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Apple Silicon costs more than OpenRouter

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Re: Apple Silicon costs more than OpenRouter

#71

Post by dijit »

ianberdin wrote: post #69
dijit wrote: post #59

Frontier AI companies are selling at a loss. Excusing everything else that u/bastawhiz said[0]; the obvious fact here is that Claude, OpenAI, Gemini et al. are quite literally burning through 100's of billions of dollars and selling it back to you for pennies on the dollar in the hopes that they get to be the only one left. If I spend $10 growing Oranges and sell them to you for $1; then of course it's more expensive…

Do you have a proof? Anthropic’s CEO said they Are profitable. Same with OpenAI.

Profitable for inference if you completely ignore training costs and that you absolutely must continuously train new models.

Re: Apple Silicon costs more than OpenRouter

#72

Post by tiffanyh »

ianberdin wrote: post #69
dijit wrote: post #59

Frontier AI companies are selling at a loss. Excusing everything else that u/bastawhiz said[0]; the obvious fact here is that Claude, OpenAI, Gemini et al. are quite literally burning through 100's of billions of dollars and selling it back to you for pennies on the dollar in the hopes that they get to be the only one left. If I spend $10 growing Oranges and sell them to you for $1; then of course it's more expensive…

Do you have a proof? Anthropic’s CEO said they Are profitable. Same with OpenAI.

Do you mind sharing source links to that profitability claim?

I’m struggling to find the quotes.

Re: Apple Silicon costs more than OpenRouter

#73

Post by vlovich123 »

dijit wrote: post #59

Frontier AI companies are selling at a loss. Excusing everything else that u/bastawhiz said[0]; the obvious fact here is that Claude, OpenAI, Gemini et al. are quite literally burning through 100's of billions of dollars and selling it back to you for pennies on the dollar in the hopes that they get to be the only one left. If I spend $10 growing Oranges and sell them to you for $1; then of course it's more expensive…

Except that’s not what the analysis is. They’re spending In other words, inference is fairly profitable for them and the rest of the money is spent growing revenue as quickly as possible. Building models is still an expensive line item but the costs for that are going down with time.

There is also maybe a “capture the market” mentality but I don’t think that’s necessarily it - the tools and processes are largely fungible and that’s a huge problem. They need to figure out how to make it sticky for “capture the market”, but there’s also a very real “grow as big as possible as quickly as possible to take on Google”; Google has an existential threat here.

Re: Apple Silicon costs more than OpenRouter

#74

Post by EGreg »

dijit wrote: post #59

Frontier AI companies are selling at a loss. Excusing everything else that u/bastawhiz said[0]; the obvious fact here is that Claude, OpenAI, Gemini et al. are quite literally burning through 100's of billions of dollars and selling it back to you for pennies on the dollar in the hopes that they get to be the only one left. If I spend $10 growing Oranges and sell them to you for $1; then of course it's more expensive…

These models will become more expensive over time, it's functionally impossible for them not to, they just want to capture the market before they have to stop selling at a huge loss.

They could have said the same about transistors. People keep inventing new ways to keep the costs down. Just look at the latest Qwen, DeepSeek, BitNet. Interesting tidbit: they’re all open, and as Google said in 2022: they have no moat.

Re: Apple Silicon costs more than OpenRouter

#75

Post by vlovich123 »

dijit wrote: post #71
ianberdin wrote: post #69

Earlier quoted context omitted.

Do you have a proof? Anthropic’s CEO said they Are profitable. Same with OpenAI.

Profitable for inference if you completely ignore training costs and that you absolutely must continuously train new models.

Which is where your analogy breaks down and why you think you’re taking crazy pills. Inference is growing and selling the oranges in your analogy. Model building is growing the farm to sell larger, juicier more addicting oranges.

Re: Apple Silicon costs more than OpenRouter

#76

Post by spzb »

dijit wrote: post #71
ianberdin wrote: post #69

Earlier quoted context omitted.

Do you have a proof? Anthropic’s CEO said they Are profitable. Same with OpenAI.

Profitable for inference if you completely ignore training costs and that you absolutely must continuously train new models.

And ignore capital costs, depreciation, user churn etc

Re: Apple Silicon costs more than OpenRouter

#77

Post by dijit »

vanviegen wrote: post #65
dijit wrote: post #59

Frontier AI companies are selling at a loss. Excusing everything else that u/bastawhiz said[0]; the obvious fact here is that Claude, OpenAI, Gemini et al. are quite literally burning through 100's of billions of dollars and selling it back to you for pennies on the dollar in the hopes that they get to be the only one left. If I spend $10 growing Oranges and sell them to you for $1; then of course it's more expensive…

That seems unlikely. There are many providers for open models on openrouter. It seems unlikely that they are throwing money away for each token they sell. Also, there a good technical reasons for inference being much more efficient at scale.

The providers on OpenRouter serving open models aren't "throwing money away", agreed.

But that's not the point I'm making. (or, it kind of is, but it's more high level than that).

They're running spot and preemptible GPU instances (60-80% cheaper than on-demand), paying wholesale industrial electricity rates, and running at multi-tenant utilisation densities that make your MacBook look like a bonfire. Of course they're not individually loss-making on inference, they're aggregating cheap commodity compute and skimming a margin, and on paper that's what makes it seem like a good idea, certainly not a loss leader right?

But zoom out a bit; the entire stack is swimming in VC money. OpenRouter itself just raised at a $1.3B valuation backed by a16z. The Chinese models that now account for 36% of all tokens routed through the platform (DeepSeek, Qwen) are priced the way they are because Beijing-adjacent capital has decided market share matters more than margin right now.

So yes, technically no single party is "throwing money away" on each token; they're just all simultaneously subsidising different parts of the stack for strategic reasons. The floor price you're seeing isn't a stable equilibrium, it's a pile of investor money that hasn't entirely finished burning yet.

Re: Apple Silicon costs more than OpenRouter

#78

Post by Wilya »

maho wrote: post #9

The author only compared output token costs -- but for typical agentic workloads, input tokens dominate the costs by a large margin. Running inference locally, input tokens are, to first order, free. (They only generate implicit costs through higher time-to-first-token, higher power use, and lower token output speed).

Yeah, that completely invalidates his point.

I looked at a couple random agentic sessions in my openrouter activity, and the input cost is 10x the output cost.

Prompt caching on openrouter is complicated and unreliable. On local hardware with llama-cpp, it's mostly free.

Re: Apple Silicon costs more than OpenRouter

#79

Post by spzb »

MuffinFlavored wrote: post #66
dijit wrote: post #59

Frontier AI companies are selling at a loss. Excusing everything else that u/bastawhiz said[0]; the obvious fact here is that Claude, OpenAI, Gemini et al. are quite literally burning through 100's of billions of dollars and selling it back to you for pennies on the dollar in the hopes that they get to be the only one left. If I spend $10 growing Oranges and sell them to you for $1; then of course it's more expensive…

> Frontier AI companies are selling at a loss. How big/deep of a loss? I feel like I read this every day for years that Uber did this same "idiotic, losing" strategy (how it was pitched/discussed) and then one day we woke up and... without much fuss, boom, they were profitable seemingly overnight.

Ed Zitron discusses this as part of his post on AI economics : https://www.wheresyoured.at/ais-economics-dont-make-sense/

Re: Apple Silicon costs more than OpenRouter

#80

Post by OsrsNeedsf2P »

dijit wrote: post #59

Frontier AI companies are selling at a loss. Excusing everything else that u/bastawhiz said[0]; the obvious fact here is that Claude, OpenAI, Gemini et al. are quite literally burning through 100's of billions of dollars and selling it back to you for pennies on the dollar in the hopes that they get to be the only one left. If I spend $10 growing Oranges and sell them to you for $1; then of course it's more expensive…

The models have been dropping 10x in price for completing the same tasks, year over year. Even if you think Anthropic is losing money charging 10x more than everyone else for their 400B model, the prices will continue to go down based on model improvement alone
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