The real question is not whether there will be a market for AI, it is obvious that there will be one (as it was obvious the Internet was a gigantic thing in the dotcom boom). It is rather whether the value will be in the models (and if so in which?) or the infrastructure or somewhere else.

Interesting thoughts from Dwarkesh Patel on the future of models [1]. In summary, no moat if a client can switch to a competitor from a dropdown when all models are similar-ish (so models are commodities), but to really compete with humans, AI needs to start "learning on the job", i.e. accumulating experience like an employee (as opposed to the training / inference approach where the model isn't learning after it is released). If your model does that, then you have vendor lock-in as you can't replace an experienced model with a competitor. Then the value is in the model.

As in the 90s, this could go in all sort of different directions, hard to make predictions. And remember the 90s: the value was in the browser (you had to purchase it, eg Netscape), then the browser came for free with the OS (no value in the browser), then the browser was the most important thing in the world as it was control over the default search engine, everyone thought portals was the most important thing to control, so ISPs had their own applications accessing the internet from their own portal, etc - none of those people were stupid.

[1] https://www.youtube.com/watch?v=iewm45atodE

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porridgeraisin 3 days ago | parent [-]

The moat is in sales, the model and its quality is largely irrelevant. Gross margins will be high enough for moats to not matter that much.

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cm2187 3 days ago | parent | next [-]

I work for a large company and for any LLM I use professionally, whether programmatically or via a UI, I get to pick from a dropdown from Gemini, Claude, OpenAI and the open weight ones. We ain't locked in.

	▲	porridgeraisin 3 days ago \| parent [-]
		Yeah, and that is completely fine business-wise for all the businesses in that dropdown. Averaged over the whole TAM, they will all make a lot of money. The reason is that the total market becomes _bigger_ with every new model (upto a reasonable point of course, but for 5 models it is obviously true), they don't end up competing for the same slices of the pie. The core business for each of the 5 will not be companies like yours, but rather few hundred to few thousand companies each who exclusively use their model not for technical reasons, but because they were wined and dined or due to bundling with another service. The other hundreds of thousands of customers are all bonus. This is true for most categories of SaaS not just LLM inference. If the vendor of a core piece of software that you are already locked into tells you they are raising prices and adding AI inference features, you are going to cancel whatever AI plan you have and use theirs. Or pay the amount anyways (which is even better business-wise for them). Eventually, semi-random differences that arise in their distribution may end up informing model capabilities as well, and _that_ is when true model-level differentiation may happen. But this is not necessary and if it comes true would just be a bonus.

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WarmWash 3 days ago | parent | prev [-]

Not hosting in China will be a moat. Tech (software) never really experienced it, but the rest of Western industry all have stories of getting burned by China and their policy of ignoring IP rights.