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AI subscriptions are a ticking time bomb for enterprise

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Re: AI subscriptions are a ticking time bomb for enterprise

#31

Post by mvanbaak »

sarchertech wrote: post #27
wqaatwt wrote: post #7

Earlier quoted context omitted.

There are plenty of various providers on OpenRouter serving very large Chinese models like GLM for a fraction of what OpenAI/Anthropic. Presumably they are making a profit. It’s unlikely that Claude is proportionally that bigger and more expensive to serve so profit margins on inference must be pretty decent

Do we know they are making a profit though? They could be subsidizing use to build market share the same way. They might not have billions, but at the volumes they are selling maybe they’ve got the cash to do it. Even if they are “profitable” how many Uber drivers are “profitable” because they aren’t correctly calculating asset depreciation. Maybe these guys are doing the same thing. Maybe it’s a lot of people who al…

also, it's very much possible that the chinese companies get heavy investments from the state. Since it's very hard to get this info we have no idea wether they really make a profit or not.

Re: AI subscriptions are a ticking time bomb for enterprise

#32

Post by garrickvanburen »

542458 wrote: post #5

I’ve said this before on HN, but there are two things that make me optimistic that we won’t see a big rug pull where price-to-capability ratio skyrockets relative to today: * People keep finding ways of cramming more intelligence into smaller models, meaning that a given hardware spec delivers more model capability over time. I remember not that long ago when cutting edge 70B parameter models could kinda-sorta-someti…

I agree.

Between: more efficient models - tuned for the task at hand, the ability to run those models in-house, or even at the edges, plus Google and Microsoft are well positioned to stay ambivalent as they’ve got lots of products to sell and whether or not LLMs are part of the portfolio mix is completely dependent on enterprise customer demand.

Anthropic/OpenAI have a number of aggressive downward pressures on their pricing.

Re: AI subscriptions are a ticking time bomb for enterprise

#34

Post by cryo32 »

returnInfinity wrote: post #3

Brad Gerstner confirmed that tokens aren't being sold at a loss. Whatever the formula, API + Subscription split, the companies are making a profit on net token sale. They maybe running at loss after all the salaries and stock comp, but tokens are in profit now.

They aren't being sold at a loss but they aren't being sold at enough to cover the current losses and the costs. The losses are being passed around in some fucked up circular funding mess which will inevitably collapse into a debt crisis at some point.

Re: AI subscriptions are a ticking time bomb for enterprise

#37

Post by megadopechos »

PKop wrote: post #29

> is not a rounding error. It is Who said it was? > Pull out the napkin. This matters. The article wouldn't exist if you didn't think it mattered, just tell us why. > the question is not whether they got a good deal. The question is Who said that was the question? > This Is Not One Company's Problem Who said it was? Stop telling us what thing aren't, just speak like a normal human and convey your own thoughts. It's a…

After reading the third "rounding error" phrase I quit.

Re: AI subscriptions are a ticking time bomb for enterprise

#39

Post by add-sub-mul-div »

ghusto wrote: post #17

TL;DR to save you time: 1. GenAI companies are making a loss in order to gain adoption and later lock-in 2. ??? 3. They're going to cash-in soon and start milking you now that business critical systems rely on GenAI The "???" denotes a complete failure to offer compelling arguments that link 1 and 3.

We popularized the term "enshittification" so we wouldn't have to keep explaining this.
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