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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

#401

Post by datadrivenangel »

GenerWork wrote: post #293
SkiFire13 wrote: post #242

Earlier quoted context omitted.

Are they? I don't believe there's that big of a market for local AI. Most people don't care that much, and you'll most likely lose the advertising revenue.

>I don't believe there's that big of a market for local AI. Most people don't care that much, I agree that the market for local AI is basically limited to nerds at this point, but that's because nobody's really explained why local AI is a good thing and also because the vast majority of people need the $20 paid plan at most. How much time and money would it take to get something half as good as OpenAIs products runni…

An M5 macbook pro running LM studio with Gemam4 or Qwen3.6 is basically the original GPT 3/ gpt3.5 chatgpt experience. So about $3000 usd

Re: AI subscriptions are a ticking time bomb for enterprise

#402

Post by hansmayer »

ZephyrBlu wrote: post #372
hansmayer wrote: post #316

Earlier quoted context omitted.

> Tokens will get cheaper > it costs OpenAI less money to serve GPT-5.5 than GPT-4 > Ppl don't understand how much efficiency gains are being made I guess "ppl" also don't understand then, with all the supposed "efficiency gains" and "tokens getting cheaper" how come MS GH Copilot is switching everyone to token-based billing? Must be because those tokens are so damn cheap, innit?

The fact you are trying to use Copilot as an example here shows you don't understand how Copilot's previous billing worked. Previously they used "premium requests" which would allow you to make a request to one of the more expensive models. People abused the shit out of this because a request was disconnected from tokens. You could make one request which used tens of dollars worth of tokens, obviously not the intende…

> shows you don't understand how Copilot's previous billing worked

Having used it for > 4 years and having paid for it for > 2.5 years, I think I know full well how it's previous billing worked.

> You could make one request which used tens of dollars worth of tokens, obviously not the intended usage pattern and obviously unsustainable.

Gee, thanks Mr. Obvious! It never occurred to me this was the reason Microsoft recently removed Opus 4.6 and added a 15x multiplier in front of the inferior, but less token-intensive Opus 4.7!

Re: AI subscriptions are a ticking time bomb for enterprise

#403

Post by [deleted] »

esseph wrote: post #350
saltcured wrote: post #318

Earlier quoted context omitted.

It's amazing to me. You say this like it isn't an absolute horror. We've really ramped up the malignant bloat of the software industry if it goes this way. We'll have this massive machine to do "home automation", something that by all rights should be possible with less computing than is deployed in smartwatches today. Yuck...

Moving the LLM from SaaS to the home, reducing the power distribution problem, and giving people control back over their data - getting it away from Big Tech. The home controls should also be more responsive that most current modern home automation that mostly uses wireless and Bluetooth to a cloud service. These are all good things. That's just one piece of the puzzle. If you're running the LLM there's no reason you…

[deleted]

Re: AI subscriptions are a ticking time bomb for enterprise

#404

Post by aryehof »

The assumption here is that the profitable price (variable costs) is only the api price. I question that.

Subscriptions can be equally profitable depending on the total actual tokens used across users. Few subscriptions use 100% of their potential, but these memes that subscriptions are unsustainable always seem to assume it to be so.

Re: AI subscriptions are a ticking time bomb for enterprise

#405

Post by Ferret7446 »

evo_9 wrote: post #79

Every AI subscription is a ticking time bomb for the frontier provider; within a few years we will be running local models as good as today’s frontier models with almost no cost burden. The floor will fall out of the enterprise market for all the frontier companies.

That's why cloud died out and everyone is running their own servers right?

Re: AI subscriptions are a ticking time bomb for enterprise

#406

Post by rakel_rakel »

rstuart4133 wrote: post #388
rakel_rakel wrote: post #344

The hyperbolic nature of the articles in both AI camps is very exhausting to me. I'd like to get in front of a whiteboard with someone who knows economics and the token providers businesses well enough to answer my "explain to me like I'm five" questions. But I'll start with these in here: Is my observation correct that for the token providers this is a margins game, while for the consumers this is a quality of servi…

You can ask an AI what it costs to produce an Opus token. The answer I got was $0.216/M Token. That takes into account hardware cost, power, cooling and hosting. Others have posted links here saying inference is about 30% of Anthropic's spend, the other 70% is R&D - things like developing the next model. If you take that into account, add a profit margin, and round to make the figures easy you end up with them sellin…

That's helpful, thanks!

Once past IPO, I suspect the 70% -> R&D must shrink, right? I mean, to keep the stock afloat long term P/E must come down right?

Public investors strike me as less willing to pour money into R&D, which is why I'm wondering about the timing of IPO in my initial question.

Re: AI subscriptions are a ticking time bomb for enterprise

#407

Post by ZephyrBlu »

hansmayer wrote: post #402
ZephyrBlu wrote: post #372

Earlier quoted context omitted.

The fact you are trying to use Copilot as an example here shows you don't understand how Copilot's previous billing worked. Previously they used "premium requests" which would allow you to make a request to one of the more expensive models. People abused the shit out of this because a request was disconnected from tokens. You could make one request which used tens of dollars worth of tokens, obviously not the intende…

> shows you don't understand how Copilot's previous billing worked Having used it for > 4 years and having paid for it for > 2.5 years, I think I know full well how it's previous billing worked. > You could make one request which used tens of dollars worth of tokens, obviously not the intended usage pattern and obviously unsustainable. Gee, thanks Mr. Obvious! It never occurred to me this was the reason Microsoft rec…

Why would you extrapolate from Microsoft's very poor setup to tokens in general then if you know it's stupid and not representative?

Re: AI subscriptions are a ticking time bomb for enterprise

#408

Post by m101 »

christopherwxyz wrote: post #136
slashdave wrote: post #133

Earlier quoted context omitted.

> within a few years we will be running local models as good as today’s frontier models I seriously doubt it. Scaling is already strained (don't buy into the "exponential" hype). And, in any case, the competition will be against the frontier models that will exist in two years.

I would readjust your convictions. We are only 2-4 years away from consumer grade immutable-weight ASICs.

This will be interesting. I can see some world where it’s used with consumers, but for the most part I think it will be in the cloud and that would make most sense

Re: AI subscriptions are a ticking time bomb for enterprise

#410

Post by SkiFire13 »

throaway198234 wrote: post #395
SkiFire13 wrote: post #353

Earlier quoted context omitted.

> that's because nobody's really explained why local AI is a good thing There are a lot of good things that need to be explained to people, but nobody ever managed to. I don't think this will be any different. > because the vast majority of people need the $20 paid plan at most Exactly, people are not gonna invest time and money when there's already something else that satisfies their need. Local AI will need to be b…

Free is always better.

Linux is free too, but it hasn't replaced Windows despite lot of people explaining why it should be better.

Moreover local AI is not free. You'll need proper hardware to run it which you have to pay extra for it.

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