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by lelanthran 155 days ago
> There's a bit of nuance hiding in the "etc". Openai and anthropic are still in a race for the top results.

That's not what is usually meant by "race to the bottom", is it?

To clarify, in this context I mean that they are all in a race to be the lowest margin provider.

They re at the bottom of the value chain - they sell tokens.

It's like being an electricity provider: if you buy $100 or electricity and produce 100 widgets, which you sell for $1k each, that margin isn't captured by the provider.

That's what being at the bottom of the value chain means.
1 comments
viraptor 155 days ago
I get what it means, but it doesn't look to me like they're trying that yet. They don't even care that people buy multiple highest level plans to rotate them every week, because they don't provide a high enough tier for the existing customers. I don't see any price war happening. We don't know what their real margins are, but I don't see the race there. What signs do you see that Anthropic and Openai are in the race to the bottom?
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lelanthran 155 days ago
> I don't see any price war happening. What signs do you see that Anthropic and Openai are in the race to the bottom?

There doesn't need to be signs of a race (or a price-war),only signs of commodification; all you need is a lack of differentiation between providers for something to turn into a commodity.

When you're buying a commodity, there's no big difference between getting your commodity delivered by $PROVIDER_1 and getting your commodity delivered by $PROVIDER_2.

The models are all converging quality-wise. Right now the number of people who swear by OpenAI models are about the same as the number of people who swear by Anthropic models, which are about the same as the number of people who swear by Google's models, etc.

When you're selling a commodity, the only differentiation is in the customer experience.

Right now, sure, there's no price war, but right now almost everyone who is interested are playing with multiple models anyway. IOW, the target consumers are already treating LLMs as a commodity.

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