[missedthecue]

They haven't raised enough money to be selling at a loss. And selling at a loss to gain market share in an industry with zero switching friction between sellers is not a strategy. That doesn't make sense.

Loss leading only works when

- it leads to a situation that allows you to prevent competitors from selling to your customers (gilded age railroad and pipeline industries are great examples). Then you can eventually raise prices and not lose back any market share.

- or when it allows you to remarket to customers and make back the difference (selling a single console at a loss to sell a whole library of high margin videos games, or selling jet engines at a loss to lock in 30-year maintenance contracts).

[raincole]

Yeah, cool theory, but they are selling at a loss. We know that because their model is open and available on other providers too. No other provider even sells a quantitized version of DeepSeek V4 Pro at that price.

Also, in case of LLM, market share = more people uploading their whole codebase/legal documents/unfinished books/literally everything to your servers for you to use in future training. So the incentive to sell at a loss is much stronger than other kinds of service.

[freakynit]

We are missing the fact that they have created their GPU's that are now just 4-5 years behind. And considering it's China, which does everything-hardware at insane scale, and efficiency, my guess is that they are at step-1 now... gain market share at loss, and at the same time, gradually, start plugging their in-house cards to power these models to gauge their performance on real workloads.

Once they cross a certain threshold, nVidia can say goodbye to it's monopolisitic profit margins of over 70%.

GPU infra capex is the biggest spend for the inference providers as of now, power, second biggest.

China has already cracked the power part, they are now close to cracking the GPU part.

[oceansweep]

Didn’t the DeepSeek team release a paper documenting inference improvements that showed they were still making a profit even under heavy discount? Why would it be impossible for them to make a profit now, with a new model and more research?

Before DeepSeek, no one sold cheap tokens anyways and then DS showed the profit margins.

[WithinReason]

they might have trained the model with fancy optimisations that only they can unlock

[throwburn202605]

Maybe Anthropics efforts to thwart deepseek from distilling their model is bearing fruit.

So their strategy now is to try get as much raw content for their inference. You're being "paid", via discount, for your use

[lejalv]

> So their strategy now is to try get as much raw content for their inference. You're being "paid", via discount, for your use

There is an implicit social contract, and for many it might work out well:

We use your data to improve the model. You get to use the improved model for affordable prices and (the important part): you get _the model_.

[throwa356262]

From Antropics own report:

"DeepSeek

Scale: Over 150,000 exchanges"

Doesn't sound like much of distilling. Maybe they are runnung benchmarks?