> "Profitable on inference". Isn't that exactly the same a physical business saying "our widgets have a marginal cost of 95 cents to make, and we can sell for a dollar, so we're profitable, as long as you forget we have a $92 kajillion loan on the factory that has to be serviced."

Yes, that's called an investment. That money's already spent. Look at the marginal revenue of many business. What's going to happen? They'll raise prices because legacy costs? And then the people distilling these models will come in w/out the baggage. Cars for instance have a huge up front cost in design and manufacturing capacity and they only sell for 5-20% more than it costs them to make that one unit. It's a competitive industry

What's your point?

My point is that you can't cherry pick a profitable business unit if you don't have a story for how the entire business can operate profitably.

Cars have low margins, but they generally don't rely on an ongoing infusion of investor money to balance the books. The overall venture still has to turn a profit. Nobody is walking into Hyundai HQ and saying "We are going to sell Sonatas for $6,750 each, because if we can do it long enough, some magic will happen and we'll end up back in the green."

TBH, I'm not quite sure what the "some magic will happen" angle is for AI.

Compute gets cheaper, but I suspect the training arms race is running up costs faster still.

We're already seeing hints of price balking (definitely heard people at work saying they're hesitant about Fable due to the costs) so it's unclear if there's headroom there.

TBH, the best answer I can figure right now is that many players are hoping for a competitor's flameout-- the dream of being the last man standing, and then able to dictate market terms.