> The fundamental problem with these frontier model companies is that they're incentivized to create models that burn through more tokens

That's one market segment - the high priced one, but not necessarily the most profitable one. Ferrari's 2025 income was $2B while Toyota's was $30B.

Maybe a more apt comparison is Sun Microsystems vs the PC Clone market. Sun could get away with high prices until the PC Clones became so fast (coupled with the rise of Linux) that they ate Sun's market and Sun went out of business.

There may be a market for niche expensive LLMs specialized for certain markets, but I'll be amazed if the mass coding market doesn't become a commodity one with the winners being the low cost providers, either in terms of API/subscriptions costs, or licensing models for companies to run on their own (on-prem or cloud) servers.