[mrweasel]

Okay, but what if you're not Microsofts size and don't have and R&D budget large enough to fund development of your own models and tools?

This is a warning to any company, not building their own AI, that AI assisted development could become really expensive really fast and most likely won't pay off. What Microsoft is suggesting is that the current price is to high, but it's still not high enough for e.g. Anthropic to be profitable, or AI coding tools are only as good as the developers using them. So you can't meaningfully do layoffs by replacing the developers with AIs, because the cost is to high.

How does Microsoft plan to fix CoPilot, so that the cost will be so much lower than Claude, that budget overruns won't be a problem for their own customer?

[andyfilms1]

I expect in the next year or so, we'll stop seeing headlines like "Anthropic buys $15b of compute from SpaceX" and we'll start seeing headlines like "Uber's AI department licenses GPT 6.2 as the foundation for their internal model," or something like that.

Smaller companies will have departments that distill larger models into something more specifically manageable and useful for them. At least, that's my personal prediction :)

[jcgrillo]

> Smaller companies will have departments that distill larger models into something more specifically manageable and useful for them.

In order to do that they'd have to make a concrete business case to justify the headcount and compute costs. They'd be facing the same fundamental economic problems Anthropic, OpenAI, MSFT, etc are facing just at a department level instead of a megacorp level. I hope they try it, sunlight is the best disinfectant.

However, when the pressure is turned up and people have to actually show results--and, like, be accountable--instead of just buying a subscription and externalizing the accountability, I don't think we'll see so much enthusiasm about AI coding. Whether or not an engineer is actually more or less productive with AI (not merely whether they feel more productive) will begin to matter a lot more. I don't see how people continue using AI in this hypothetical small company under those adverse conditions.

[mrweasel]

How would that help with pricing? The cost of hardware is already subsidized to hell and back by investors and that's not dropping costs enough. I'm not concerned about Uber, they are way to big. I'm thinking sub 1000 employees in total and maybe 50 - 100 people in the IT department. Are they just going to be cut off from AI tools, because the cost of running them would ruin the company?

I do think your prediction makes sense, because the AI really isn't the product, it needs to be baked into something and licensing the models saves you the R&D and cost of implementing your own.

[kridsdale1]

Giving your workforce Claude is like giving everyone in the USPS a Ferrari.

There may be a spot of “good enough to pay for and make a profit” that exists.