From what’s presented this seems to be the lower end of Q&A and reasoning tasks and not long horizon agentic work. I agree that the search engine replacement AI usage is something that can run anywhere (though it’s still better run in the cloud for speed, context length, sandboxing and convenience) but this isn’t the engine of AI growth.

Also, the average consumer is not going to be running a local model until they are built into the hardware they already buy and when they are, who is supplying the weights? They’ll likely be shipped as an ASIC (or MSIC) at that point anyways. Those will use a licensed model from the current leaders. The whole argument sounds like saying that cloud services shouldn’t be profitable because everyone has a computer at home or to meme “we have AI at home”.

> Those will use a licensed model from the current leaders.

Says who? In the world of video decoding, H.265 is losing out to AV1 largely because it's not superior enough to H.264 to justify the expensive and complicated licensing.

> Also, the average consumer is not going to be running a local model until they are built into the hardware they already buy and when they are, who is supplying the weights?

Apple or Nvidia, presumably.