AI will save money, and make very little. The business will collapse, but the effects will be permanent in so far as they can. We’re stuck with some AI for good, unfortunately.
Once there is enough adoption, expect token costs to skyrocket and advertising enshitifaction to accelerate. We are still in the “first hit is free” stage of ai drug addiction.
The companies that replaced employees with AI are already entering the “find out” stage.
Once there is enough adoption, expect token costs to skyrocket and advertising enshitifaction to accelerate
Models on local hardware that give adequate performance and the availability of non-US models mean that path is doomed to failure. If they crank up the price then people will look elsewhere. While they might not get frontier-level performance out of the alternatives, there’s plenty of stuff out there that’s good enough for 1/4 to 1/10th of the cost. Or just the cost of power, if you’re willing to pay for some hardware and are operating on a small scale.
The only play the AI companies have got now is twofold :
- Regulatory capture, hence all the press releases of basic and frankly embarrassing sandbox failures and “we need to slow down” talk to try and get that rolling, and
- Banning of those nasty, evil, non-US models in the name of national security.
And then what? The rest of the world will just move on to the next most useful thing on the list. There will be ~330 million US citizens to extract wealth out of, to service trillions in data centre debt. That shit’s not gonna fly.
I’m sure they will keep hardware exorbitantly expensive for as long as possible to push ppl to the subscription model. I would love to run local models, but the cost of hardware versus performance is too high compare to cloud at this point in time. I might break even in 5-10 years, but the hardware may be out of date by then. I hope things will level out in a few years. And I agree the us gov will try to ban non-us models and hardware. They may even bail out the ai companies because they will be too big to fail. Also expect ai and robot companies to get massive military contracts.
So, that’s the best we’ll ever get?
The MBAs think they can just pull an Internet and mobile device revolution out of thin air 💀💀💀
The Internet was a slow burn starting in the 1960s and gaining momentum through one of humanity’s most productive generations into the 80s and beyond, spurred on by personal computing. Mobile was a (retrospectively) natural continuation.
LLMs have been around for a very long time but they’re just forcing the issue with a product that’s not yet compelling enough to justify its enormous cost. It’s like waiting for the iPhone and the App Store to make smartphones ubiquitous.
Ehh I don’t think mobile was just a continuation of the Internet revolution, it was its own thing that happened to change the internet a lot.
I see it as an extension of the PC combined with the Internet and hardware advances. It certainly changed the Internet and our society. But I’ll leave it to historians to fight over!
Tactile screen was dreamed by TV. Mobiles covered that. On the technical standpoint, arm power consumption and having music, camera, gps, etc. all resonated with online/! digitalization of our selves. So, yes. I concur!
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AI’s business model is starting to look less like a revolution and more like a $6 trillion IOU. Bain says existing AI services may cover just $1.8 trillion by 2031, leaving a $4.2 trillion hole to justify the data center frenzy. Apparently the killer app is still: »please invent enough revenue before the depreciation schedule catches us!!!«
In order to make $6 trillion by 2031, every human being on earth would have to spend at least $150 per year on average.
Maybe that doesn’t sound like a lot if you’re already paying a $100 a month for a Claude max subscription or whatever, but consider that the vast majority of people don’t pay for any AI at all, and have no interest in ever paying for it.
Also, $150 is a best-case scenario where revenue is 100% profit. In actual reality, the profit margins are much, much lower, and may not even exist at all!
Even if AI takes off the way people hope it will, that does not mean that data center investments will pay out.
Local models exist and are a viable alternative (partially to substantially to completely) to sending every query to a centralized data center that is extracting profit from every token.
On top of that, everyone is now aware of the risks of tech dependency, and big players, the ones that would be sending their money to OpenAI or Anthropic, are the ones best able to declare their independence.
Also the vast majority of people don’t get any benefit from LLMs and won’t be willing or able to afford the actual cost to use them.
Hell, I would be surprised if the majority of people used AI for anything digital assistants or web searches were doing successfuly before they were replaced with AI bullshit.
Yes, certainly! It’s hilarious to me that people think the market broadly adopting a FREE product is somehow indicative of its economic viability. You just have to look at the journalism to see the chasm between use and profitability. And LLM’s, unlike almost every other form of modern software-based technology, does not scale. When Facebook doubles their user base, they double their revenue stream, at a fraction of a cost of exanding their costs. But when an LLM doubles its user base, it also doubles its costs.
AI is not a monopolizable product like Facebook, nor a locked-in key infrastructure ecosystem like Microsoft. It is a commodity, like toilet paper or oil or crackers. Anyone can enter the market to compete with you. No company will ever “own” AI–at least not this iteration of it.
The killer app is “you can’t build your own cloud because we’re hoarding all the compute”
Also many of the skills for building your private cloud have been forgotten or retired because Amazon and azure.
I’ve heard theories that I find convincing that the real plan is to transition us to a surveillance-based tiered economy in which the wealthy hoard control over the means of production and then spend generously to pay the largest segment of the economy – tech surveillance – to police the restless masses.
In this framing, the technology becomes profitable in the same way as healthcare: it’s essential. Once something is essential, its demand is unconstrained, and so its price-setting power isn’t based on the price customers consider a good value, it’s based on what fraction of their wealth and income they are able to hand over.
If the top 10% of Americans who participate in the investment economy conclude that ongoing real-time tracking of every American’s location and sentiments is necessary to prevent a revolution, paying to build and maintain datacenters is a must. It doesn’t matter what it costs.
This 10% then becomes the new real economy, and everyone in the 90% just become essentially livestock.
A message to the industry:
Fuck yourselves, you traitorous, awful, slimy, scummy, pee brained, flee bitten, rabid, child raping, terrorist, ego driven, scumbag, sacks of monkey shit. Holy shit; hallelujah
It’s fine. All of this is borrowed money and commitments. The reason prices on RAM and GPUs are through the roof is because all of the future capacity has been spoken for. But when the datacenters all that silicon is supposed go into don’t arrive, all of that booked demand evaporates. I think we’ll see a very nice market correction. Big tech will be fine, but stock prices will tank. The US AI labs will continue to exist, but the chinese labs will gut their competitive advantage. US put all their eggs into this stupid AI basket and China will be happy to give away the tech to spit in the US’s soup.
The time bomb is society’s total prostration to the ruling class, of which tech journalism’s enabling vassalage is but a subset.
That’s changing, people are getting way fed up. The best years of the wealthy are behind them. The next two years are going to be violent chaos, as MAGA tries to increase their grip on power, and abolish elections, but that will be their downfall, and their oligarch slavemasters will go down with them.
I take a market crash of apocalyptic proportions over a cloud dystopia any day.
That’s the problem and why they are desperate for AI. They don’t have a world changing idea like the smartphone or the Internet.
They have been lucky to have a new tech that becomes ubiquitous every 20 years or so - first radio, then TV, then Color TV, then Cable, then Home Video, then the digital age with CDs, cell phones, digital cameras, the Internet, then smartphones, which combined everything into one - phone, camera, video recorder, VCR, Internet, computer, calculator, calendar, etc., all rolled into one.
It’s kind of hard to beat the smart phone. The tablet and the smart watch has been a pretty good addition, and so has streaming, and now they think AI is the next big thing. It is becoming ubiquitous, and it won’t be a failed tech, but it won’t be everything that they are promising, either.
It’ll be like floppies, ironically. A niche specialized market
Sure, I’ll just call the boys down at the lab and tell them to do that!
Those PhD students just need a grant
In case we’re not aware already, these companies are building faster and bigger than the market can keep up with. They’re expecting a tremendous fallout likely within the next several years. The companies that remain will dominate this market indefinitely… for better or worse
