[wccrawford]

That's exactly the point. Until recently, AI models that could run on home machines were so bad that it was very hard to imagine anyone wanting to.

And, like the overly large machines of 1977, models are getting faster, leaner, and better. It's happening a lot quicker, though.

[Silhouette]

This is why I'm bearish on Anthropic, OpenAI, and friends. I am not confident that we will continue to see the same pace of improvement in frontier model capabilities as we have seen over the past year or two - not using similar mathematics at least. But I think that getting results that are close enough to the same standard to be a realistic substitute but in a model small enough to run locally may well happen quite quickly. And if it does - where is the moat to defend these AI organisations with their astronomical budgets when they're already starting to price more realistically and that's already killing a lot of the hype they've enjoyed until very recently? They have an accidental moat because they bought up the global supply chain for storage but that surely isn't going to last once the data centres to hold that storage are becoming liabilities.

[api]

If model performance asymptotes and CPU/GPU and RAM keep growing, even slowly, then eventually we will have frontier models on desktop that are totally competitive with hosted. It’s only a matter of time.

You already can if you’re willing to spend many thousands of dollars on a beast of a machine. I’m talking about middle tier desktops and laptops here. Maybe eventually even phones.

The only way hosted stays strongly competitive in that world is if they can keep pushing the frontier or by playing the classic social media and SaaS games of network effect building and integrations.

Many people might still use hosted, of course, but what I really mean is that their multiples won’t be justified and they will have little to no moat. AI will become commoditized, like a sophisticated next generation form of an encyclopedia with search.

[throw0101a]

> This is why I'm bearish on Anthropic, OpenAI, and friends.

Just because you can do more and more things at home (thanks Moore and Dennard), doesn't preclude needing things also done remotely. The number of at-home systems seems to have fed a growing number of remote systems (especially once always-on connectivity became ubiquitous).

It's basically the angle Apple is going for: do as much locally (for the sake of privacy), and then offload when it becomes "too much".

[Silhouette]

I agree that one doesn't preclude the other. But the sky high valuations we've been seeing for the AI industry recently can only be justified if they bring about a fundamental change in our society and those companies continue to bring in the lion's share of the resulting profits. I don't see why everyone else in our society - particularly other large businesses with lots of money to invest - is going to play a game by the AI companies' rules once they can take their ball and go home and still have most of the fun without paying much for it by comparison.