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OpenAI mulls slashing prices as it competes with Anthropic for users

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Re: OpenAI mulls slashing prices as it competes with Anthropic for users

#71

Post by LoganDark »

sschueller wrote: post #60
LoganDark wrote: post #42

Earlier quoted context omitted.

I have 128 GB of unified memory (M4 Max) and the user experience with local inference is still pretty bad. I'm so glad something like llama.cpp exists so I don't have to wrangle Python (which I hate), but OpenCode is entirely disrespectful of the KV-cache so I had to switch to Pi (but Pi is going relatively well actually). Even so, I can't really run at hundreds of tokens per second which is practically table stakes…

Try Kilocode with deepseek v4 (via API directly to deepseek, much cheaper than via kilo). I have had very good results and compared to others it just costs pennies. I use something similar to this https://github.com/ScotterMonk/AgentAutoFlow setup and switch between deepseek v4 to flash depending on task.

I do use DeepSeek, it's exceptionally cheap! Inference is slow though, and it's not particularly intelligent but the experience is better than local inference.

Re: OpenAI mulls slashing prices as it competes with Anthropic for users

#72

Post by rich_sasha »

Lots of comparisons to eg. Amazon, and how both were burning money for ages.

Maybe the better comparison is Uber? I.e. a commoditised product (taxis on an app), burning money to directly subsidise and gain market share. I always thought it was utterly insane and a waste of money... But you'd be hard pressed to have not made money on Uber.

This is my understanding anyway. A LLM-generated summary suggests that anyone who invested pre-IPO got at least 8-10% annually compounded. Even Series G investors made 2.3x since then. It's not an Eldorado and has to make up for all the losers in the VC portfolio but it's money made, not a smouldering crater of losses.

And after going public, return from IPO is 9.4% compounded. Price is 40% below all time high in October 25 but hey that's a harsh criterion for a long term investment.

The reason why I think it's a good point of comparison is that there's no moat, plenty of competition, heavily subsidised for years by literally burning cash, now seemingly profitable and a reasonably sane PE ratio of 17.

Of course one difference is that a major cost item for LLM companies is building genuinely new, cutting edge engineering/science products whereas for Uber, I never understood why they need the 1000s of technical staff to deliver a taxi app.

I don't know about the ins and outs of the business models of either LLM providers or Uber but keen to hear from people who have insights.

Re: OpenAI mulls slashing prices as it competes with Anthropic for users

#73

Post by kouteiheika »

nl wrote: post #64
kouteiheika wrote: post #50

Earlier quoted context omitted.

This. Here's a quick experiment I did yesterday. I got a new $20 Claude subscription to try the new Fable model. I gave it a single prompt, and it barely finished, using up my whole session quota (it was at ~95% when it finished) and 10% of my weekly quota. For comparison, with the Kimi Code $40 subscription I can pretty much constantly run two/three agents in parallel for the whole week, and I never run out of quota…

A word of caution on this. I've tried this too, and was disappointed. Kimi generally benchmarks at "a bit more intelligent than Sonnet Medium" levels[1] and I'd agree broadly with this assessment. If you have adapted your coding to rely on the agentic style that is doable in Opus 4.7+ then you will find Kimi disappointing. If you are using it in a more targeted way then it can work well. [1] https://artificialanalysi…

Yes, I would agree with this.

I think it works best when you're using the agent in a more hands-on way with a targeted prompt. If you're obsessive about code quality like I am (so you thoroughly review and, when needed, reprompt or even rewrite what the agent does) then you'll be fine, but if you like to just throw a prompt at the wall and expect it to plan and execute the whole thing perfectly then you'll be disappointed.

A middle-ground trick one can use is to have Opus (or Fable now) plan the whole thing and get something cheaper like Kimi execute on it.

Re: OpenAI mulls slashing prices as it competes with Anthropic for users

#75

Post by lelanthran »

swiftcoder wrote: post #43
ses1984 wrote: post #15

Earlier quoted context omitted.

I don’t think Amazon did that…?

Amazon was pretty famous for never actually posting a profit for their first ~10 years of operation

> Amazon was pretty famous for never actually posting a profit for their first ~10 years of operation

They were spending the profit from each user, not making a loss on each user.

It's a big difference.

To turn a profit all AMZN had to do was stop spending (and the consumers would not have been affected by the halting of spending).

For the AI providers, to turn a profit they have to raise the price.

Re: OpenAI mulls slashing prices as it competes with Anthropic for users

#76

Post by lelanthran »

Overpower0416 wrote: post #16
pseudosavant wrote: post #9

Earlier quoted context omitted.

Increasingly it looks like it will end with a bubble bursting. LLMs and AI will survive, like the internet survived the dotcom bubble. But OpenAI and Anthropic could just be today's AOL and Yahoo.

I hope it will also crash hardware pricing so it becomes economically feasible to run your own local model. Currently I don’t like where we are heading with the sabotaging models because its “too dangerous”

> I hope it will also crash hardware pricing so it becomes economically feasible to run your own local model.

Even if you don't acquire hardware to do host local models, a hardware crash means that I should be able to rent the crashed hardware at just above cost of electricity + bandwidth.

Like the way I can now, for $7/m, rent a VPS that can run my B2B webapp for a company with 10k users, I look forward to buying a timeshare on GPUs that let me pay $12/m for all-you-can-eat GPU.

Re: OpenAI mulls slashing prices as it competes with Anthropic for users

#77

Post by cmiles8 »

This is the race to the bottom setup that will tank these companies in their attempts to IPO. They’re burning cash at current pricing and if a true price war breaks out the only way that ends is if either OpenAI or Anthropic blows up and goes away.

Right now OpenAI is looking like the one setup to fail here. They have lost momentum big time and are looking incredibly vunerable.

Re: OpenAI mulls slashing prices as it competes with Anthropic for users

#78

Post by dlcarrier »

LLMs are quickly becoming a commodity. In a decade, the only reason anyone won't be running free models locally will be for corporate oversight or regulatory needs, so the successful providers won't be the ones that make the best product, but the ones that make the most compliant product.

Re: OpenAI mulls slashing prices as it competes with Anthropic for users

#79

Post by lelanthran »

jillesvangurp wrote: post #22
anonym00se1 wrote: post #2

How does OpenAI plan to be profitable?

Economies of scale, optimization of models, hardware, energy infrastructure, data center construction and operation, etc. Stuff is currently relatively inefficient and there's lots of room for optimization. All the usual stuff.

> Economies of scale,

"We lose money on every customer, but we'll make it up in volume" :-)

Re: OpenAI mulls slashing prices as it competes with Anthropic for users

#80

Post by rented_mule »

kouteiheika wrote: post #73
nl wrote: post #64

Earlier quoted context omitted.

A word of caution on this. I've tried this too, and was disappointed. Kimi generally benchmarks at "a bit more intelligent than Sonnet Medium" levels[1] and I'd agree broadly with this assessment. If you have adapted your coding to rely on the agentic style that is doable in Opus 4.7+ then you will find Kimi disappointing. If you are using it in a more targeted way then it can work well. [1] https://artificialanalysi…

Yes, I would agree with this. I think it works best when you're using the agent in a more hands-on way with a targeted prompt. If you're obsessive about code quality like I am (so you thoroughly review and, when needed, reprompt or even rewrite what the agent does) then you'll be fine, but if you like to just throw a prompt at the wall and expect it to plan and execute the whole thing perfectly then you'll be disappo…

CodeWhale (formerly deepseek-tui) automates this over DeepSeek V4 Flash and Pro. My shallow understanding is that it prompts the model to evaluate the complexity of a given task, then decides on Flash vs. Pro at various reasoning levels for that task. This can help with both cost and speed. If other agent platforms don't already do this, I have to imagine they will at some point.

I'm retired and can't justify spending too much on these things. CodeWhale over DeepSeek is helping me understand this space much better (and have some fun!), and it's quite affordable. I've spent ~30 hours using it over the last couple of weeks, and I've spent $3.89 on DeepSeek in that time. If I don't feel like writing any code for a few weeks, I pay nothing. Looking at DeepSeek's dashboard, about 60% of my requests have gone to Pro and 40% to Flash. I've used 97M Pro tokens and 19M Flash tokens (well over 90% of each have been cache hits, so the price is much lower than it would otherwise be).

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