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AI's Affordability Crisis

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Re: AI's Affordability Crisis

#111

Post by jdw64 »

I can't go back to a life without AI, and I don't want to. But if AI were billed by token instead of subscription, my monthly cost would probably be ten times what it is now. I could switch to a Chinese model, but I'm not sure how things will look by then.

What makes AI so convenient is how good it is at doing red-team code reviews on my work. I used to need all this unnecessary communication just to get a review, but now I only have to reach out to the people I actually want to talk to.

Re: AI's Affordability Crisis

#112

Post by nemomarx »

okr wrote: post #45
fny wrote: post #34

The unit economics might be just fine. We'll know more after IPO. The drug dealer analogy has a darker side to it, however. Once your dependent, they can drive up the price just because . It doesn't need to be for existential reasons.

AI is a worker for me. That i pay for. Basically i am in the same game now to reduce the prizes i have to pay for my workers. Just like the employers are, that seek to reduce costs for employees, as we are simply too expensive. We need more competition among the workers. Let's introduce more chinese workforce! ;)

If you had a choice of maybe 3-4 contracting firms to hire workers from and you weren't large enough to negotiate on price I think you'd be in a pet bad spot as a business?

Re: AI's Affordability Crisis

#113

Post by dranudin »

steveBK123 wrote: post #44

I think the biggest problem is not necessarily the cost to develop & serve the models, but how quickly user behavior changed with token based pricing. I know a lot of people at companies where the marching orders changed on a dime end of Q1/start of Q2. These are shops that were fully on the "use AI or die (because we will fire you)" train. Now there's monitoring, reporting, alerting not just on overall cost but on "…

I can second this. Our company and department was all-in on AI. And since the token-based pricing came in, we got an email from IT that tried to explain that most developers don't know how to choose models and that the cheap models should be good enough for most of our work ..

Re: AI's Affordability Crisis

#114

Post by thewebguyd »

sdesol wrote: post #90
steveBK123 wrote: post #54

Earlier quoted context omitted.

I would imagine it only gets worse in the face of good-enough open/chinese/local models too right? Microsoft adding Deepseek support already as I recall? That is - for any definition of "they are behind X months" then eventually they get to the point Claude was in January when the world freaked out, but at 1/10th the cost. A lot of firms are going to mandate that is good enough for their developers.

> Microsoft adding Deepseek support I believe this hasn't been confirmed yet but I think it speaks to a bigger problem for the AI companies which is, if you give capable developers a good reasoning LLM, they can make it work like it was a really expensive model. I believe we are 100% at the stage of good enough for the vast majority of tech companines. Fable and others will be more valuable for non-traditional tech c…

If hardware becomes the moat, the US frontier labs are screwed. We have AWS, Azure, GCP. All three have or are making inference silicon. LLMs become just another service in the public cloud's large service catalog, and open weight wins.

Which makes sense to me. Selling a chatbot interface/model access to the general public was never going to be a viable long term play. You still need developers to wrap the models into specialized tools. Queue the Jobs quote "It's a feature, not a product."

Re: AI's Affordability Crisis

#115

Post by recursivedoubts »

Once locals get to Opus levels I think it we may see a phase change because that + a reasonably competent programmer is going to be a very powerful combination for most practical programming problems.

Frontier models may eventually achieve super-intelligence (no opinion beyond mild skepticism) but super-intelligence isn't necessary for most practical day-to-day programming. The problems, as always, become communication, understanding what users really need, etc. that is, softer skills.

Re: AI's Affordability Crisis

#116

Post by solidasparagus »

rhinoceraptor wrote: post #62
tacone wrote: post #27

My take is that Anthropic and OpenAI simply are NOT competing on price. 2 big players are often not enough to create tension on price. Chinese models and open model providers are, indeed, competing on price, and the difference shows.

How are Anthropic and OpenAI going to compete on price when they're both already deeply unprofitable?

Serving the API is profitable. They are unprofitable because of R&D (and maybe subscription costs?). If they can continue to find access to R&D capital, there is space to reduce API costs.

Re: AI's Affordability Crisis

#117

Post by mikgp »

skeledrew wrote: post #83
mikgp wrote: post #19

Earlier quoted context omitted.

This doesn’t solve the problem because (tautologically) the more AI prices go down the less money the companies make. If right now today the companies are operating at a profit and a price war causes the API costs to sink 90% next year, and their capex amortization costs stay fixed. The math doesn’t math.

AI prices going down means the models are improving, particularly from the efficiency angle (which is inevitable, given the nature of tech). That means all they have to do is maintain a large enough customer base at a rate high enough to ensure loss decreases continuously over time, until eventually the pass the point where they're just gaining. Healthy competition ensures that improvement savings are actually passed…

But now you’re describing a commodity, and the competition will erode profits, and their valuations are bananas, unless someone can find a business model that truly differentiate and creates a moat.

Re: AI's Affordability Crisis

#118

Post by simianwords »

beepbooptheory wrote: post #21
simianwords wrote: post #4

This is basically bunk because AI costs have gone down by 50x or more (api costs) since 3 years.

I'm no economist but if true don't you have the opposite problem? How do you get people to need X many tokens per day such that you can sell enough to make money? Wouldn't you need an absence of competition for that to be ok?

If you are an AI bear you have multiple techniques with you

- if AI costs go down you can ask how the companies will make profit and then suggest the bubble popping

- if AI costs go up you can ask how people will afford it and then suggest the bubble popping

- if companies actually do make profit then you can say the companies are getting too big and powerful so it’s a bad thing for consumers

Essentially you have left zero to a small narrow path where you are happy with the outcomes.

Re: AI's Affordability Crisis

#119

Post by cheonic52749 »

recursivedoubts wrote: post #115

Once locals get to Opus levels I think it we may see a phase change because that + a reasonably competent programmer is going to be a very powerful combination for most practical programming problems. Frontier models may eventually achieve super-intelligence (no opinion beyond mild skepticism) but super-intelligence isn't necessary for most practical day-to-day programming. The problems, as always, become communicati…

> Frontier models may eventually achieve super-intelligence but super-intelligence isn't necessary for most practical day-to-day programming

I think you forgot what super-intelligence means…

Re: AI's Affordability Crisis

#120

Post by recursivedoubts »

cheonic52749 wrote: post #119
recursivedoubts wrote: post #115

Once locals get to Opus levels I think it we may see a phase change because that + a reasonably competent programmer is going to be a very powerful combination for most practical programming problems. Frontier models may eventually achieve super-intelligence (no opinion beyond mild skepticism) but super-intelligence isn't necessary for most practical day-to-day programming. The problems, as always, become communicati…

> Frontier models may eventually achieve super-intelligence but super-intelligence isn't necessary for most practical day-to-day programming I think you forgot what super-intelligence means…

tbh, not sure i ever understood it
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