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I think Anthropic and OpenAI have found product-market fit

simonwillison.net

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Re: I think Anthropic and OpenAI have found product-market fit

#731

Post by RevEng »

mesmertech wrote: post #15
binary0010 wrote: post #12

So how do openai and anthropic plan to keep customers when GLM-5.1 is just as good and open source and a lot cheaper? I don't see the business model working. My closest friend actually does automation software for large companies. He does not use Claude or openai at all. He primarily uses gpt 120b on cerebras and glm-5.1 for heavy thinking work. And some other small models for various tasks. All open source. And thes…

For coding you always want to go with the best model in the category, not something that would be the best model if we went 1 year back which GLM 5.1 is, and I'm saying that as a big fan of GLM cause I run a translation site where GLM is good enough for the price. Most of the money right now is in coding. Openai and Anthropic just have to be 6 months ahead of SOTA open source models and they'll capture most of the en…

I strongly disagree. I'm an engineer - I'm all about the fastest, cheapest thing that meets the requirements. I don't need Opus 4.7, even for my complex programming tasks. It costs over 10x other models available that still give good enough answers. Those smaller models are also a lot faster to output tokens, which saves me time.

Once the model gets good enough, the returns on bigger models diminishes quickly. I don't want to spend 10x the money and wait 5x the time to get answers that are equivalent.

Re: I think Anthropic and OpenAI have found product-market fit

#733

Post by RevEng »

I usually agree with Simon but I think he is overlooking an important factor.

There is a lot of AI usage happening not because it shows benefits, but because the business has mandated its ubiquitous use. Companies having dashboards for token usage and rewarding people for using more tokens is a real thing. I just spoke with someone today who works at Microsoft and they are required to use AI for all of their work - they have to make a special request with justification if they decide not to use AI for even a single PR. This kind of demand isn't driven by value from either the company itself or from its workers; it is the kind of artificial demand you get from make-work projects to keep people employed during hard times.

We have to wait for the hype to settle down and people start making business decisions based on results before we can really value these AI products.

Re: I think Anthropic and OpenAI have found product-market fit

#734

Post by dcre »

plaidfuji wrote: post #693
aspenmartin wrote: post #236

Earlier quoted context omitted.

What I also find confusing though is that folks seem to ignore trajectory which is maybe the biggest lede to bury. As Simon says, we have had "good enough" coding agents for 6 months, that is a blink of an eye, and at my company my job has now completely changed. It's almost like a dream. And that's just one inflection point. We've had several and there are many more on the horizon. So while I could be convinced that…

There may be additional major leaps forward, and there may not. I kind of struggle to imagine what the next step actually is. Certainly there will be improvements in performance (speed) and cost. But at a point you reach a barrier where the limiting factor is the specificity of the human prompt and our ability to manage all the code we’re generating. Somewhat oversimplifying; writing software and building apps was a…

Judging from the fact that the Opus 4.5 inflection point was not really anticipated, and we still don’t really know what threshold was crossed that suddenly made agentic coding accessible to so many more people, I think it’s safe to say we don’t know what the thresholds will be until they’re crossed. The fact that we don’t know exactly what they’ll be isn’t a good reason to think there won’t be any more.

Re: I think Anthropic and OpenAI have found product-market fit

#735

Post by jauntywundrkind »

trjordan wrote: post #11

They've got, ballpark, $5t to $10t to make back in the next 5 years, or the hardware buildouts will start getting written down. This means we're going to need $1t+ per year in spending, per year, on tokens. 200m knowledge workers in the world, 30m developers. We're talking about a world where you need 5% of every knowledge workers salary to go into tokens. 20% if you're a developer. That's a _huge_ shift. Most people…

Given what costs are and availability of parts, that 5 year write down is not in practice going to be the case. Maybe tax wise perhaps but especially for big fancy expensive multi million dollar 100-500kW racks these things are going to stick around for a while, I think.

Re: I think Anthropic and OpenAI have found product-market fit

#736

Post by no-name-here »

materielle wrote: post #211
whatshisface wrote: post #173

Earlier quoted context omitted.

Here are a few thoughts: - The publicly available information about how inference costs compare to training costs is conflicted. EEs involved in datacenters talk about power usage spikes during training runs as if they were a major factor in the designs, but academic papers discussing cost-optimal scaling confidently treat inference-time compute as a major factor. - On the side of the balance indicating that training…

I'm about to leave a shallow comment, but I am a bit skeptical of the supposed drop in inference costs. If AI labs saw a lot of potential there, they'd surely be bragging about it non-stop? So the fact that publicly available information is conflicted is probably a sign that at the very least, the numbers aren't amazing. Yes I know there's no evidence and this is lazy reasoning. But there's probably a bit of truth to…

> I am a bit skeptical of the supposed drop in inference costs. If AI labs saw a lot of potential there, they'd surely be bragging about it non-stop?

Unless to the grandparent commenter’s point they’re using it to obscure their large prisoner’s dilemma (training) cost?

Re: I think Anthropic and OpenAI have found product-market fit

#737

Post by m3kw9 »

troyastorino wrote: post #20
prepend wrote: post #14

> $2,180.16 worth of tokens for $200 “Tokens” don’t have an intrisic cost or value. Saying that I used $2,180.16 worth of tokens is like relying on the salesperson to convince me I’m getting a billion dollars worth of pots and pans for $19.99. I think it’s funny how we are throwing critical thinking out the window when it comes to evaluating biased sources of info.

Tokens do have a clearly calculable intrinsic cost. There's the marginal cost of production (i.e. the inference cost) and the amortized R&D cost that goes into the model producing them. Yes, value is hard to calculate, but luckily market pricing mechanisms exist exactly for this purpose. There isn't a better number to use than what people are willing to pay for them. So he's saying that on an enterprise plan, he'd be…

Enterprises also use 200$ plans, they are not that stupid. They add a spill over API key for over usage.

Re: I think Anthropic and OpenAI have found product-market fit

#738

Post by kopirgan »

Tuna-Fish wrote: post #248
materielle wrote: post #211

Earlier quoted context omitted.

I'm about to leave a shallow comment, but I am a bit skeptical of the supposed drop in inference costs. If AI labs saw a lot of potential there, they'd surely be bragging about it non-stop? So the fact that publicly available information is conflicted is probably a sign that at the very least, the numbers aren't amazing. Yes I know there's no evidence and this is lazy reasoning. But there's probably a bit of truth to…

Why on earth would AI labs be bragging about how little the product they sell actually costs them to make? You don't want to do anything that reduces it's perceived value to the user, that might make them less willing to pay for it. Also, inference costs are bound to go way down with more optimized architectures. GPUs are fundamentally not great at inference. No platform where the weights are streamed from a large po…

If inference costs drop 90% or whatever, that would be a massive write-off of hardware even before they gave any returns for it?! Given Chinese and others are snapping at the heels and would also benefit from such reduction in cost.

Re: I think Anthropic and OpenAI have found product-market fit

#739

Post by ggttk »

RevEng wrote: post #733

I usually agree with Simon but I think he is overlooking an important factor. There is a lot of AI usage happening not because it shows benefits, but because the business has mandated its ubiquitous use. Companies having dashboards for token usage and rewarding people for using more tokens is a real thing. I just spoke with someone today who works at Microsoft and they are required to use AI for all of their work - t…

Correct the question is one of real vs fake demand curves.

Re: I think Anthropic and OpenAI have found product-market fit

#740

Post by kopirgan »

trjordan wrote: post #11

They've got, ballpark, $5t to $10t to make back in the next 5 years, or the hardware buildouts will start getting written down. This means we're going to need $1t+ per year in spending, per year, on tokens. 200m knowledge workers in the world, 30m developers. We're talking about a world where you need 5% of every knowledge workers salary to go into tokens. 20% if you're a developer. That's a _huge_ shift. Most people…

Depreciation starts on day 1 and most likely they IMHO dont have 5 years. They dodged the deepseek bullet but who knows what is out there that will make all of this investment essentially worthless?
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