For the near future it seems that the new models will consume whatever improved hardware capacity we have. Competing with that is challenging, but I also think there will be strong economic incentives towards cheaper but adequate models on other providers.

I don't think we'll see home users being able to match even the low end clouds for a long time.

Longer term I think we'll see these uses of AI cluster into a few groups:

- maximal code / reasoning quality, at high prices (Fable)

- typical code / agents (sub-Opus, Terra)

- cheap but decent enough quality (think Deepseek / GLM / Luna)

- so cheap I don't care about utilization (Deepseek, and friends)

And also more niche ones:

- ultra fast with high quality answers (typically sub-SOTA). Cerebras / dedicated silicon type approaches, expensive.

- ultra fast with mostly-adequate answers, and an openness to retries, moving up to better models

I think the open models will dominate (not with individuals, but low cost providers) all except the top 1-2 of those categories, and there will be a continuous erosion on the big player's moats. The top categories are also where all the money is, but I'm not sure it can justify those investments long-term. I also think they will have to squeeze more money out of them to justify the investments, which will also drive people down the list.

Edit: clarifications.