Comment by InsidiousWombat
18 hours ago
> 2. The capital equation is still favoring more spend. Anthropic's revenue is growing rapidly and they are profitable on inference. Huge upfront spend for realized gains later on is standard for R&D. As long as serving the models is profitable and generates more value than the energy/compute consumed
But they are essentially fighting for smaller and smaller part of the pie. The better open models are the less you need frontier models, so the frontier AI companies are essentially fighting for market that will shrink the better AI is.
Sure there is inertia and the usual corporate enterprise nonsense of "we only buy stuff from other big companies regardless the cost" that keeps the licenses going but we're quickly getting into point where you don't need any of the frontier models to do majority of the tasks
I don't fully get this line of argument. I am a massive advocate for open source... everything basically, but especially in ML. And open models are making incredible strides. But I'm not sure that models getting good enough for most tasks, making the absolute frontier models (Astra/Fable class) unnecessary for most people, puts the frontier labs in a fundamentally disadvantaged position.
I mainly think this because frontier labs already try to compete at this tier. For example, 6.1 Sol has identical pricing to Kimi K3.1, but with a lower price per task due to Kimi's verbosity. It seems to score roughly the same on most benchmarks, with some (like Artificial Analysis) putting 6.1 Sol significantly higher. If you need to step down, 6.1 Terra is also cheaper than K3.1 or K3 and performs well relative to their benchmarks. Opus 5.5 and much of Anthropic's recent push seems to confirm this as a major area of focus as well.
I still use a lot of open models and harnesses, but I don't know if cost competitiveness (at least not with the current crop of open models) will ultimately drive a huge chunk of average users away.
Things could change, but fundamentally, large labs aren't precluded from training more cost effective models if there is significant demand for them, which is what we're seeing now.
You did not really address the argument.
6.1 Sol is not a “frontier model” and does not command the pricing of one. The reason it exists is because of competition from non-frontier models that are “good enough”.
In fact, you kind of made the same argument. As “good enough” models commoditized, the use cases requiring frontier models and frontier model pricing will shrink.
And, even if performance is not as good, many will prefer open models.
I think I did address the argument? This being the key quote:
"The better open models are the less you need frontier models, so the frontier AI companies are essentially fighting for market that will shrink the better AI is."
The implication in this is that frontier labs' market is exclusively people who need the absolute frontier, i.e. Astra or Fable. And the point I made was that frontier labs are clearly prioritizing the broader market of people who want more cost effective models, and that if OpenAI/Anthropic offers models that are price competitive with the top open models (before factoring in subscription discounts and corporate lock-in), then I don't see how that leads to the average user walking away from the labs in favor of self-hosting or relying OpenRouter/Together/etc.
I also went out of my way to clarify that I personally prefer and use open models wherever possible. I'm not saying that there isn't a real group of people who prefer them. I'm specifically saying that frontier labs also sell "good enough" models and that there's nothing preventing them from training models to fit the demands of users. It's not as if training a frontier model boxes them in such that they can't release an Opus 5.5 or a 6.1 Terra.
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Let's just ignore the many practical advantages of open and self-hosted models...
Did I ignore them? I said that I love open models. If it came across like I'm putting down open models, then I'm genuinely sorry--I love open source ML, have been a involved in it for a long time, and think it's incredibly important. It's also just fun to work with open models, beyond the benefits to privacy and flexibility.
I'm just talking about the idea that frontier labs will lose market share to providers that sell open model inference at sub-Fable prices. And I'm not convinced that this specifically is a threat to frontier labs, because they also train and sell models that fit that demand.
> The better open models are the less you need frontier models
True in theory, but in practice hardware availability and cost will keep open source impractical for years to come.
It will be impractical to self host, but not to get one that's served from other providers (which won't have to recuperate loses from training).
If your moat is "Our vendors aren't expanding fast enough to supply our competitors!", you don't have a moat.
It's already very practical lmao
It's really not. The hardware to support anything even remotely practical starts in the tens of thousands of dollars. Quantized 40b param models are impressive, but are basically toys.
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