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I think that's convoluted logic trying to show that a business lowering its costs is actually bad for the business. You can make this assumptions about any busi

I think that's convoluted logic trying to show that a business lowering its costs is actually bad for the business. You can make this assumptions about any business. It's not a good assumption. If a car company discovered a way to lower its production costs and started selling their cars cheaper, would you argue that maybe this is actually bad for the car company because maybe they lowered their price so much that it cancelled out all the benefit? You're just hoping they're really bad at pricing their cars. The different GPT models are for different use cases. The existence of the nano model does not imply everyone who used the formerly cutting-edge GPT-4 will switch over to the cheaper nano model. Most of them will switch to the smarter models like 4o, 4.1, or o3. Nano allows the creation of new tools where the other models are either too pricey or too slow to respond to be viable.

yorwba 1y ago
It's funny that you bring up cars as a point of comparison, because constantly releasing new models while dropping prices is exactly what made a bunch of Chinese EV companies go bankrupt in recent years. It's not that they were stupid and priced their cars badly, it's that they didn't have much choice. Developing a new car model has significant upfront costs that require a correspondingly large number of cars to be sold for the company as a whole to turn a profit, each individual sale being profitable is not enough. But in an environment with lots of competitors constantly releasing new models for cheaper, any single company had little choice but to also release a new model and lower their prices in order to sell any cars at all, eating a loss on the previous model. And eventually some companies couldn't take those losses any more and folded. OpenAI is definitely losing money overall, presumably because training new large language models is expensive. But can they stop doing that to turn a profit? If OpenAI announced that the funding for their next frontier training run fell through and they're laying off research staff to focus on inference, and then competitors come out with better, cheaper models, how long will OpenAI be able to stay relevant? I guess they hope everyone else gives up first and they won't have to find out.
- nearbuy 1y ago
  This is all true. Competition reduces a company's profits. OpenAI reducing their costs isn't what hurts them. They're better off with lower costs. Their competitors getting lower cost models is what hurts them. Absolutely some AI companies will be out-competed and fail. I don't know which one will end up on top. But even if almost all the AI companies fail, it doesn't stop the industry as a whole from being very valuable. Whichever AI companies are left will just take over the market share of those that failed. And this eases the pressure on the surviving companies.

yorwba 1y ago

It's funny that you bring up cars as a point of comparison, because constantly releasing new models while dropping prices is exactly what made a bunch of Chinese EV companies go bankrupt in recent years. It's not that they were stupid and priced their cars badly, it's that they didn't have much choice. Developing a new car model has significant upfront costs that require a correspondingly large number of cars to be sold for the company as a whole to turn a profit, each individual sale being profitable is not enough. But in an environment with lots of competitors constantly releasing new models for cheaper, any single company had little choice but to also release a new model and lower their prices in order to sell any cars at all, eating a loss on the previous model. And eventually some companies couldn't take those losses any more and folded. OpenAI is definitely losing money overall, presumably because training new large language models is expensive. But can they stop doing that to turn a profit? If OpenAI announced that the funding for their next frontier training run fell through and they're laying off research staff to focus on inference, and then competitors come out with better, cheaper models, how long will OpenAI be able to stay relevant? I guess they hope everyone else gives up first and they won't have to find out.

nearbuy 1y ago
This is all true. Competition reduces a company's profits. OpenAI reducing their costs isn't what hurts them. They're better off with lower costs. Their competitors getting lower cost models is what hurts them. Absolutely some AI companies will be out-competed and fail. I don't know which one will end up on top. But even if almost all the AI companies fail, it doesn't stop the industry as a whole from being very valuable. Whichever AI companies are left will just take over the market share of those that failed. And this eases the pressure on the surviving companies.