, models are not going to matter as much in the future. Pure energy cost will be the determining factor in who is most successful. The US just cannot build cheap energy the way other China can and at the scale that China will build it. 10 years from now it will be seen as the single source of advantage
> The US just cannot build cheap energy Nuclear power anyone?
Cheap.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#76I disagree with every part of this. Local LLMs are great and very useful but if you are claiming that their code quality is in the same ballpark as Claude Code or Codex with their best models I cannot consider you a serious person. I feel like this is analogous to the folks arguing that The Cloud is "someone else's computer." As if billions of dollars of spend gives these companies zero benefit over a Mac mini. Regar…
Local models will get improve. They will get smaller, faster, cheaper. This is already happening https://dev.to/bspann/bitnet-microsofts-1-bit-llms-that-run-...
AI will become a commodity technology the same way virtual machines are a commodity.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#77When discussing LLM pricing, people are missing the plot. The subscription token price is 10x-40x cheaper than API pricing. Your 90$ Claude subscriptions give you close to $1000 to $4000 in equivalent API token pricing. The second issue is that the quality of the model “operator” makes a massive difference in the outcomes. Highly skilled senior devs who know how to prompt and have high agency will outperform team peo…
Also, your local hardware is in no way capable of running the types of models that the cloud providers do, it’s just not economically feasible, and it never will be.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#78Earlier quoted context omitted.
> The US just cannot build cheap energy Nuclear power anyone?
Cheap.
What is expensive in nuclear energy? Reason there is not more of nuclear reactors is not the cost, it is regulation. Regulation can be changed (it also seem to already have, recently, IIRC - starting 2024 NRC law changes by Biden admin and later by Trump admin)
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#79When discussing LLM pricing, people are missing the plot. The subscription token price is 10x-40x cheaper than API pricing. Your 90$ Claude subscriptions give you close to $1000 to $4000 in equivalent API token pricing. The second issue is that the quality of the model “operator” makes a massive difference in the outcomes. Highly skilled senior devs who know how to prompt and have high agency will outperform team peo…
I learned today that the Anthropic "Enterprise" plan - the one big companies use because they need governance features and audit logs and all of that jazz - is billed at API token rates (plus $20/seat/month).
So large companies are getting billed a lot more than those discount subscription plans.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#80Earlier quoted context omitted.
> they may have inadvertently priced themselves out of the market. Last week we were all talking about how Anthropic has too much demand, how they had to rent a data center from a competitor, and how the limits they’ve put on their service to deal with the demand are making users angry. DeepSeek is cheap because they’re working hard to attract users. The open weights models released for free weren’t free to train. It…
Yes and no. Just take a look at the OpenRouter providers page: https://openrouter.ai/deepseek/deepseek-v4-pro/providers Deepseek v4 Pro is much cheaper when provided by Deepseek itself, likely as a combination of the loss leader strategy you mention and the desire to have more data flow through their pipeline for training. However, the same open weights model, provided by other providers, is somewhere in the $2-3/1M…
> I hope there's always someone willing to make this bet and release better and better open models.
What would this bet be? Training is expensive and open weights mean that for hosting you compete on price with people that don't have this item on their bill.