[Hansenq]

If you know anything about tech, you will know that tech as an industry is highly deflationary--billionares use the same iPhones as you do! (in contrast, they don't drive the same cars you do)

This boils down to the fact that chip fabs have massive fixed costs and near-zero marginal costs, and these chips power all of tech. So the more chips they can produce for a given fab, the more profit they can make, meaning that companies are incentivized to sell as many products as possible for as low a price as possible.

We're supply constrained in the short-term because demand for these AI tools is so high that TSMC and other chip manufacturers can't keep up. But long term, supply/demand will equalize and tech will continue its deflationary trend. Sure, the frontier will always require the best possible chips, but AI coding is highly competitive, and competition drives price decreases. So prices may stay high right now, but it seems unlikely to me that this will stay true long-term.

All four of the author's steelmanned arguments at the end for a price decrease seem likely to come true already: competition is intense (OAI brags about how much cheaper they are compared to Claude), OAI subsidizes open-source influencers already, companies' earnings calls all call for more investment in fabs, and we're already close to saturating all of the benchmarks used for RL!

[jsheard]

> billionares use the same iPhones as you do!

Not if they have the brain disease which makes this kind of thing appealing:

https://caviar.global/catalog/custom-iphone/iphone-17/?sort=...

Yes that flagship model incorporates an actual Rolex Daytona in solid gold.

[necovek]

It is still exactly the same iPhone tech-wise, just with a custom "case".

I wouldn't go as far to call it "brain disease" though: in a sense, it is OK for someone well off to spend on expensive products (made by less rich), so things would equalize at least a bit.

Just like we in IT might happily pay 3% of our salary on slightly better shoes, and someone else would claim we have a "brain disease" because you can get perfectly good shoes for 5x less money.

[relaxing]

That iphone is not 5x more.

Furthermore, who in IT is paying 3% on shoes? Even if you’re the hypebeast buying $1200 Balenciagas, I don’t see how the math works out.

[necovek]

That iPhone is 15x more (I don't know the exact price, sorry)? Same order of magnitude.

3% of your monthly salary for $200-$500 shoes (I see plenty amateur runners getting carbon sole shoes in this price range, for instance), when you could get a pair for less than $50.

[relaxing]

Ok I don’t know who’s running around talking about their monthly compensation or what that has to do with billionaires but sure, I see your math now.

[necovek]

Thanks you for adding a slight to your "understanding" statement. You can try figuring out the point I was making (wealth is relative, even "commoners" like us overspend from someone else's perspective).

I would say most of Europe talks and thinks in monthly (and even net after-tax salary), so hopefully that helps in the future when someone does not adapt to US gross annual salary figures for you.

[wffurr]

That's got the exact same processing hardware in it though, which was the OP's point. Not that they can't have a fancier case.

[A_D_E_P_T]

For me, it's London.

> https://caviar.global/catalog/custom-iphone/iphone-17/london...

[phpnode]

Both of these are great, true expressions of a total void of taste

[stronglikedan]

I guess billionaires don't charge wirelessly. They just grab their backup custom iphone when the first one dies.

[necovek]

They've got someone carrying their battery packs with an extendable cable.

Or maybe Big Ben hides the charging coils too.

[runarberg]

> competition drives price decreases

This is something that is often cited as trueism, but there is no natural laws which makes this a necessary true. There is plenty of room for black swans in market laws. So much so that the term black swan is probably better known in the field of economy then any other field.

Competition may drive down the price of LLMs, however there is a greater then zero probability that it won‘t, and if it won’t, your whole counter-argument falls apart.

[beachy]

I can't think of any high volume/consumer electronics/computer technology that has not been driven down in price over time. So based on historical precedent, I think your "greater than zero probability" might be only a tiny bit greater than zero.

[runarberg]

xkcd did one about graphic calculators

https://xkcd.com/768/

But other that comes to mind are MRI scanners, superconductors, quantum computers.

I think in general this market law is subject to selection bias. The technology which does decrease in price will become commonplace and easy to find, whereas the technology which doesn’t risks becoming obscure and maybe even removed from consumer markets.

EDIT: just to clarify, the point about black swans is that the prediction is always close to 0 probability of the existence of black swans, until we actually observe one, then the probability is suddenly exactly 1. If LLMs are a black swan for this market law, most people will assign a close to 0 probability ... until they don’t.

[beachy]

Oops my bad formatting - instead of "high volume/consumer electronics/computer technology" I meant to say "high volume consumer electronics/computer technology" which would have ruled out those examples. But your other point is true, there are always shortages of MRI scanners.

[floatrock]

> This boils down to the fact that chip fabs have massive fixed costs and near-zero marginal costs, and these chips power all of tech.

But what powers the chips?

You're talking about chip economics. Inference economics requires electricity dynamics.