The profit comes from the enterprise customers who have to pay for usage at API rates. Not the subsidized subscriptions, which both OpenAI have designed to be unavailable for large enterprises by withholding IAM and auditing features they need except on the usage based entperise plans.

As an individual I'm still paying for a ChatGPT Plus plan since $20/mo gives me a lot of value and I use many multiples of $20 at API rates per month. But in terms of capabilities, I am entirely satisfied when using my Opencode Go plan with open models like Deepseek Flash/Pro, Kimi and MiMo.

At this point keeping my ChatGPT subscription isn't because of a significant capability gap compared to open models. It's 90% about the value of the subscription priced well below API rates (10% the fun of trying latest models).

If OpenAI/Anthropic dropped their cheap subscriptions or drastically undermined the value proposition I'd be happy using open models exclusively and currently barely notice a difference switching back and forth for the vast majority of tasks.

I'm expecting the subs to increasingly provide less value as the US labs IPO and follow the SV pattern of moving from marketshare capture mode to profit extraction mode. Thankfully I'm already comfortable using OpenCode with open models and avoid lock-in to any specific harness so would be a very soft landing.

Openrouter stats seem to indicate that there is a lot of demand for ‘good enough at a good price.’ After all, not everyone is decompiling PS5 games. In fact, most people are just speedrunning notetaking apps in JavaScript frameworks.

All the money is in enterprise. Contrary to your experience in software development and other frontier knowledge tasks, 90% of enterprise ai tasks are pretty mundane so much so that GPT 4o was already plenty enough.

> well, Claude/Chatgpt is still marginally better for me now

Enterprise doesn't care about marginally better. They care about cost.

Most organizations that run our self-hostable chat platform with cloud models are for most stretches running 6 months-1 year old models, and are strongly eyeing (or have already switched) to more commodity models for most of their workforce. Frontier models are mainly relevant for engineering tasks.

I'm pretty much weaned off closed-weight models at this point.

It's a very "The Year of Linux on Desktop" situation, in the sense that in any particular year it seems like Linux is close, but the OSS stuff requires a lot of configuration to get to feature parity, and the barrier keeps rising because the prop solutions are running as fast as they can to justify the cost premium.

Unlike Linux, the world is pretty literate about tech business models, so I think there's a way for the open weight world to avoid the situation Linux got into, where it only really caught up once the market was pretty much commoditization any-ways.

If anyone interested in PL theory (including adjacent fields) and/or inference engines is reading this wants to help make open weight models and associated ecosystems feature-competitive, we're hiring, drop me a line: nathan at nfulton org.

For enterprise customers the value proposition of self-hosting one of the open models is enormous. We're talking 10x cheaper (remember that enterprises pay API rates), plus more control on where the data goes (especially given that some frontier models do not support ZDR). And all those savings are lost revenue for the US AI Labs.

My issue with anthropic and openai is that if I use a model like e.g. Sonnet 5 I don't always get full Sonnet 5, sometimes it's dumber, sometimes it is smarter (mostly dumber though), while GLM, Kimi and others stay the same. So if I rely on AI for things I better make sure the platform is stable and does not introduce hidden changes.

Why is opus 5.5 suddenly a lot dumber? Who knows.

Have you considered you are reading comments from different people?

Is Starbucks competing against Pete's Coffee, or are they competing against your home brew? Is it McDonald's vs Burger King, or all fast food against home cooking?

If prices were not being significantly lowered by Anthropic and OpenAI then you’d probably see more people using the Chinese models

The frontier labs think the switching threats are credible or they would not have cut prices.

Competition in a duopoly looks very different from competition with a large number of suppliers.

nah if not for open models they'd just raise the price in unison as any self respecting oligopoly would.

They'd compete on model quality, sure, but without competition from open models there is no reason to compete on price

Neither OpenAI or anthropic can afford to lose subscribers to the other or anybody else right before IPO. I tried both CC and codex recently, and I would say they are practically on par. Some things CC does better, some things codex does better. I've also seen them increase usage limits. The cheapest plan now feels very generous imo.