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AI's Affordability Crisis

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Re: AI's Affordability Crisis

#241

Post by surgical_fire »

cmiles8 wrote: post #73

The math doesn’t add up and the wheels are starting to come off the bus. The conversation in a lot of wealth management offices has shifted dramatically in the last few month from “how do I get in on this AI thing?” to “how do I protect my assets when this AI stuff blows up.” There’s little question now if this will all implode, just when and who’s going to lose their shirt and be left without chairs when the music s…

> There’s little question now if this will all implode, just when and who’s going to lose their shirt and be left without chairs when the music stops.

Well, OpenAI and Anthropic are racing to IPO for a reason.

They will need every bagholder they can get their hands on.

Re: AI's Affordability Crisis

#242

Post by surgical_fire »

HDThoreaun wrote: post #238
surgical_fire wrote: post #237

Earlier quoted context omitted.

> Neither Anthropic nor OpenAI are subsidizing enterprise customers > Neither Anthropic nor OpenAI allow Business nor Enterprise customers access to the high value $200/mo plan. Both organizations have moved to a "cheaper plan per user + API Pricing after that" (e.g. $20/mo + usage). I actually think that even the API pricing of OpenAI and Anthropic are still subsidized. I don't think they make any profit on inferenc…

I don’t see any reason to believe this. If you compare their api prices to open router you see they charge 10x as much. Sure their models are probably bigger, but they have economy of scale on their side, and I doubt their models are 10x bigger.

It's impossible to tell at this point. I have no idea how much of their compute is also subsidized through deals they have with the hyperscalers, etc.

It's irrelevant how big their models may or may not be. Depreciation needs to be taken into account, so does actual compute expenses. Training those models is not cheap, and you will never reach a point where a model is "final". You will always need to train the next one.

Eventually the bill has to be paid. Money and resources are finite still.

Re: AI's Affordability Crisis

#243

Post by asdff »

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 works for you because you were trained in The Old Way.

Consider the people younger than you. Who are literally shutting their brain off so AI can cheat on their essays and exams. They aren't going to be good architects or code reviewers.

Re: AI's Affordability Crisis

#244

Post by asdff »

titzer wrote: post #80

The coming AI enshittification is going to be epic. For those of us who have been on the web for more than five minutes, we can see this a mile away. If you think search ads are annoying, pre-roll YouTube ads are annoying, streaming ads are annoying, or basically ads-on-any-screen-anywhere-at-any-time are annoying, just wait until every stupid thing is powered by AI and is subtly trying to manipulate you to buy/watch…

It is already ruining forums including this one. People posting AI slop articles. Probably a good deal of commenters using AI slop to write their comments. Can't run away from it. Eventually you will have to step away entirely because you will just be interfacing mainly with AI content. I'm about fed up with forums at this point and I doubt I will be around them in the coming months at this rate of ever increasing slop peddling. I suspect more and more human contributors will feel the same and start slowly walking away, snowballing the slopification effect.

There is going to be a point soon where HN is just ai models posting ai articles to be filled with ai comments and for what reason exactly? I guess to try and train new ai slop company products into the datasets of various ai models to capture the budget spend of some ai middle manager model.

Re: AI's Affordability Crisis

#245

Post by thewebguyd »

KolibriFly wrote: post #230
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 funniest thing would be if in a couple years LLMs just end up being another checkbox next to PostgreSQL and Kubernetes

I don't think that's far fetched at all either and is probably the end game ultimately. No one wants to buy a chatbot, they want to automate something with it. Intelligence is just another PaaS offering right next to storage, compute.

The only hiccup in that happening is will the US Gov let Anthropic and/or OpenAI fail when that time comes.

Re: AI's Affordability Crisis

#246

Post by HDThoreaun »

surgical_fire wrote: post #242
HDThoreaun wrote: post #238

Earlier quoted context omitted.

I don’t see any reason to believe this. If you compare their api prices to open router you see they charge 10x as much. Sure their models are probably bigger, but they have economy of scale on their side, and I doubt their models are 10x bigger.

It's impossible to tell at this point. I have no idea how much of their compute is also subsidized through deals they have with the hyperscalers, etc. It's irrelevant how big their models may or may not be. Depreciation needs to be taken into account, so does actual compute expenses. Training those models is not cheap, and you will never reach a point where a model is "final". You will always need to train the next o…

Well the third party operators on open router are assuredly operating at a profit, including depreciation. The only reason they’d be profitable at 1/10 the price of the labs while the labs aren’t profitable is if inference costs the labs 10x as much per token

Re: AI's Affordability Crisis

#247

Post by simianwords »

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?

Re: AI's Affordability Crisis

#248

Post by Supermancho »

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.

Re: AI's Affordability Crisis

#249

Post by wqaatwt »

bayarearefugee wrote: post #82
827a wrote: post #71

> Zitron's numbers don't tell us the real cost of generating tokens but, subject to the assumption that the platforms are not subsidizing the token price, that means Anthropic is subsidizing their enterprise customers by up to 40 times, and OpenAI up to 70 times Neither Anthropic nor OpenAI are subsidizing enterprise customers. Neither Anthropic nor OpenAI allow Business nor Enterprise customers access to the high va…

> it may underestimate the inference margins of Ant/OAI's API pricing. If true then why are neither Anthropic or OpenAI dropping their API pricing to gain market share when both are clearly doing all sorts of political and PR maneuvering to compete in a cutthroat market? Since they aren't dropping the API usage prices (and are in fact raising them in a lot of subtle ways) then one of these options almost has to be tr…

Why would they? If they see the market as a duopoly for now and don’t consider open Chinese models a fully credible threat that might start eating into their share then they have the incentive to charge as much as the market can bear instead of under cutting each other in a pointless price war.

Re: AI's Affordability Crisis

#250

Post by Catloafdev »

woeirua wrote: post #213
Catloafdev wrote: post #55

Affordability is not the current goal. Vendor lock-in is the current goal. Consumer prices are a drop in the bucket comparatively.

How can you lock in when the harnesses are basically thin clients around the APIs and you can replicate them using agents in a short period of time? I haven't seen a compelling thesis yet for how you achieve vendor lock in for LLMs. Claude Code is a bit sticky, but if we're being honest its just because Codex doesn't have all the same features yet.

Because it's not about consumer lock-in, it's about enterprise lock-in. That's what they're chasing. Regular users are basically marketing.
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