I disagree that it only matters if the subsidy results in selling at a loss. Yes, some revenue is better than no revenue. But clearly the demand exists for consumption-based tokens. At its current growth rate, Anthropic could end all of its subscription offerings tomorrow and still be profitable as an enterprise by early next year. Every day that it doesn't do that, it's leaving money on the table, because it has to divert resources to less profitable subscription tokens.

Now, the reason they won't do that is because subscriptions provide a stable floor of revenue. The floor is lower than it could be because of the subsidies, and that's why they matter even if they do not bring prices down to below cost: if the growth of consumption-based spending ever slows or - heaven forbid - DROPS, Anthropic will need to cut into those subsidies to avoid a revenue slowdown, which risks sending away reliable recurring revenues (i.e., customers quitting).

Anthropic is kind of like the bus in Speed: if it stops moving it'll blow up. At least over the next 5 years, massive revenues won't be enough - it needs to sustain massive revenue GROWTH. They can pull two levers to do this: increase uptake or increase prices. So far, the "increase uptake" lever works like an infinite money glitch. But at some point, they'll need to look at the "increase prices" lever. When that happens, we will find out just how big the subsidies are.

F500 company I’m at switched off Claude code to copilot in 30 days across a 5000 person org.

There’s no moat. AI tools actually make the switching that much easier

That's an interesting perspective. Do you know if the deal with Anthropic has an exclusivity provision? In theory, you don't have to "switch," you could just ADD an OpenAI subscription and start splitting your spend (or not consuming Anthropic tokens at all).

Also, shouldn't your AI efficiency gains shrink the switching costs by a lot? Legal can review for cheaper, IT can implement faster, etc.

Approximately 80% of revenue comes from consumption-based spending, so your statement would likely be true even if subscriptions were priced below cost. Overall revenue is not especially informative on the price structure of a revenue stream that represents one-fifth of the overall enterprise.

Who would be among those 5? Are these big tech? Or large corporates?

As per the S1, 5 companies were responsible for 25% of revenue in the 9months back from end of September.

Which feels like a carefully chosen statistic.

Compute is by far not the only cost associated with running a service, so, no?

24 GB 7900 XTX user here. You can do a ton with less than 32 GB. It definitely drops off quick, but 32 GB is not the floor for useful AI.

Scrappy builds aren't "affordable" but are more so than running Nvidia + optimized builds. You could put together a machine for $5000 or less that competes with frontier models from less than a year ago, albeit a little slower.

And cards like the $1600 (sheesh) R9700 have actually gotten more capable through community efforts at optimization, since their launch.

I think if the bubble can ever deflate/pop, and GPUs and RAM back off a bit, we'll see the dam burst for local AI.

Right now it's only accessible to people who can justify the costs.

If you had been paying any attention at all over the last year, there were 32GB AMD cards at like $1200-1400 and Intel at a little over $1000. I actually hadn't yet noticed they've gone up in price and had last checked only a couple months ago. But even at like $2000, that's still comparable to the nominal price of a mid 90s consumer PC for actual magic.

That rig is running single GPU most of the time and like that it is good for 95% of what I'm doing. If I need to evaluate a large model or if the smaller ones get stuck on a problem (which does happen) then I run GLM 5.3 3.86 bpw on all of the GPUs. It's a nice space heater in that configuration, so I see it as co-generation ;)