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Makes me wonder if the lowering of prices in this industry is temporary. Currently, the API costs are at an all-time low, but how much of it is subsidized by in

Makes me wonder if the lowering of prices in this industry is temporary. Currently, the API costs are at an all-time low, but how much of it is subsidized by investor money? Are we going to see increasing prices as the hype goes away and post-nut clarity kicks in the industry?

fullshark 2y ago
Definitely, these companies are trying to buy market share, establish lock in, and then figure out the long term cash flows after competition folds.
rvz 2y ago
> Makes me wonder if the lowering of prices in this industry is temporary. Yes. For example, Microsoft is keeping prices of Copilot temporarily free for as long as possible to destroy competitors who can't compete with the best tool available for free. This is a known attractive tactic to the point where it is the new definition of 'Extinguish' in Microsoft's EEE strategy: Embrace (Open Source, Github), Extend (OpenAI, GitHub), Extinguish (For free). > Are we going to see increasing prices as the hype goes away and post-nut clarity kicks in the industry? Until there are enough AI startups shutting down and a few of them have gone public on the stock market. The prices will start to rise by $0.50 - $1.50 per million tokens very slowly.
- behnamoh 2y ago
  > For example, Microsoft is keeping prices of Copilot temporarily free for as long as possible to destroy competitors who can't compete with the best tool available for free. Yes, their recent "copilot is free" tactic is obviously to crush Cursor and the like. > Until there are enough AI startups shutting down and a few of them have gone public on the stock market. The prices will start to rise by $0.50 - $1.50 per million tokens very slowly. At the same time, advances in GPU and inference optimizations will likely push back against price increase. That said, you're right about lock in—if that happens, then even technological progress in GPUs and inference wouldn't stop companies from raising prices.
  - Y_Y 2y ago
    This world be called "dumping" and would violate competition law in many jurisdictions if they were selling physical widgets.
- occz 2y ago
  I'm not sure I'd consider Copilot the best tool in the space, but I agree otherwise.
rdsubhas 2y ago
It's not "this industry" and it has nothing to do with tech. It's how most business endeavors practically work. Someone wants to start, say, a woodworking service or shop? It's perfectly normal and expected to offer discounts for some time to grow. Whoever has time subsidizes their time. Whoever has money subsidizes their money. I honestly don't understand the "surprise" behind what's basic common sense in everyday life. There is no point in differentiating this like "ah it's on a bigger scale" or something. It's still just pretty basic.

fullshark 2y ago

Definitely, these companies are trying to buy market share, establish lock in, and then figure out the long term cash flows after competition folds.

rvz 2y ago

> Makes me wonder if the lowering of prices in this industry is temporary. Yes. For example, Microsoft is keeping prices of Copilot temporarily free for as long as possible to destroy competitors who can't compete with the best tool available for free. This is a known attractive tactic to the point where it is the new definition of 'Extinguish' in Microsoft's EEE strategy: Embrace (Open Source, Github), Extend (OpenAI, GitHub), Extinguish (For free). > Are we going to see increasing prices as the hype goes away and post-nut clarity kicks in the industry? Until there are enough AI startups shutting down and a few of them have gone public on the stock market. The prices will start to rise by $0.50 - $1.50 per million tokens very slowly.

behnamoh 2y ago
> For example, Microsoft is keeping prices of Copilot temporarily free for as long as possible to destroy competitors who can't compete with the best tool available for free. Yes, their recent "copilot is free" tactic is obviously to crush Cursor and the like. > Until there are enough AI startups shutting down and a few of them have gone public on the stock market. The prices will start to rise by $0.50 - $1.50 per million tokens very slowly. At the same time, advances in GPU and inference optimizations will likely push back against price increase. That said, you're right about lock in—if that happens, then even technological progress in GPUs and inference wouldn't stop companies from raising prices.
- Y_Y 2y ago
  This world be called "dumping" and would violate competition law in many jurisdictions if they were selling physical widgets.
occz 2y ago
I'm not sure I'd consider Copilot the best tool in the space, but I agree otherwise.

rdsubhas 2y ago

It's not "this industry" and it has nothing to do with tech. It's how most business endeavors practically work. Someone wants to start, say, a woodworking service or shop? It's perfectly normal and expected to offer discounts for some time to grow. Whoever has time subsidizes their time. Whoever has money subsidizes their money. I honestly don't understand the "surprise" behind what's basic common sense in everyday life. There is no point in differentiating this like "ah it's on a bigger scale" or something. It's still just pretty basic.