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AI's Affordability Crisis

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Re: AI's Affordability Crisis

#231

Post by thewebguyd »

a34729t wrote: post #220
thewebguyd wrote: post #189

Earlier quoted context omitted.

Even without doing that the Chinese are already going to impact our labs presence everywhere else in the world. With Fable getting pulled, any model coming out of the US is now unreliable and untrusted. No one in any other country would in their right mind choose OpenAI or Anthropic for anything. The big push for regulation and export controls is only going to ensure OpenAI & Anthropic are more like the automakers. O…

I have to push back on this: China's cheap EVs and power prices are due to industrial policy on an epic scale which goes directly against the whole free market thing. I personally think industrial policy is a good thing, but you cannot have it both ways and not expect workers to get unhappy and vote against your interests when they have no more jobs.

True, and its what they are going to do with LLMs as well. We know their playbook by now as they've repeated it over and over again across different industries.

But we can still protect domestic workers without screwing over consumers. Pure protectionism doesn't work, it'll only set us back and keep us behind. Just slapping on 100% tariffs or a complete import ban just lets domestic companies get lazy. The protectionism needs an expiry date so they can't hide behind it forever. We could also work to move supply chains out of adversarial nations and into friendly ones, but you know...that requires us to continue to have friends and allies.

A fully free market has been an illusion in the US for a very long time. We'd do well to do some of our own state-industrial planning.

Re: AI's Affordability Crisis

#232

Post by dualvariable »

verdverm wrote: post #216
dualvariable wrote: post #175

Earlier quoted context omitted.

And corporations could run DeepSeek models on cloud hardware.

You can run most open models on cloud hardware. Google Cloud gives you a click to deploy, but then you have saturation / ROI considerations, versus Google serving them up multi-tenant, per-token.

For ROI though you can run 24/7 agentic-style workloads, constantly churning through all your source code looking for security bugs (or whatever) and you DONT pay per-token costs.

A DeepSeek instance running 24/7 in a cloud provider will beat doing that with Claude which could bankrupt you with 100x more costs, even though it might find more.

And DeepSeek may find enough to keep your engineering team saturated and busy fixing things.

Re: AI's Affordability Crisis

#233

Post by KolibriFly »

woeirua wrote: post #218

It's not an affordability crisis, it's a financial crisis. The models get cheaper super fast. By this time next year Fable 5 will cost less than Sonnet does today. That's not the problem. The problem is that many companies are going to realize that they don't get any ROI from AI. Generating code faster != more profit. Most of the Fortune 500 will likely realize this and then the token budgets will come crashing down.…

I feel like this is way too binary. I don't have to write every line of code myself to understand the system. I don't write my own compiler HTTP stack or database either

It's more about the level of abstraction. If AI handles 80% of the grunt work and I spend my time on architecture and reviews that's still a win

Re: AI's Affordability Crisis

#235

Post by CuriouslyC »

woeirua wrote: post #210
CuriouslyC wrote: post #36

Earlier quoted context omitted.

The US govt is going to ban foreign models and foreign providers, and frontier labs are still cooked, because US companies will RLwash Chinese models to try and get in on the captive market. The frontier labs have already lost the war for coding, their next play is custom models for specific domains... Anthropic Galen for biomedical research, Anthropic Locke for legal analysis, etc, and you won't see _ANY_ intermedia…

>The frontier labs have already lost the war for coding This is a delusional take. Sorry, but anyone claiming this hasn't used Fable and compared it to the current best open source models. I see a lot of hype posting about GLM5.2. I see absolutely ZERO people using it in production compared to GPT 5.5 or Opus 4.8.

Coding agents are edging into diminishing returns for common tasks. The whole Opus 4.5+ arc shows this for a large swathe of people. Chinese Fable is likely <=6 months away. US Frontier labs are structurally disadvantaged in the long term so advantage is only going to skew China.

Re: AI's Affordability Crisis

#236

Post by sdenton4 »

recursivedoubts wrote: post #120
cheonic52749 wrote: post #119

Earlier quoted context omitted.

> 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

In discussions of super intelligence and ai takeoff and such, I find it helpful to ask why the smartest humans usually aren't heads of state...

Re: AI's Affordability Crisis

#237

Post by surgical_fire »

827a wrote: post #71

> Zitron's numbers don't tell us the real cost of generating tokens but, subject to the assumption that the platforms are not subsidizing the token price, that means Anthropic is subsidizing their enterprise customers by up to 40 times, and OpenAI up to 70 times Neither Anthropic nor OpenAI are subsidizing enterprise customers. Neither Anthropic nor OpenAI allow Business nor Enterprise customers access to the high va…

> Neither Anthropic nor OpenAI are subsidizing enterprise customers

> Neither Anthropic nor OpenAI allow Business nor Enterprise customers access to the high value $200/mo plan. Both organizations have moved to a "cheaper plan per user + API Pricing after that" (e.g. $20/mo + usage).

I actually think that even the API pricing of OpenAI and Anthropic are still subsidized. I don't think they make any profit on inference when you factor in depreciation. They likely still operate that at a loss.

It's no coincidence that Anthropic only had a "profitable" EBITDA with not paying Elon for compute for a bit of time, and when EBITDA curiously ignores depreciation. Models grow stale over time, as knowledge is not static.

Re: AI's Affordability Crisis

#238

Post by HDThoreaun »

surgical_fire wrote: post #237
827a wrote: post #71

> Zitron's numbers don't tell us the real cost of generating tokens but, subject to the assumption that the platforms are not subsidizing the token price, that means Anthropic is subsidizing their enterprise customers by up to 40 times, and OpenAI up to 70 times Neither Anthropic nor OpenAI are subsidizing enterprise customers. Neither Anthropic nor OpenAI allow Business nor Enterprise customers access to the high va…

> Neither Anthropic nor OpenAI are subsidizing enterprise customers > Neither Anthropic nor OpenAI allow Business nor Enterprise customers access to the high value $200/mo plan. Both organizations have moved to a "cheaper plan per user + API Pricing after that" (e.g. $20/mo + usage). I actually think that even the API pricing of OpenAI and Anthropic are still subsidized. I don't think they make any profit on inferenc…

I don’t see any reason to believe this. If you compare their api prices to open router you see they charge 10x as much. Sure their models are probably bigger, but they have economy of scale on their side, and I doubt their models are 10x bigger.

Re: AI's Affordability Crisis

#239

Post by 827a »

bayarearefugee wrote: post #82
827a wrote: post #71

> Zitron's numbers don't tell us the real cost of generating tokens but, subject to the assumption that the platforms are not subsidizing the token price, that means Anthropic is subsidizing their enterprise customers by up to 40 times, and OpenAI up to 70 times Neither Anthropic nor OpenAI are subsidizing enterprise customers. Neither Anthropic nor OpenAI allow Business nor Enterprise customers access to the high va…

> it may underestimate the inference margins of Ant/OAI's API pricing. If true then why are neither Anthropic or OpenAI dropping their API pricing to gain market share when both are clearly doing all sorts of political and PR maneuvering to compete in a cutthroat market? Since they aren't dropping the API usage prices (and are in fact raising them in a lot of subtle ways) then one of these options almost has to be tr…

Company-wide their margins are trash (probably negative). They need as much inference margin as they can get to afford the massive training runs. It is likely that we'll see GPT-5.6 reduce API pricing to compete against Anthropic, but whether Anthropic feels they need to reduce their prices is anyone's guess.

Re: AI's Affordability Crisis

#240

Post by HDThoreaun »

dns_snek wrote: post #185
solidasparagus wrote: post #116

Earlier quoted context omitted.

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.

Nuclear energy is really cheap too... as long as you ignore CapEx, would you like to invest?

Marginal cost of nuclear is huge. Marginal cost of inference is much smaller. Capex in nuclear isn’t a fixed cost, it is the marginal cost.
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