I said this years ago, LLMs are a commodity (or were becoming one at the time). They are dime a dozen. Even the frontier ones. OpenAI and Anthropic have no moat.
No moat and competition is good for consumers though.
My 0.02 on this is that for a given level of capability, yes, there is no moat. What’s frontier one day quickly becomes a commodity almost too cheap to meter within a year or two.
But there is always a use case for frontier models, even if they’re quite a bit more expensive. The set of things you can profitably do with better intelligence than everyone else is unbounded.
So yes, the number of tokens that get pushed through commodity models for very cheap will continue to grow, but so will the tokens for expensive frontier models. We’ll never run out of things to do with the latest geniuses who are twice as smart as last year’s geniuses.
The moat is the engine that builds and sells the latest geniuses, especially the compute. And no one will have more compute than American labs for the next 5-10 years.
They’ve been saying that for the last 18 months at least. They’re always just a few months behind…
I picked double out of a hat, obviously there’s some intelligence gap that’s too small for a price premium beyond a certain point, but it seems like OpenAI and Anthropic’s revenue keeps climbing, so I don’t think we’ve hit it.
well, it is true. there is a price ceiling for intelligence, there were news about how adoption of fable was lower than expected, only hitting 11% of enterprise spending for customers with anthropic, iirc 26% for Sol with openai customers.
in any case, I've been using open and closed models since sonnet 4, i remember when the best I could get was qwen 3 480b coder, you can definitely feel the gap closing going from that and GLM 4.5, to GLM 5.3, DeepSeek Flash V4.1, Kimi K3 etc, it's reached the point where i wish I had V4.1 at work, it's faster and bullshits me less when I use it in my personal projects. And I have unlimited access to fable 5.1
The gap really is closing, though. I don't remember the source, but there was a publication recently stating that it's 4 months at this point. So, 4 months where you can charge premium prices for the small subset of tasks where only a frontier model will do. I have to think the big AI duopoly is at an inflection point where most of their customers haven't just yet realized that they're being fleeced.
toephu2 · · focus · HN ↗
No moat and competition is good for consumers though.
senordevnyc · · focus · HN ↗
But there is always a use case for frontier models, even if they’re quite a bit more expensive. The set of things you can profitably do with better intelligence than everyone else is unbounded.
So yes, the number of tokens that get pushed through commodity models for very cheap will continue to grow, but so will the tokens for expensive frontier models. We’ll never run out of things to do with the latest geniuses who are twice as smart as last year’s geniuses.
The moat is the engine that builds and sells the latest geniuses, especially the compute. And no one will have more compute than American labs for the next 5-10 years.
OrangeDelonge · · focus · HN ↗
senordevnyc · · focus · HN ↗
I picked double out of a hat, obviously there’s some intelligence gap that’s too small for a price premium beyond a certain point, but it seems like OpenAI and Anthropic’s revenue keeps climbing, so I don’t think we’ve hit it.
mobelkh · · focus · HN ↗
in any case, I've been using open and closed models since sonnet 4, i remember when the best I could get was qwen 3 480b coder, you can definitely feel the gap closing going from that and GLM 4.5, to GLM 5.3, DeepSeek Flash V4.1, Kimi K3 etc, it's reached the point where i wish I had V4.1 at work, it's faster and bullshits me less when I use it in my personal projects. And I have unlimited access to fable 5.1
anon373839 · · focus · HN ↗