I found the OP insightful and worth a read. Thank you for sharing it on HN.
The only aspect that is poorly analyzed by the OP is business model viability. All players are investing insane amounts of money in infrastructure with the expectation that their future profits will justify all that investment. The winner or winners in the AGI race, they believe, will find the proverbial "pot of gold at the end of the rainbow."
The OP glosses over questions of business model viability with a brief qualitative discussion and very little hard data. For example, to earn an annual return > 10% on every trillion dollars of capital sunk into infrastructure, the owners of that infrastructure must earn free cash flow (operating profit less investment) in excess of $100 billion per year in perpetuity. Is that feasible? Why? How?
I think the article's analysis is basically right in a vacuum. That is, I think it's clear that inference is a viable business model. But what isn't clear is whether it will be such a profitable business model for any given company that it will justify the investment that company has taken. I kind of think the winners might be a follow-on generation of companies that focus on this commodity inference business model instead of the invent-machine-god-first "business model" and thus are wiser about their level of investment and capital costs.
> I think it's clear that inference is a viable business model.
You may be right. I'm not so sure. Inference looks like a viable business model for those operators that have SOTA infrastructure in place, but the investment required to have it is enormous, and appears to be never-ending, because if an operator stops investing aggressively, its infrastructure quickly becomes non-competitive, and customers will quickly leave for alternatives. SOTA infrastructure is a moving target.
Maybe... I'm not enough of an expert on the financials to say, but it seems to me that inference should be able to recoup the cost of SOTA infrastructure, unless you then also use a large portion of that infrastructure to train new models. And I also think the race to remain SOTA itself is also largely a function of training, because my understanding is that training benefits more from the leading edge of hardware.
But yeah, I definitely don't have high confidence in any of this!
cs702 · · focus · HN ↗
The only aspect that is poorly analyzed by the OP is business model viability. All players are investing insane amounts of money in infrastructure with the expectation that their future profits will justify all that investment. The winner or winners in the AGI race, they believe, will find the proverbial "pot of gold at the end of the rainbow."
The OP glosses over questions of business model viability with a brief qualitative discussion and very little hard data. For example, to earn an annual return > 10% on every trillion dollars of capital sunk into infrastructure, the owners of that infrastructure must earn free cash flow (operating profit less investment) in excess of $100 billion per year in perpetuity. Is that feasible? Why? How?
The OP does not really consider such questions.
sanderjd · · focus · HN ↗
cs702 · · focus · HN ↗
You may be right. I'm not so sure. Inference looks like a viable business model for those operators that have SOTA infrastructure in place, but the investment required to have it is enormous, and appears to be never-ending, because if an operator stops investing aggressively, its infrastructure quickly becomes non-competitive, and customers will quickly leave for alternatives. SOTA infrastructure is a moving target.
sanderjd · · focus · HN ↗
But yeah, I definitely don't have high confidence in any of this!
cs702 · · focus · HN ↗