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There were two or three top players. As of this week there are at least five. xAI is apparently in the game with a new Mecha Hitler release, Meta seems to be ba

There were two or three top players. As of this week there are at least five. xAI is apparently in the game with a new Mecha Hitler release, Meta seems to be back in the game, z.ai is biting the ankles of the big dogs...not hurting them, yet, but they aren't going to get any less capable. Google got caught flatfooted as they maybe didn't notice where the money is in LLMs, but they still have the inventors of the technology on payroll and they have a money faucet that doesn't rely on people paying for the product directly. "Commodity" doesn't mean there are no luxury goods in the space, it just means there are many options that will work for most people. I'll pay more for the best model, right up until the best model stops being a good deal. But, switching won't be all that painful. Even last week before Meta and xAI released competitive models, I was already using DeepSeek for tasks best served by an API and where the smartest model isn't critical. It's just so cheap, I can send it 10x more tasks for the same money. I haven't even mentioned several others that aren't competitive today, but likely will be. I think predicting this market will stay like it is, with clear dominance by Anthropic and OpenAI seems like it requires ignoring a lot of countering evidence.

bluegatty 3mo ago
Those are announcements, not released integrated models. There are two Tier 1 platforms today. Meta, Google and XAi are formidable Tier 1.5 place, any one of which could rise to the fore. My belief is that it will be Google and that probably only one of them will keep up in the long run. There is a 'breaking point' when you start to get past 4-ish players - it really does start to introduce competitive pressures. Your second point about Tier 2 substitution is valid, but a few things: 1) Tier 1 models are not a 'luxury good' - that has a different economic definition. They are for most applications today actually just the quality, rational choice. 2) Substitution will have different effects for different people, and you're right that AI for many tasks will be commiditized. All of the profits in Mobile Phones go to Apple even though they are not the biggest player. Almost all of the profits in Silicon go to the leading edge chips - even though there are a zillion fabs that make legacy chips.

bluegatty 3mo ago

Those are announcements, not released integrated models. There are two Tier 1 platforms today. Meta, Google and XAi are formidable Tier 1.5 place, any one of which could rise to the fore. My belief is that it will be Google and that probably only one of them will keep up in the long run. There is a 'breaking point' when you start to get past 4-ish players - it really does start to introduce competitive pressures. Your second point about Tier 2 substitution is valid, but a few things: 1) Tier 1 models are not a 'luxury good' - that has a different economic definition. They are for most applications today actually just the quality, rational choice. 2) Substitution will have different effects for different people, and you're right that AI for many tasks will be commiditized. All of the profits in Mobile Phones go to Apple even though they are not the biggest player. Almost all of the profits in Silicon go to the leading edge chips - even though there are a zillion fabs that make legacy chips.