I’m not so sure about that. Already AI vendors are back to cutting prices to try and keep customers from cutting back on their usage. My own employer is working hard at pivoting to much smaller fine-tuned models for established use cases, and seeing model performance improvement in addition to large inference cost reductions. Being able to run them locally hasn’t exactly been a disaster for devex, either.

It may turn out that demand for SOTA frontier models isn’t so limitless after all.

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pixl97 2 hours ago | parent [-]

Every product follows demand curves. At a price of 0 you could find infinite usage. This has nearly zero relation to how much it costs to provide the product.

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bunderbunder 2 hours ago | parent [-]

Except of course it relates. All else being equal, we will prefer $X COGS over $2X COGS because that helps us with both profit margins and price competition.

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pixl97 2 hours ago | parent [-]

It relates in the sense there's a minimum cost of production without losses, not the actual price people are willing to pay.

	▲	bunderbunder an hour ago \| parent [-]
		Framing it in terms of the price people might be willing to pay for a single product in isolation frames the point I was making, which was about price competition, right out of the picture. Maybe I'd be willing to pay $10 for product A if I had other options. But if there's a product B for $3 that's not quite as nice but still ticks all my boxes, then product instantly becomes a lot less attractive.