I think it does make sense if you're at a certain level of user hardware. If you make local computing infeasible because of the computational or hardware cost it makes it much easier to sell compute as a service. Since about 2014 almost every single change to paid software has been to make it a recurring fee rather than a single payment, and now they can do that with hardware as well. To the financially illiterate paying a $15 a month subscription to two LLMs from their phone they have a $40 monthly payment on for two years seems like a better deal than paying $1,200 for a desktop computer with free software that they'll use a tenth as much as the phone. This is why Nvidia is offering GForce Now the same way in one hundred hour increments, as they can get $20 a month that goes directly to them, with the chance of getting up to an additional $42 maximum if the person buys additional extensions of equal amount (another one hundred hours). That ends up with $744 a year directly to Nvidia without any board partners getting a cut, while a mid grade GPU with better performance and no network latency would cost that much and last the user five entire years. Most people won't realize that long before they reach the end of the useful lifetime of the service they'll have paid three to four times as much as if they had just bought the hardware outright.

With more of the compute being pushed off of local hardware they can cheapen out on said hardware with smaller batteries, fewer ports and features, and weaker CPUs. This lessens the pressure they feel from consumers who were taught by corporations in the 20th century that improvements will always come year over year. They can sell less complex hardware and make up for it with software.

For the hardware companies it's all rent seeking from the top down. And the push to put "AI" into everything is a blitz offensive to make this impossible to escape. They just need to normalize non-local computing and have it succeed this time, unlike when they tried it with the "cloud" craze a few years ago. But the companies didn't learn the intended lesson last time when users straight up said that they don't like others gatekeeping the devices they're holding right in their hands. Instead the companies learned they have to deny all other options so users are forced to acquiesce to the gatekeeping.