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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

#241

Post by Gareth321 »

typ wrote: post #236

Unlike the belief that frontier AI is expensive due to a high margin, and going to be expensive if there is no competition. My understanding is that, under certain circumstances (which is most likely true), the price will be driven down just because of profit seeking. The frontier LLM labs run on a huge fixed cost and very low marginal cost. They need the economies of scale to make sense of the business (an incentive…

I agree, but there is prestige to consider. Many people are motivated to buy the best, even if it's much more expensive. "We're building a mission critical application here. Sure the API costs are much higher, but it's worth it."

Re: GLM 5.2 and the coming AI margin collapse

#242

Post by davedx »

arkh wrote: post #224
nostrademons wrote: post #157

Earlier quoted context omitted.

Somewhere else in the comments here, someone else remarked "Individuals perhaps [move to the new models], but not organizations." That's illustrative. The mechanism by which organizations are forced to update their technology, move to more competitive suppliers, and cut costs is a recession. In one, every business that doesn't do so goes bankrupt, and what's left are the more efficient businesses that have adopted te…

> The next one is likely to be a doozy The US, EU, China are teetering on the edge of a crisis. Russia is well on its way. I feel like 2008 was just a warmup to what may be coming.

The EU is not "teetering on the edge of a crisis", why do you say that?

Re: GLM 5.2 and the coming AI margin collapse

#243

Post by throwa356262 »

markasoftware wrote: post #42
sailfast wrote: post #26

How long will that $4.40 rate persist? Until we know more about the real unit economics it will be damn near impossible to rely on steady inference costs or make them predictable at the enterprise level. Gonna be a wild ride for awhile.

Multiple providers (who need to make a profit) offer the same 4.40 rate for glm-5.2. It's not subsidized. Deepseek's 0.86 or whatever is likely subsidized but alternate providers offer it for a price comparable to glm-5.2.

According to deepseek themselves, their current rates are NOT subsidised.

They have published tons of articles dedicated to performance and efficiency engineering. Feel free to have a look...

Re: GLM 5.2 and the coming AI margin collapse

#244

Post by echelon »

Gareth321 wrote: post #241
typ wrote: post #236

Unlike the belief that frontier AI is expensive due to a high margin, and going to be expensive if there is no competition. My understanding is that, under certain circumstances (which is most likely true), the price will be driven down just because of profit seeking. The frontier LLM labs run on a huge fixed cost and very low marginal cost. They need the economies of scale to make sense of the business (an incentive…

I agree, but there is prestige to consider. Many people are motivated to buy the best, even if it's much more expensive. "We're building a mission critical application here. Sure the API costs are much higher, but it's worth it."

I could spend $1000/day with Fable and it would be worth it. It has much deeper systems thinking, enabling me to trust it to follow my instructions and not fuck things up.

1. That confidence and quality is worth the price.

2. We're accelerating at lightning speed now. If you don't spend, someone else will and they'll eat your cake.

We're nearing the point where you could spin up an entire YC startup in a day. That changes the economics of everything.

Re: GLM 5.2 and the coming AI margin collapse

#246

Post by AmazingTurtle »

dgellow wrote: post #208
01100011 wrote: post #151

I'll agree but from the other direction. AI continues to absorb my job as a senior systems software engineer (c/c++) and after a couple months I've only spent a few hundred dollars using gpt-5.5/5.6 and codex. I have no idea what people are doing to burn so many tokens but for me this is laughably cheap and every day I discover new capabilities. I don't care if costs go up or down, it's so cheap for what I get that I…

> I have no idea what people are doing to burn so many tokens Agentic workflows is what consumes a lot. When you have an automated agentic loop working towards a given goal. If you use an LLM as a support for your own work you don’t end up consuming that much tokens, if you have multiple agents working on things independently, reviewing the work of other agents, etc you very, very quickly burn all your budget

I learned that running goal for hours produces exponentially more slop than running targeted prompts over and over again manually.

Personally, I use gpt 5.5 high with planning every time and plan various smaller features/changes in parallel, then approve them one after another. This allows me to steer it (which I need more often than not) before approving the plan, thus reducing the otherwise accumulating slop.

Using goal doesn't work for everyone, unless you have an unreasonably strong test suite or harness that the agent can verify against.

Re: GLM 5.2 and the coming AI margin collapse

#247

Post by antirez »

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…

The flaw is here:

> 1. Compute costs collapsed since the advent of Cloud and yet hyperscalers still have fat margins.

Cloud opposes switch inertia. To setup a complex system in a different environment is a complex operation. Changing AI provider is switching an endpoint.

Re: GLM 5.2 and the coming AI margin collapse

#248

Post by Shorel »

Atotalnoob wrote: post #129
jaggederest wrote: post #110

Earlier quoted context omitted.

Someone on HN made a comment in one of these threads that we could bake the weights into something like Cerebras's wafer scale chips and serve essentially the entire world off a single wafer, which is a pretty wild thing to think about. You'd have to make new hardware any time you trained a model but that seems really worth it.

You’d never be able to update it’s knowledge. LLMs need retraining to incorporate new knowledge. Baking them into wafers means they will be out of date by the time they finish the first wafers.

So, what?

I don't see the C++ compiler standards or Newton's laws changing every day.

Re: GLM 5.2 and the coming AI margin collapse

#249

Post by lgl »

echelon wrote: post #244
Gareth321 wrote: post #241

Earlier quoted context omitted.

I agree, but there is prestige to consider. Many people are motivated to buy the best, even if it's much more expensive. "We're building a mission critical application here. Sure the API costs are much higher, but it's worth it."

I could spend $1000/day with Fable and it would be worth it. It has much deeper systems thinking, enabling me to trust it to follow my instructions and not fuck things up. 1. That confidence and quality is worth the price. 2. We're accelerating at lightning speed now. If you don't spend, someone else will and they'll eat your cake. We're nearing the point where you could spin up an entire YC startup in a day. That ch…

I hear this all the time lately. Things like AI X or LLM Y can create a fully working company like "BigCorp XYZ" in N days/hours etc.

But is speed of creation really the golden goose here? A few skilled and motivated individuals could also do (and have been doing) that.

Sure, maybe they take a few months instead of days or weeks, but AFAIK, having a product is just a tiny bit of the battle, finding customers, product market fit, and actually growing it is where the gold is so I'd argue that you'd be better off building the product with a $100 day LLM and spend the other $900 on marketing.

AI won't automatically make everybody business gurus and every LLM generated company a unicorn.

Re: GLM 5.2 and the coming AI margin collapse

#250

Post by koolala »

echelon wrote: post #244
Gareth321 wrote: post #241

Earlier quoted context omitted.

I agree, but there is prestige to consider. Many people are motivated to buy the best, even if it's much more expensive. "We're building a mission critical application here. Sure the API costs are much higher, but it's worth it."

I could spend $1000/day with Fable and it would be worth it. It has much deeper systems thinking, enabling me to trust it to follow my instructions and not fuck things up. 1. That confidence and quality is worth the price. 2. We're accelerating at lightning speed now. If you don't spend, someone else will and they'll eat your cake. We're nearing the point where you could spin up an entire YC startup in a day. That ch…

Maybe YC could just give Fable 2 or 3 the funding directly. Sounds like the only thing left will be market control. The only winners being hardware gatekeepers and the investors in them.
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