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I wonder if they're pulling the wall-mart model. Ruthlessly cut costs and sell at-or-below costs until your competitors go out of business, then ratchet up the

I wonder if they're pulling the wall-mart model. Ruthlessly cut costs and sell at-or-below costs until your competitors go out of business, then ratchet up the prices once you have market dominance.

entropicdrifter 2y ago
You think Google would engage in monopolistic practices like that? Because I do
- 0cf8612b2e1e 2y ago
  I have no idea if this is dumping or not. At Microsoft/Google scale, what does it cost to serve a million LLM tokens? Tough to disentangle the capex vs opex costs for them. If they did not have so many other revenue streams, potentially dicey as there are probably still many untapped performance optimizations.
bko 2y ago
Isn't Walmart still incredibly cheap? They have a net margin of 2.3% I think that's one of those things competitors complain about that never actually happens (the raising prices part). https://www.macrotrends.net/stocks/charts/WMT/walmart/net-profit-margin https://www.macrotrends.net/stocks/charts/WMT/walmart/net-pr...
lacker 2y ago
Probably not. Do they really believe they are going to knock OpenAI out of business, when the OpenAI models are better? Instead I think they are going after the "Android model". Recognize they might not be able to dethrone the leader who invented the space. Define yourself in the marketplace as the cheaper alternative. "Less good but almost as good." In the end, they hope to be one of a small number of surviving members of an valuable oligopoly.
- GaggiX 2y ago
  Android is more popular than iOS by a large margin and it's neither less good or cheaper, it really depends on the smartphone.
  - deleted 2y ago
    [deleted]
- socksy 2y ago
  The latest Google Pixel phone (you know, the one that Google actually set the price for) appears to cost the exact same as the latest iPhone ($999 for pro, $799 for non-pro). And I would argue against the "less good" bit too. I think this analysis is not in keeping with reality, and I doubt if that's their strategy.
  - rajup 2y ago
    I doubt anyone buys Pixel phones at full price. They are discounted almost right out of the gate.
- scarmig 2y ago
  Cheapness has a quality all its own. Gemini is substantially cheaper to run (in consumer prices, and likely internally as well) than OpenAI's models. You might wonder, what's the value in this, if the model isn't leading? But cheaper inference could potentially be a killer edge when you can scale test-time compute for reasoning. Scaling test-time compute is, after all, what makes o1 so powerful. And this new Gemini doesn't expose that capability at all to the user, so it's comparing apples and oranges anyway. DeepMind researchers have never been primarily about LLMs, but RL. If DM's (and OAI's) theory is correct--that you can use test-time compute to generate better results, and train on that--this is potentially a substantial edge for Google.
  - Dr4kn 2y ago
    In Home Assistant you can use LLMs to control your Home with your voice. Gemini performs similar to the GPT models, and with the cost difference there is little reason to choose OpenAi
charlie0 2y ago
Yes, and it's the exact same thing OpenAI/Microsoft and Facebook are doing. In Facebook's case, they are giving it away for free.
sangnoir 2y ago
There's lot of room to cut margins in the AI stack right now (see Nvidia's latest report); low prices are not an sure indication of predatory pricing. Which company do you think is most likely to have the lowest training and inference costs between Anthropic, OpenAI and Google? My bet goes to the one designing,producing and using their own TPUs.

I wonder if they're pulling the wall-mart model. Ruthlessly cut costs and sell at-or-below costs until your competitors go out of business, then ratchet up the prices once you have market dominance.

entropicdrifter 2y ago

You think Google would engage in monopolistic practices like that? Because I do

0cf8612b2e1e 2y ago
I have no idea if this is dumping or not. At Microsoft/Google scale, what does it cost to serve a million LLM tokens? Tough to disentangle the capex vs opex costs for them. If they did not have so many other revenue streams, potentially dicey as there are probably still many untapped performance optimizations.

bko 2y ago

Isn't Walmart still incredibly cheap? They have a net margin of 2.3% I think that's one of those things competitors complain about that never actually happens (the raising prices part). https://www.macrotrends.net/stocks/charts/WMT/walmart/net-profit-margin https://www.macrotrends.net/stocks/charts/WMT/walmart/net-pr...

lacker 2y ago

Probably not. Do they really believe they are going to knock OpenAI out of business, when the OpenAI models are better? Instead I think they are going after the "Android model". Recognize they might not be able to dethrone the leader who invented the space. Define yourself in the marketplace as the cheaper alternative. "Less good but almost as good." In the end, they hope to be one of a small number of surviving members of an valuable oligopoly.

GaggiX 2y ago
Android is more popular than iOS by a large margin and it's neither less good or cheaper, it really depends on the smartphone.
- deleted 2y ago
  [deleted]
socksy 2y ago
The latest Google Pixel phone (you know, the one that Google actually set the price for) appears to cost the exact same as the latest iPhone ($999 for pro, $799 for non-pro). And I would argue against the "less good" bit too. I think this analysis is not in keeping with reality, and I doubt if that's their strategy.
- rajup 2y ago
  I doubt anyone buys Pixel phones at full price. They are discounted almost right out of the gate.
scarmig 2y ago
Cheapness has a quality all its own. Gemini is substantially cheaper to run (in consumer prices, and likely internally as well) than OpenAI's models. You might wonder, what's the value in this, if the model isn't leading? But cheaper inference could potentially be a killer edge when you can scale test-time compute for reasoning. Scaling test-time compute is, after all, what makes o1 so powerful. And this new Gemini doesn't expose that capability at all to the user, so it's comparing apples and oranges anyway. DeepMind researchers have never been primarily about LLMs, but RL. If DM's (and OAI's) theory is correct--that you can use test-time compute to generate better results, and train on that--this is potentially a substantial edge for Google.
- Dr4kn 2y ago
  In Home Assistant you can use LLMs to control your Home with your voice. Gemini performs similar to the GPT models, and with the cost difference there is little reason to choose OpenAi

charlie0 2y ago

Yes, and it's the exact same thing OpenAI/Microsoft and Facebook are doing. In Facebook's case, they are giving it away for free.

sangnoir 2y ago

There's lot of room to cut margins in the AI stack right now (see Nvidia's latest report); low prices are not an sure indication of predatory pricing. Which company do you think is most likely to have the lowest training and inference costs between Anthropic, OpenAI and Google? My bet goes to the one designing,producing and using their own TPUs.