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Comment by cute_boi | Hacker News Reader

it is all because of subsidization. If OAI or Ant starts to use real pricing there will be lot of capacity.

No, in fact inference is far cheaper than most think, see analysis for serving Kimi K3.

If you mean OpenAI and Anthropic's investments into R&D, ok, perhaps.

However, they will not be able to increase prices unless what they are offering next is a significant enough improvement over the current SOTA, which might only be six months ahead of the Chinese models.

Not only is inference currently much cheaper than people seem to think, it is going to get much cheaper. NVIDIA’s Vera Rubin is going to drive costs down for current models considerably.

It's amazing to see the shift from "Anthropic is profitable" to "it's just R&D costs" following the leak of Anthropic's finances. If there's one thing more abundant in this bubble than FOMO, it's special pleading.

These companies are burning helps of money, and they need to keep burning heaps of money in order to stay competitive. People have (correctly) learned to be extremely fickle consumers, they can't depend on making profit by running inference on a 1 year old model.

How do you know that it's subsidized?

If it isn't subsidized, why aren't all those AI companies making huge amounts of profit? Instead they are rapidly burning through the billions, and the money must be going somewhere.

Investing in R&D isn't the same thing as subsidizing something.

Investing in R&D is fine. as long as you are turning a profit somewhere within your company that can support it. If you are not, eventually the end comes. In short, the bubble.

The problem with this view is that that isn't a "bubble". "Eventually" can support quite a while, especially when the investment is increasing revenue over time and the unit economics look good. The timeline point cuts both ways, and none of that is a subsidy.

I really dislike that term. It's stupid and supports a distorted narrative.

They arbitrarily decide 1M API tokens cost X, and any subscription where usage costs less than that is "subsidized". No it isn't. They may be profiting on subscriptions as well, or losing on full API costs as well, or anything in between, and that X is anyway more reflective of competition than their costs. For all we know they did a rand()%1000 to determine it in the first place.

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