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AI's Affordability Crisis

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Re: AI's Affordability Crisis

#161

Post by SwellJoe »

lenkite wrote: post #106
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.

Chinese models are dropping in price thanks to ridiculous levels of state subsidy where companies are forced into aggressive price wars to survive and grab market share. I am guessing this will also blow up sometime next year or in 2029 at the maximum. Btw, some Chinese corporates have already seen this and increased their price. Zhipu AI & Tencent for example. Alibaba, Baidu, and Tencent also announced multiple pric…

China has the benefit of vast solar power and rapidly increasing battery capacity. Yes, that's subsidized, but it pays for itself in the long run.

And, even with the price increases, Z.ai and Tencent are still much cheaper than Anthropic or OpenAI models. I think there's an efficiency focus among the Chinese models that is absent at OpenAI and Anthropic, and in the end I suspect efficiency will be the winning feature. Google seems to understand that. Gemini 3.5 Flash is pretty competitive with the big guys, and it's small enough for Google to run it profitably (I assume) for a price that's much less than the frontier models. Gemma 4 models are showing off a bunch of efficiency techniques (MTP, QAT, the 12B encoder-less vision model that soundly outperforms much larger vision models, DiffusionGemma), and I assume they have several more techniques that aren't published.

Re: AI's Affordability Crisis

#162

Post by coryrc »

pragmatic wrote: post #150
SamuelAdams wrote: post #137

Earlier quoted context omitted.

GM just did this in the last 30 days [1], and their sales are likely going to be just fine. In fact the auto industry has repeatedly automated jobs over the last 100 years, and they still make decent sales numbers. If you decided to boycott every company that replaced staff with automation, you would be forced to exit the economy. Every company does this to some degree and the customers who vote with their wallet do…

GM is running 0% interest, no payments until n deals right now. That’s usually a sign that sales are not “just fine”.

They always are.

Re: AI's Affordability Crisis

#163

Post by sleepybrett »

manapause wrote: post #138
sleepybrett wrote: post #50

It's funny when you watch the doomscroll all these anthropic guys talking about how you should be writing self-improving loops and that's all they do. Of course that's all they do, they don't have to pay for their tokens.

Can confirm, my experience in “loop engineering” was “this is neat” for 45 minutes until a daily ration of tokens was evaporated. The quadratic cost trap is prohibitive to experimentation. As a localLLM evangelist, I am hopeful this will bring more attention to the joys of rolling your own sovereign AI.

Yeah, i'm hoping that gets smoother. I've been experimenting with omlx and opencode on my m5x64gb and keep running into issues w/ Qwen3.6-35B-A3B-MLX-8bit exceeding it's memory limit at the most inopportune times. Playing with 12B gemma4 (8bit) more today.

Maybe I should be aiming for something targeting 48gb of memory?

Re: AI's Affordability Crisis

#164

Post by akazantsev »

jcgrillo wrote: post #81
onion2k wrote: post #60

Earlier quoted context omitted.

Once your dependent, they can drive up the price just because. It doesn't need to be for existential reasons. This is the crisis point for vibe-coders. A developer can go back to writing code by hand, as horrible as that might sound. Someone who hasn't learned to code but builds with AI can't go back. They either pay or they stop. That will be an painful choice whichever way you fall.

There's a secret third option: learn. At one point, all of us were "nontechnical", but we learned. The trick is to never stop.

Is it? Learning is one thing. But owning a large codebase, you see for the first time, is a completely different level.

Re: AI's Affordability Crisis

#165

Post by titzer »

bryanlarsen wrote: post #128
titzer wrote: post #80

The coming AI enshittification is going to be epic. For those of us who have been on the web for more than five minutes, we can see this a mile away. If you think search ads are annoying, pre-roll YouTube ads are annoying, streaming ads are annoying, or basically ads-on-any-screen-anywhere-at-any-time are annoying, just wait until every stupid thing is powered by AI and is subtly trying to manipulate you to buy/watch…

Jeopardizing a $200/month subscription in return for $1/month in ad revenue seems insane. Using ads on a $20/month subscription to entice you into a $200/month one, OTOH...

They will almost certainly get more than $1/month in ad revenue for someone interacting with the AI for hours a day.

Re: AI's Affordability Crisis

#166

Post by dominotw »

solidasparagus wrote: post #116
rhinoceraptor wrote: post #62

Earlier quoted context omitted.

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.

how do you have access to their financials? are you an insider?

Edit: to the commenter below . It was widely reported that these companies were unprofitable 1 from last year. I am asking question to this specefic comment because they made a very specific claim about part of plan thats profitable . something only an insider would know.

1. https://www.wsj.com/tech/ai/openai-anthropic-profitability-e...

Re: AI's Affordability Crisis

#167

Post by dualvariable »

chermi wrote: post #143

Lol I feel like no one has any attention span here. Tech shit is expensive in the beginning when it's new. It gets cheaper with time. This is a tech forum, don't we know this? Of course people overreact in both directions on both sides of the issue. It's a very fast technology, wait for things to settle before making grand declarations.

Yeah, but in the short-term there's $600B/yr of debt-financed depreciating capital investments waiting to financially blow up.

If you zoom out to the year 2100, it becomes a little pimple on the economy that is ready to pop, but in the here and now it can cause a lot of damage to real people's wages and finances over the next 3 years.

Re: AI's Affordability Crisis

#168

Post by a34729t »

Deepseek is 90% cheaper, and nearly as good for coding tasks as claude/codex, and as good given the right plan.

The only moat OpenAI and Anthropic have is regulation. If the Chinese really eant to hammer us, they could realse the full training data and pipeline.

Re: AI's Affordability Crisis

#169

Post by nemomarx »

chermi wrote: post #143

Lol I feel like no one has any attention span here. Tech shit is expensive in the beginning when it's new. It gets cheaper with time. This is a tech forum, don't we know this? Of course people overreact in both directions on both sides of the issue. It's a very fast technology, wait for things to settle before making grand declarations.

Lots of stuff in the zirp era was cheap when it was new and increased in price over time though. Look at grubhub fees or etc.

Re: AI's Affordability Crisis

#170

Post by brainwad »

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?

Anthropic just announced it's on track to have its first profitable quarter: https://www.wsj.com/tech/ai/mind-blowing-growth-is-about-to-...
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