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12 posts, first seen 2h ago
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356
12 posts, first seen 2h ago
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@alexolegimas Some models are more capable than others. If you get to allocate your FLOPs across different models that sell for different prices, and the constraint is FLOPs, firms maximize $/FLOP. And the economics from there will be different, because there is much more demand than supply.
@alexolegimas OfC, this assumes that consumers can tell the difference between tokens. For now, it makes less sense to pay $50/m tokens for Fable instead of $30/m tokens for Sol, if Sol is, as many are saying, both more token efficient and about as effective. (But GPUs haven't run out yet.)
@davidmanheim I'm focusing on the AI lab revenue, not on consumer prices. You're adding a hyperscaler layer that will change consumer prices, but I don't see how this changes the argument of what the labs are getting (hyperscalers just get the difference between consumer prices and lab prices)
@alexolegimas You seem to be imagining that the AI labs own the GPUs, and will only serve their own model, and so they pick a price point to compete. I'm saying that they need to pay for scarce GPUs, and the hyperscalers can then charge up to the consumer price of the 2nd most valuable model.
@davidmanheim This is what I mean: the economically relevant unit is not flops, it is specific tasks. If there are enough models that can do roughly the same job even if some are doing it better than others, then this is competition on costs.
@davidmanheim Sorry, I'm confused: if it doesn't make sense to pay $50 for fable instead of $30 for Sol, then fable will try to undercut Sol until they hit cost. You're in the bertrand world and competition drives prices to cost.
@alexolegimas So I don't see how this leads to bidding down prices; the value to consumers is still going to be many times what is charged, so they'll pay whatever the market price is, which is a function of total available capacity.
@davidmanheim Yes, but what does the value mean here? If value means economic value, then we will have a whole set of competing models in the same value space, so we’re back to cost.
Guardrails removed spam, off-topic, unclear, or duplicate replies.
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@davidmanheim Sorry, I'm confused: if it doesn't make sense to pay $50 for fable instead of $30 for Sol, then fable will try to undercut Sol until they hit cost. You're in the bertrand world and competition drives prices to cost.