They've got, ballpark, $5t to $10t to make back in the next 5 years, or the hardware buildouts will start getting written down. This means we're going to need $1t+ per year in spending, per year, on tokens. 200m knowledge workers in the world, 30m developers. We're talking about a world where you need 5% of every knowledge workers salary to go into tokens. 20% if you're a developer. That's a _huge_ shift. Most people…
I work for a tiny little company ($150MM annual rev with 9% net) and we are already looking at dropping $100k on hardware to run local models because, for us, they're "good enough." Our estimated spend for AIaaS would exceed that cost in less than a year. In a few years, there will be hardware capable of running frontier models good enough for most things at accessible prices for even tiny companies.
It's a given that the SOTA models need to raise their prices. It's also a given that they can't. The more they raise the more customers will move to their competition.
So what happens next? Well I think it will suck horribly if you can't move off of SOTA sooner or later, because the Big Two are going to lose customers, and therefore have to raise prices on the locked in customers even more than these projections suggest.
Beyond that if you're looking to start a business, figure out how to use cheap models in new scenarios. Build software which does that and license it. This is kind of contrary to the idea that you shouldn't over optimize for deficiencies in the models that will likely go away in the next generation - for instance a lot of problems were solved when context windows got way bigger. So it's a thin line to walk but I think it's there because a lot of orgs are using Claude today for pretty basic tasks.
The dev who's addicted to SOTA models honestly is going to have to settle for less or get totally screwed. Most applications within business from what I see aside from complex research do not require SOTA. They summarize, they classify, they transform, and doing that accurately has been cheap for a while.