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GLM 5.2 and the coming AI margin collapse

martinalderson.com

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Re: GLM 5.2 and the coming AI margin collapse

#81

Post by iknowstuff »

cogman10 wrote: post #31
fny wrote: post #5

I'm not convinced raw costs matter: 1. Compute costs collapsed since the advent of Cloud and yet hyperscalers still have fat margins. 2. Many open source office suites exist yet none compete with the ubiquity of gsuite or office. GitHub, Slack are similar examples. 3. Both Windows and macOS dominate the home desktop space despite free alternatives existing for a long time. 4. Many formerly open source infrastructure…

Unlike all your examples, switching out an LLM is both cheap an easy. So easy that every 3 months or so new models are released and people grab them and start using them. The UX is the same regardless the provider. You send in a prompt, it spits back an answer. In all your other cases, the cost to switch is losing support and a difficult transition period. But in the case of LLMs, there was no support to begin with.…

I don’t exactly see orgs lining up to switch (and train) their employees between claude desktop and codex and whatever copilot is doing. There’s probably some inertia to those harnesses/integrations on top of the llms themselves.

Re: GLM 5.2 and the coming AI margin collapse

#82

Post by aussieguy1234 »

I would not be unsurprised if the US govt steps in to prevent this. They'll do anything to stop China getting ahead in the AI race.

There's the sanctions already implemented, next step might be giving these companies government funding, just like they do with military companies.

Re: GLM 5.2 and the coming AI margin collapse

#83

Post by yomismoaqui »

aussieguy1234 wrote: post #82

I would not be unsurprised if the US govt steps in to prevent this. They'll do anything to stop China getting ahead in the AI race. There's the sanctions already implemented, next step might be giving these companies government funding, just like they do with military companies.

Good luck trying to enforce that outside of the US.

Re: GLM 5.2 and the coming AI margin collapse

#84

Post by AussieWog93 »

cogman10 wrote: post #31
fny wrote: post #5

I'm not convinced raw costs matter: 1. Compute costs collapsed since the advent of Cloud and yet hyperscalers still have fat margins. 2. Many open source office suites exist yet none compete with the ubiquity of gsuite or office. GitHub, Slack are similar examples. 3. Both Windows and macOS dominate the home desktop space despite free alternatives existing for a long time. 4. Many formerly open source infrastructure…

Unlike all your examples, switching out an LLM is both cheap an easy. So easy that every 3 months or so new models are released and people grab them and start using them. The UX is the same regardless the provider. You send in a prompt, it spits back an answer. In all your other cases, the cost to switch is losing support and a difficult transition period. But in the case of LLMs, there was no support to begin with.…

>switching out an LLM is both cheap an easy.

Honestly, these days probably less friction switching out Redis or Elasticsearch (backend) than changing LLM provider (human facing).

Fable is seriously good enough now to, in a 20k line project, take "replace Mongoengine with raw PyMongo" and not screw anything up.

Re: GLM 5.2 and the coming AI margin collapse

#86

Post by pants2 »

cogman10 wrote: post #31
fny wrote: post #5

I'm not convinced raw costs matter: 1. Compute costs collapsed since the advent of Cloud and yet hyperscalers still have fat margins. 2. Many open source office suites exist yet none compete with the ubiquity of gsuite or office. GitHub, Slack are similar examples. 3. Both Windows and macOS dominate the home desktop space despite free alternatives existing for a long time. 4. Many formerly open source infrastructure…

Unlike all your examples, switching out an LLM is both cheap an easy. So easy that every 3 months or so new models are released and people grab them and start using them. The UX is the same regardless the provider. You send in a prompt, it spits back an answer. In all your other cases, the cost to switch is losing support and a difficult transition period. But in the case of LLMs, there was no support to begin with.…

If you're developing on top of LLM APIs directly, this is definitely not true. There are differences in how context caching works, in what's available through native harnesses, the types of tools you're fine-tuned on (GPT uses apply_patch while Claude uses edit, with different formats), the API surface (Agents SDK, Responses API, Managed Agents), cost structures, and best-practice guidance all around.

Not to mention the meta of account limits, billing, ZDR contracts, etc.

Re: GLM 5.2 and the coming AI margin collapse

#87

Post by mgambati »

iknowstuff wrote: post #81
cogman10 wrote: post #31

Earlier quoted context omitted.

Unlike all your examples, switching out an LLM is both cheap an easy. So easy that every 3 months or so new models are released and people grab them and start using them. The UX is the same regardless the provider. You send in a prompt, it spits back an answer. In all your other cases, the cost to switch is losing support and a difficult transition period. But in the case of LLMs, there was no support to begin with.…

I don’t exactly see orgs lining up to switch (and train) their employees between claude desktop and codex and whatever copilot is doing. There’s probably some inertia to those harnesses/integrations on top of the llms themselves.

The inertia is legal and financial. People are paying Anthropic through AWS accounts because the simple reason of not dealing making new contract and legal agreements is enough of reason of the inertia.

But, eventually, I’m quite sure that AWS will also provide open models with those contracts without any inertia. Copilot is already offering Kimi.

My company has a deal with Devin and they provide new models all the time, and open models are becoming the most used ones by our internal metrics, especially because the company is very worried about cost.

Re: GLM 5.2 and the coming AI margin collapse

#88

Post by mistercheph »

fny wrote: post #5

I'm not convinced raw costs matter: 1. Compute costs collapsed since the advent of Cloud and yet hyperscalers still have fat margins. 2. Many open source office suites exist yet none compete with the ubiquity of gsuite or office. GitHub, Slack are similar examples. 3. Both Windows and macOS dominate the home desktop space despite free alternatives existing for a long time. 4. Many formerly open source infrastructure…

Remember web browsers? compilers? web servers? databases? windows embedded? server operating systems?

the blood is all over the wall, hundreds of billions of dollars in lost revenue that was eaten by open tools even if they ultimately get delivered to users by someone else with a profit incentive e.g. AWS selling deployment of OSS

1. their margins don't come from service guarantees (see github), they come from unlawful anti-competitive behavior which is likely to be prosecuted under future US administrations

2. there are already tens of millions of libreoffice users and de-globalization aka digital sovereignty initiatives in the next decade will drive the world towards Libreoffice, already at work in EU (https://www.zdnet.com/article/why-denmark-is-dumping-microso... https://cybernews.com/tech/germany-microsoft-word/

2a. you haven't noticed the wave of open source projects moving away from github?

3. Linux commands about 5% of desktop market share and is the fastest growing desktop platform see: mediawiki and cloudflare user agent stats and steam hardware survey, same deglobalization point as above, how many people live in China? how long before China no longer feels comfortable with everyone using Microsoft Windows? What OS will Chinese people/corps use instead? hint: https://en.wikipedia.org/wiki/Deepin

Re: GLM 5.2 and the coming AI margin collapse

#89

Post by iknowstuff »

platinumrad wrote: post #56
est31 wrote: post #47

Earlier quoted context omitted.

Those solutions have moats: 1. the cloud moat is mostly around talent really. Try finding people who can self host the alternatives to S3 et al at the HA and the scale the businesses need. Those alternatives are usually not free either, and each product might have its creator acquired (and the product cancelled) or similar. if you're a larger business then the data lock in becomes a moat: getting your data out of the…

Linux has a very stable userspace syscall ABI. About as stable as Windows, and much more stable than MacOS or the BSDs. I agree with everything else though.

Not relevant for user space applications written atop glibc/gtk/kde/qt

Re: GLM 5.2 and the coming AI margin collapse

#90

Post by jazzyjackson »

redrix wrote: post #57
felixfurtak wrote: post #18

> It turns out that nearly every agentic session does a lot of web searching for looking up items This is why Google will win the race over most of its competitors. They own search.

I wonder if this is an alternative (and better) revenue stream vs ads for search engines: Offer a competing web search for LLMs as an alternative to Google, and charge enterprises and LLM providers for it. I know Brave do this already. Not sure about DDG (I wonder if their agreement with Bing would allow it?)

Kagi assistant IMO does a great job giving relevant material to the LLM. It's a pretty neat way for a search engine to charge a premium, to offer a good model on top of their results.
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