Outsourcing plus local AI will soon become more economical vs. frontier labs
1–10 of 408 posts
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#2The current closed source frontier models are more capable than the latest from DeepSeek. But is the capability difference enough to justify a 30x price difference?
"Frontier models" are caught in a financial dilemma of their own making --- they have spent such huge sums on development and as a result, they may have inadvertently priced themselves out of the market.
Energy costs are a huge factor for AI. He who has the lowest energy costs will likely be able to dictate market prices. And fossil fuels dependence doesn't look to be advantageous for AI.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#3The current closed source frontier models are more capable than the latest from DeepSeek. But is the capability difference enough to justify a 30x price difference? "Frontier models" are caught in a financial dilemma of their own making --- they have spent such huge sums on development and as a result, they may have inadvertently priced themselves out of the market. Energy costs are a huge factor for AI. He who has t…
> "Frontier models" are caught in a financial dilemma of their own making --- they have spent such huge sums on development and as a result, they may have inadvertently priced themselves out of the market.
I feel it'll wind up like the dotcom/fiber bubble. Way too much money poured into it, lots of expensive bankruptcies or write-offs, and a readjusted market sea level.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#4The current closed source frontier models are more capable than the latest from DeepSeek. But is the capability difference enough to justify a 30x price difference? "Frontier models" are caught in a financial dilemma of their own making --- they have spent such huge sums on development and as a result, they may have inadvertently priced themselves out of the market. Energy costs are a huge factor for AI. He who has t…
> lowest energy costs will likely be able to dictate market prices
This is a good insight. I think everyone has seen that chart China's electricity generation going parabolic vs the US. That combined with cheaper yet equally good talent means at least in that segment, the closed labs won't catch up anytime soon
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#5The current closed source frontier models are more capable than the latest from DeepSeek. But is the capability difference enough to justify a 30x price difference? "Frontier models" are caught in a financial dilemma of their own making --- they have spent such huge sums on development and as a result, they may have inadvertently priced themselves out of the market. Energy costs are a huge factor for AI. He who has t…
> lowest energy costs will likely be able to dictate market prices This is a good insight. I think everyone has seen that chart China's electricity generation going parabolic vs the US. That combined with cheaper yet equally good talent means at least in that segment, the closed labs won't catch up anytime soon
> the closed labs won't catch up anytime soon
Which closed labs won’t catch up to whom?
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#6The current closed source frontier models are more capable than the latest from DeepSeek. But is the capability difference enough to justify a 30x price difference? "Frontier models" are caught in a financial dilemma of their own making --- they have spent such huge sums on development and as a result, they may have inadvertently priced themselves out of the market. Energy costs are a huge factor for AI. He who has t…
This sounds to me like the Bitcoin bros. Yes, the first-gen technology was very energy-heavy, but afterwards people (bitcoin maxis and people who held the bag) kept insisting that all new technology is “shitcoins” and that everyone should just buy bitcoin.
Actually, platforms that serve many customers can bring down the costs tremendously through caching, and don’t need the AI credits as much: https://safebots.ai/costs.html
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#7The current closed source frontier models are more capable than the latest from DeepSeek. But is the capability difference enough to justify a 30x price difference? "Frontier models" are caught in a financial dilemma of their own making --- they have spent such huge sums on development and as a result, they may have inadvertently priced themselves out of the market. Energy costs are a huge factor for AI. He who has t…
> lowest energy costs will likely be able to dictate market prices This is a good insight. I think everyone has seen that chart China's electricity generation going parabolic vs the US. That combined with cheaper yet equally good talent means at least in that segment, the closed labs won't catch up anytime soon
[dead]
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#8Earlier quoted context omitted.
> lowest energy costs will likely be able to dictate market prices This is a good insight. I think everyone has seen that chart China's electricity generation going parabolic vs the US. That combined with cheaper yet equally good talent means at least in that segment, the closed labs won't catch up anytime soon
> the closed labs won't catch up anytime soon Which closed labs won’t catch up to whom?
Not my comment, but I’d venture to guess they’re referring to the likes of DeepSeek et al, who are/will be able to host their top-tier inference infra more efficiently
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#9The current closed source frontier models are more capable than the latest from DeepSeek. But is the capability difference enough to justify a 30x price difference? "Frontier models" are caught in a financial dilemma of their own making --- they have spent such huge sums on development and as a result, they may have inadvertently priced themselves out of the market. Energy costs are a huge factor for AI. He who has t…
This sounds to me like the Bitcoin bros. Yes, the first-gen technology was very energy-heavy, but afterwards people (bitcoin maxis and people who held the bag) kept insisting that all new technology is “shitcoins” and that everyone should just buy bitcoin. Actually, platforms that serve many customers can bring down the costs tremendously through caching, and don’t need the AI credits as much: https://safebots.ai/cos…
Bitcoin is a poor analogue for much anything since it's very much designed to be energy-heavy.
Re: Outsourcing plus local AI will soon become more economical vs. frontier labs
#10Earlier quoted context omitted.
> the closed labs won't catch up anytime soon Which closed labs won’t catch up to whom?
Not my comment, but I’d venture to guess they’re referring to the likes of DeepSeek et al, who are/will be able to host their top-tier inference infra more efficiently
right now the most likely outcome is that they are going to host locally produced much more power hungry chips, and even if the lead on electricity production will stay, it will be eaten by inefficiency of the hardware.