> The subscription token price is 10x-40x cheaper than API pricing
This is a temporary phenomenon. Expect either drastic price increases or draconian throttling or both in the coming months.
These companies are operating at huge loses and have hundreds of billions in liabilities and commitments. They need to turn on the money faucet sooner than later.
Even with increased prices, AI enables velocity both in development and bugs fixing. Would companies want that? If prices are biting the company, I think companies will route all development and bugs fixing requests through few superperfomer developers with complete knowledge of the different components within the company (they will be the Queen Bees holding the company on their head). The rest of the company will be tasked with requirment gathering, specs cleaning, deambiguation and so on (worker bees).
So kinda like how stuff is now at a lot of big companies? I've worked at many different companies and almost always there are a few out-performers and a lot of people just found enough not to get fired (no hate, power to them lol).
We're already seeing slash their AI budgets. I expect that will increase till we hit more of an equilibrium.
From what I understand, that is sort of how IBM Bob works - multiple models behind the scenes and they route the request to the model that will handle it best at the lowest price.
Incentives matter…
If prices keep going up, watch for companies to exit frontier models and go to local llama.cpp instances for 6-month-ago SOTA, with the flex of being housed within the office - no more privacy leakage, no more price gouging.
To be honest, I’m not sure why a Y-Combinator backed company hasn’t come out yet flooding the market with highly capable OPAI (pronounced “Oh-pah” as in what Greeks shout as the drink shots), which stands for “On-Prem AI”
… yes, I just made up OPAI right now lol
> If prices keep going up, watch for companies to exit frontier models and go to local llama.cpp instances for 6-month-ago SOTA, with the flex of being housed within the office - no more privacy leakage, no more price gouging.
That or just hiring people to do the work! I hear rumours that this is already starting to happen in some places (perhaps those that were a little overzealous with AI-hype driven layoffs).
I do think many will move to lower cost models or self hosted over the next few years as prices balloon. And the privacy/control story is compelling.
If we're able to see some big increases in hardware capabilities that can be self-hosted, that will be an accelerant.
That said, most companies just want to pay a provider to delegate responsibility in exchange for cost and control.
> I’m not sure why a Y-Combinator backed company hasn’t come out yet flooding the market with highly capable OPAI
If we momentarily disregard the fact that YC itself owns billions of dollars worth of OpenAI shares[1], YC would plan to find demo-day investors willing to drive down the value of frontier labs. The coöpetition among VCs and the existing web of AI investments will mean no VC will be interested in investing in local AI...until after the frontier labs IPO.
1. Thanks to the self-dea^w foresight of former YC president Sam Altman
Theres recent reporting that Anthropic will be profitable this quarter...
edit: I see in other comments on this thread you think Ed Zitron is a reliable pundit so that explains everything.
How will it be profitable, really?
You can dismiss Ed (and me vicariously) but what's your compelling evidence to counter their extremely uphill battle towards profitability?
Either way it will be very interesting to see their S1 when they try and IPO.
If it's anything like SpaceX's then I suspect my post will age better than yours.