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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

#281

Post by asdfaoeu »

saberience wrote: post #269
peab wrote: post #107

Earlier quoted context omitted.

It really depends on what you're doing, but most LLM usage and agentic runs are pretty interchangeable in my experience, and it's usually trivial to switch. If anything, you're better off supporting multiple LLMs as backup because most model providers have been so inconsistent with working all the time

Dude it’s not trivial to switch because the behaviors are different! You’re clearly not building a product based on an LLM. I’m still using various old Anthropic and OpenAI models for products I’ve built and released because I can’t risk the behavior changing in unpredictable ways and the users being pissed. It’s much easier to switch out some deterministic software than an LLM which you’ve spent a ton of time on tes…

I don't think they are saying it's trivial but compare say for example switching an organisation from Office or Windows the example that started this. They are not even in the same ballpark.

Re: GLM 5.2 and the coming AI margin collapse

#282

Post by calgoo »

thedougd wrote: post #119
woeirua wrote: post #94

Earlier quoted context omitted.

Agents will make all of these migrations trivial. I expect margin collapse across a lot of tech darlings.

This is the conversation I plan to have with Okta sales soon. Wait till you see how easy AI makes it to switch to Entra ID or anyone else. It’s tedium not even problem solving.

My problem with the SSO providers is not the technical part, thats "easy". Its the coordinate with the 200+ external and internal vendors / support to redeploy the SSO part which is time consuming. I always say its a ~3 year project, which can be done in 6 months with the right amount of resources, especially if the platform has been running for years.

Re: GLM 5.2 and the coming AI margin collapse

#283

Post by devsda »

saberience wrote: post #269
peab wrote: post #107

Earlier quoted context omitted.

It really depends on what you're doing, but most LLM usage and agentic runs are pretty interchangeable in my experience, and it's usually trivial to switch. If anything, you're better off supporting multiple LLMs as backup because most model providers have been so inconsistent with working all the time

Dude it’s not trivial to switch because the behaviors are different! You’re clearly not building a product based on an LLM. I’m still using various old Anthropic and OpenAI models for products I’ve built and released because I can’t risk the behavior changing in unpredictable ways and the users being pissed. It’s much easier to switch out some deterministic software than an LLM which you’ve spent a ton of time on tes…

Makes sense but honestly if you've spent more time testing and working around the nuances to build consistent experience doesn't it mean you actually need more standardization to easily switch models if/when your trusted model is not viable for you provider?

Re: GLM 5.2 and the coming AI margin collapse

#284

Post by zurfer »

Somehow the blog post seems naive. Yes GLM 5.2 is good and cheaper per token, but margins are a result of supply and demand. Now demand for quality and quantity of tokens is increasing at least quadratic or cubic (more users * more tasks * more tokens per task). On the other side you have real infrastructure constraints on the supply side. Openai and Anthropic have large commitments and contracts that enable them to get access at a scale of compute that is not obviously going to be available for open source model hosts. And you see it, glm 5.2 inference is less stable and higher variance than any of the bigs labs.

Why is SpaceX not hosting glm 5.2? because they make more money with renting out to Anthropic and Google.

Re: GLM 5.2 and the coming AI margin collapse

#285

Post by iammrpayments »

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…

My guess is that they never close sessions, I always restart sessions after a few messages to clean context

Re: GLM 5.2 and the coming AI margin collapse

#286

Post by alansaber »

Agent systems only increase the gap between frontier and open models. Open models still experience more tool call failures, run longer loops, and get stuck more often. Until that's resolved (and it's obviously technically possible) people will be forking out for a better agent experience.

Re: GLM 5.2 and the coming AI margin collapse

#287

Post by rubyfan »

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…

In these examples cost of the solution does not generally scale with the use of the solution in the same way we see token use. In the case of LLMs the cost of use scales very differently than seat licensing.

Many corporations have found they have a new cost center drawing tens of millions or more with little direct evidence of productivity gain. Corporations are probably best positioned to either switch providers, leverage router solutions or at worst use the fact that they could to drive prices down from the proprietary providers.

Re: GLM 5.2 and the coming AI margin collapse

#288

Post by NichoPaolucci »

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…

These are probably mostly the enterprise customers - they may use the same amount of tokens as you do, but they have to pay the API price. From my experience the API is significantly more costly. We had one user ask for and receive usage credits on Claude, the bill the next day was to the tune of $400.

Re: GLM 5.2 and the coming AI margin collapse

#289

Post by cb321 »

nostrademons wrote: post #115
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…

There's a huge case of survivorship bias when trying to recall historical analogues, because in every instance where margins collapsed and competition made the industry a commodity business, the big proprietary names are no longer with us. Here's a selection of examples, though: 1. Memory chip margins collapsed so much in the 80s that Intel exited the memory chip business entirely. At the time, they were known much m…

That is a good list. While I'm sure many companies could be added, I only post to include DEC https://en.wikipedia.org/wiki/Digital_Equipment_Corporation whose `vt50/vt100/vtXX` ideas may be with us, in software, for perpetuity unless something like Arcan (https://arcan-fe.com/) ever takes off.
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