[defnotai]

> The shift has other business model implications too. Take the observability sector. The industry still grapples with data overload, skyrocketing costs, and a critical shortage of skilled personnel. Incumbent company pricing models (think Datadog or Splunk) are wildly mismatched to customer needs, charging per GB for log management, for example, or ratcheting up costs with infrastructure size and data volume.

We have no reason to believe that AI costs won’t skyrocket long term either. It feels like the early days of streaming right now, but how long will it last?

Foundation models are pretty reasonably priced depending on the workload, but having a plurality or majority of companies all hooking up to the same two or three model APIs is gonna get really interesting when prices start to increase, because your exposure to the price increase scales with the number of times that same provider is used by your vendors, your vendor’s vendors, etc.

If Altman wakes up one day and decides to double the token price, it could be Armageddon in the SaaS space.