I suspect the economics favor centralized servers, if you only look at the aggregated cost to serve X number of users' tokens. But we could say the same thing about a lot of the computation that iPhones do locally. They could have been much thinner clients, but instead they now have more compute power than desktops had when iPhones launched.
> I suspect the economics favor centralized servers, if you only look at the aggregated cost to serve X number of users' tokens.
The economics of real-time, low-latency inference of very large near-SOTA models will heavily favor a centralized setup. But if you can afford to wait for your answer - be it a day, a week, or even more at the extreme low end (or if you just stick to leaner models for your relatively quick replies) the economics start to shift in a very clear way. A slow-going local inference setup relying on cheap SSD offload does not need the high power input of a datacenter rack, and the cooling load is outright trivial - even when working on many requests in parallel, which (in a SSD offload context) is what maximizes throughput even for local inference. These are serious problems for centralized inference that will probably limit the scale at which it can be applied.
iPhone are in practice more reliant on central servers than ever before. Except for some games, if you take a random person's iPhone it becomes almost useless without internet connection. Which is exactly my point, it's not about compute, it's about people's expecations and priorities. The main driver of the need for higher performance chips on iPhones is its camera and smooth 120fps UI animations, not local processing for apps for almost all people.
However, the compute situation just skew it even further when it comes to LLMs.
Phones are communication devices. So I would always expect connectivity to be central to their use. But that's a different issue than the "inefficiency" of edge computation and whether powerful edge devices can sell (they obviously can).
A lot of the compute that iPhones do either has high bandwidth requirements (photo editing etc) or low latency requirements (games etc). LLMs are an interesting case where unless you're feeding in images, it's just text