This is not a lot competition though. And you need to assume, that like other industries, mergers and acquisitions will happen over time which will put you in an increasingly worse position.
Google, OpenAI, Anthropic, Meta, Amazon, Alibaba (Qwen), Nvidia, Mistral, xAI - and likely more of the Chinese labs but I don't know much about their size.
I guess where I was leading to is who owns the compute that runs those models. Mistral, for example, lists Microsoft and Google as subprocessors (1). Anthropic is (was?) running on GCP and AWS.
So, we have multiple providers, but for how long? They're all competing for the same hardware and the same energy, and it will naturally converge into an oligopoly. So, if competition doesn't set the floor, what does?
Local models? If you're not running the best model as fast as you can, then you'll be outpaced by someone that does.
If there are low switching costs, and if there are multiple highly capable models, and if the hardware is openly purchasable (all of these are true), then the price will converge to a reasonable cash flow return on GPUs deployed net of operating expenses of running these data centers.
If they start showing much higher returns on assets, then one of the many infra providers just builds a data center, fills it with GPUs, and rents it out at 5% lower price. This is the market mechanism.
Looking at who owns the compute is barking up the wrong tree, because it has little moat. Maybe GPU manufacturers would be a better place to look, but then the argument is that you're beholden to NVIDIA's pricing to the hyperscalers. There's some truth to that, but you already see that market position eroding because of TPUs and belatedly AMD. All of these giant companies are looking to degrade Jensen's moat, and they're starting to succeed.
Is the argument here that somehow all the hyperscalers are going to merge to one and there will be only one supplier of compute? How do you defend the idea that nobody else could get compute?
A tri-opoly can still provide competitive pressure. The Chinese models aren’t terrible either. Kimi K2.5 is pretty capable, although noticeably behind Claude Opus. But its existence still helps. The existence of a better product doesn’t require you to purchase it at any price.
because in all of this change we can’t be bothered to imagine a world where people have money without jobs? Do you think billionaires are just going to want to stop making more money?
The best bull case for us reaching luxury gay space communism is that people not working and having near infinite capital to buy whatever they want to enjoy is the only way the billionaires get to see their pot growing forever.
>because in all of this change we can’t be bothered to imagine a world where people have money without jobs?
We can imagine it all we want, and a free pony too. What we'll get is most of humanity not needed, and living in the edges of society, plus some 10-20 percent still "useful".
>The best bull case for us reaching luxury gay space communism is that people not working and having near infinite capital to buy whatever they want to enjoy is the only way the billionaires get to see their pot growing forever.
Billionaires are about power. The money was just a means for that, if they can get it in another way, they will use that. People "not working and having near infinite capital to buy whatever they want to enjoy" is the last thing they'll want.
I mean it's kind of hard to say because almost all software I use is free, a lot of it is FOSS. The software I bought outright in the last couple of years was well priced because of competition (ex: Affinity Designer 2 for $63 - the new version is free although I stick with v2).
Maybe not worth using then. Your product costs 5x and delivers 0.2x of competing product in the adjacent product class (traditional server/VPS), why use it?
All the big clouds are still in market share acquisition mode. Give it about 5 more years, when they're all in market consolidation and extraction mode.
You just reduced the supply of engineers from millions to just three. If you think it was expensive before ...