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AI's Affordability Crisis

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Re: AI's Affordability Crisis

#401

Post by FromTheFirstIn »

N_Lens wrote: post #397
jerf wrote: post #322

Earlier quoted context omitted.

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…

The interesting point is when it becomes smart enough to completely replace 99% of knowledge workers.

Buddy it’s not even going to replace 1%

Re: AI's Affordability Crisis

#402

Post by ottotarc »

imrehg wrote: post #383
puritanicdev wrote: post #382

Earlier quoted context omitted.

Probably a stupid question, but isn't giving developers $200 for a Max x20 subscription cheaper than using the API? I was discussing Claude's monthly bills with some friends recently. Most of us are in the $700-$1000 range, and I don't feel like I really spend that much. I have a Max x20 personal account, and I do a ton of work for my side projects through it.

Above a certain size you cannot get the quota-based models. In my org, as our Team account (quota-based) was growing, to onboard more people we _had to_ switch to Enterprise (and thus API-based costs). The switch and now cost visibility really drives home the "did this code review worth $15?" kinds of questions... We are just building the monitoring and I think there will be a crack-down sooner rather than later. I'm…

[dead]

Re: AI's Affordability Crisis

#403

Post by woeirua »

KolibriFly wrote: post #233
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

This is all fine and dandy until a single line of code somewhere in the stack causes a production outage and management wants to know why it happened. Management won't accept you shrugging your shoulders and saying "the AI did it" for very long.

Re: AI's Affordability Crisis

#404

Post by woeirua »

whimsicalism wrote: post #287
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.…

Do they get ROI from additional workers? Honestly it is difficult for me to imagine white collar companies that have positive marginal profit of labor but not positive marginal profit of tokens, especially in the future.

Well... Elon showed with Twitter that there's probably a large number of companies out there that have had negative ROI on employees too for a long time. Most companies would be hard pressed to show concrete value from each marginal employee.

Re: AI's Affordability Crisis

#405

Post by simianwords »

mikgp wrote: post #395
simianwords wrote: post #349

Earlier quoted context omitted.

I promise to do it if you agree that the one of the foundational arguments of the article is itself false. And it’s not a gotcha at all. Once we agree on this, it could be worth discussing further.

Ok, so one last question - I think folks like Ed Zitron are too much I. The bear camp, he’s “AI is useless” and I’m not there, I do think AI changes the game. But everyone has been comparing OpenAI and Anthropic to the dotcom bubble, but isn’t - The historical precedent on being able to capture value of a raw technology is not good. This is why the joke they promised us flying cars and we got ads. So everyone says “A…

Depends on what you mean by capture technology? The internet was "captured" by FAANG. What makes OpenAI different?

Re: AI's Affordability Crisis

#406

Post by mike_hearn »

com2kid wrote: post #29
jschveibinz wrote: post #5

I don't have a crystal ball, but based on similar historical scenarios, I think that one or two of these companies will win--probably because of some unique application, delivery or trade secret that will drive 80% of their revenue. Consider Google, Apple, Amazon, etc. It's still early days...

So long as Chinese labs keep writing white papers, trade secrets aren't going to win the day. Having growth up in the 90s, it is weird seeing companies share their technology secrets publicly.

The papers are often missing many critical details.

Re: AI's Affordability Crisis

#407

Post by woeirua »

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?

You can think that AI is a transformative technology and still come to the conclusion that the AI industry's economics don't pan out. I do think that we will eventually develop AGI. But I think the current scale up economics won't get us there before the music stops.

Re: AI's Affordability Crisis

#408

Post by Grombobulous »

burningChrome wrote: post #176
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 give you some additional anecdotal evidence to support your comment. I work at a Fortune 200 company. At first, it was the Wild West. Need an LLM? You got it. Need to or want to build an army of agents? Done and done. We literally had everything at the tips of fingers for about 3 months. Teams were building their own internal tools, the team I work on canceled contracts with several software vendors because tea…

Most companies these days are incredibly disciplined on spending. That’s one reason why corporations have record profits in the last few years. The level of efficiency is so high.

That’s what makes the AI Wild West so fascinating to me. Companies just threw money at it out of fear of falling behind.

Now, I think that fear has subsided at many companies.

I always thought it was incredibly questionable that we were able to slurp down AI tooling with no questions asked. Meanwhile, if we want a piece of software for some other non-AI purpose, the prospect of spending $50/month per employee is met with deep scrutiny or outright denial by default.

Re: AI's Affordability Crisis

#409

Post by Der_Einzige »

N_Lens wrote: post #396
energy123 wrote: post #273

Earlier quoted context omitted.

The AI companies will be profitable if they ship the goods. Make AGI and companies will pay for it.

Your comment reminds me of when a friend was watching me play counter strike 1.6 and said “this game looks so easy, just point at the enemies’ heads and left click?”

He was right. Twitch shooters take far less skill than shooters with higher TTK and it’s not even close. Pros at “the finals” are much higher IQ than CS or valorant pros.

Similar dynamic to how league might as well be candy land compared to dota2s checkers and star crafts chess.

Re: AI's Affordability Crisis

#410

Post by travisb »

ilovecake1984 wrote: post #292
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…

Agree. But if that’s the thinking then you need to compare vs off shore contract rates, not on shore contract rates.

Off-shore isn't available on the same schedule.

My AIntern is available the moment I start my day (not normal for off-shore in a different time zone) _and_ is available after the end of my day when I want it to work after I've gone home (useful for work using scarce resources). It even keeps the context across that time span.

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