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AI's Affordability Crisis

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Re: AI's Affordability Crisis

#321

Post by lbreakjai »

travisb wrote: post #158

I think a lot of the cost comparisons to employees are off by a factor of 2 or more. AI is the ultimate contractor. Available instantly. Doesn't charge during idle periods. Pre-vetted and pre-trained. No contract negotiations or complex accounting. That is worth a small multiple of the fully-loaded employee cost. So AI might be easily worth more than $200 per human-equivalent hour. With high utilization, that might b…

AI is more like a union that controls the entire labour pool. I'm one out of a few million developers. I've got very limited bargaining power. I can't withdraw my labour because I need it to make rent and buy food. My cost has a very predictable ceiling.

On the other hand, there's two AI labs, that could afford to eat your profit, because what are you gonna do? They're your entire labour force.

Re: AI's Affordability Crisis

#322

Post by jerf »

Supermancho wrote: post #248
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.…

> The models get cheaper super fast. By this time next year Fable 5 will cost less than Sonnet does today. I'm not sure that's something to rely on. I would be Fable 5 will be phased out and the bleeding edge will be priced up.

I don't know about everyone else, but if you told me that for the next couple of years I, and everyone else, would have only Opus 4.5, I wouldn't exactly cry about it. Especially if in the meantime it got cheaper and maybe a bit faster.

My desire for the latest and greatest continues on, but my need for it in order to get any value out of it at all is much, much smaller. The in-practice delta between all the versions since 4.5 have been much more subtle than, say, the models available a year before Opus 4.5 and Opus 4.5.

The bleeding edge is going to have to earn its price delta. They can't count on me wanting to upgrade just to get something halfway decent anymore.

Re: AI's Affordability Crisis

#323

Post by andrekandre »

Supermancho wrote: post #251
andrekandre wrote: post #209

Earlier quoted context omitted.

> but they do have the power to constrain commerce its an interesting idea; i'd like to see someone claim buying/selling as a form of speech...

Citizens United got pretty close in the Supreme Court's 5–4 decision on January 21, 2010, ruling that corporations and unions cannot be prohibited from making independent political expenditures, citing First Amendment free speech protections.

yea, that was the hint in my comment... just waiting for the other shoe to drop so to speak

Re: AI's Affordability Crisis

#324

Post by gexla »

Whenever I see the cost indicator in my harness while building some probably useless thing, I'm reminded that probably everyone else is doing the same thing. Spending loads of imaginary money (according to the harness, I spent $10 worth of tokens for this single issue, but I have a $20 sub) building something of imaginary value. And then I go on social media and see a wall of slop posts, many talking about skills, systems, agents, and "Karpathy Wiki Systems" to build more useless things. Then I hear about all jobs going to AI, and I figure surely someone has to be the sane one to direct people not to build useless things. Surely you can't leave that up to the AI sales guy. Every single idea I have ever passed by GPT is BRILLIANT! I don't know where I'm going with this. At least it wasn't written by AI. ;)

Edit to add: Just use Deepseek Flash 4. You can hit those servers all day for next to nothing and still scratch the itch to build useless things. ;)

Re: AI's Affordability Crisis

#325

Post by andrekandre »

Analemma_ wrote: post #282
andrekandre wrote: post #195

Earlier quoted context omitted.

> Neither Anthropic nor OpenAI allow Business nor Enterprise customers access to the high value $200/mo plan. they may not "allow" it, but i've seen first hand enterprises encourage employees to use these accounts personally and get reimbursed later to avoid pay-as-you-go w/limits pricing for users who do tokenmaxing as a cost control measure...

Do these companies know they're letting their source code (and internal documentation, chats, communications, etc.) get used as training data? On the flat-rate consumer subscriptions, everything you send is fair game to train on, which is not true of the enterprise plans. Shows how much they value their IP, I guess.

its completely ironic but outside of claude ignore/harness rules, i've seen this stuff go out the window where ai is concerned or just brush it under the rug

Re: AI's Affordability Crisis

#326

Post by fluoridation »

simianwords wrote: post #247
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.…

Its very interesting how you are contradicting the whole article's axioms and then arriving at the same conclusion that we are in for a crash! Rational takeaway is to step back and analyse what's really happening here. - Are we really in for a crash? - What does it say about the culture and people's mental models that we have two radically opposing viewpoints on AI costs and people still arrive at same conclusion?

The fact is that a lot of people think AI is overvalued to the point there's no way it can deliver on the hype, so (if they're right) there necessarily must come a crash that brings sentiment down to the same level with objective reality. There's a lot of hype surrounding AI, so there's many different ways to defend the idea that it's overhyped, the same way that if you ask ten different people what is most wrong with the country, you'll get ten different answers.

>- Are we really in for a crash?

The question you should really be asking is, is AI really overvalued, or is it so useful it justifies all the hype that surrounds it? If the former, then yes, a crash is inevitable, because we don't live in the land of make-believe. If a crash never happens then AI was not overvalued, it was valued appropriately.

Re: AI's Affordability Crisis

#327

Post by segmondy »

The really crisis is that we are now in a phase of ("AGI" or Bust). That's it. Unless we get a self improving autonomous AI heading towards "singularity" then it's all going to blow up. The amount of money invested is ridiculous and would need a long time to recoup. Without AGI, plenty investors are going to start exiting their positions and the entire thing will be drained.

Re: AI's Affordability Crisis

#328

Post by jwrallie »

arikrahman wrote: post #319

Deepseek is practically free if you hit cache. Harnesses like reasonix help to alleviate the affordabiliy concern with opinionated oversight.

That is an area where the article did not touch, how realistic are token prices with Deepseek and the likes of it? Is it being subsidized?

Re: AI's Affordability Crisis

#329

Post by bluGill »

sdesol wrote: post #127
thewebguyd wrote: post #114

Earlier quoted context omitted.

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 int…

The big thing is, the western world has moved so much of the manufacturing to China and think a lot of people will not forgive Samsung and others, so I can see China owning a good portion of the supply chain.

While China makes a lot and a lot was moved, don't let that fool you. The western world is still making a lot of things. Manufacturing is bigger than ever in the US by any useful measure of manufacturing except the measure of number of people working in that field. Very few people work in a factory anymore because automation has replaced most of them. A factory that had 2000 employees in 1950 should have under 200 today to make the same things. If it can be that automated it moved to China.

Re: AI's Affordability Crisis

#330

Post by zhivota »

Gigachad wrote: post #265
wqaatwt wrote: post #141

This article seems to be struggling with telling apart the difference between R&D and operating expenses? The fact that AI companies are extremely unprofitable doesn’t mean they are subsidizing token costs, they still can have very decent gross margins on them

The accounting is all out of whack with these companies. If a GPU had a useful lifespan of around 3 years than it’s more a constant expense than R&D. They want you to believe they can cut the R&D at any time and be profitable but it’s likely they would completely collapse without that spend.

I don't see why 3 years is the right number there. I'm using a 10 year old model GPU to generate tokens locally, and given the bottlenecks, a commercial model focused on RAM and transfer speeds should have a longer depreciation curve than 3 years.
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