[potatolicious]

This is exactly it. Selling the output of a LLM is going to an incredibly cut-throat and low-margin business.

The more interesting, novel, and useful work you wrap the LLM in the more defensible your pricing will be.

That said I think this can describe a lot of agentic code tools - the entire point is that you're not just talking to the raw LLM itself, you're being intermediated by a bunch of useful things that are non-trivial.

I see this with Anthropic most - they seem to have multiple arms in multiple lines of business that go up the abstraction ladder - Claude Code is just one of them. They seem to also be in the customer service automation business as well.

[edit] I think a general trend we're going to see is that "pure" LLM providers are going to try to go up the abstraction ladder as just generating tokens proves unprofitable, colliding immediately with their own customers. There's going to be a LOT of Sherlocking, and the LLM providers are going to have a home field advantage (paying less for inference, existing capability to fine-tune and retrain, and looooooots of VC funding).

[bravesoul2]

This may be old fashioned thinking and the automated loom might come get me but I think traditional software products with enthusiastic customers, some kind of ecosystem will benefit with AI being used.

However they will benefit in a way like they benefit from faster server processors: they still have competition and need to fight to stay relevant.

The customers take a lot of the value (which is good).

While there is a lot of fear around AI and it's founded I do love how no one can really dominate it. And it has Google (new new IBM) on it's toes.

[KerrAvon]

Sherlocking won't happen. It requires them to already have the superior customer relationship.

They do need to develop sustainable end-user products, or be purchased by larger players, or liquidate.