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points by kenhwang 4 days ago | 0 comments
They're not competing against each other, they're competing against free/local/open weight models that they're also lobbying very hard to regulate/ban.
[–] asa123 4 days ago
As much as I hear this sentiment, and as much as all the smart software people around me echo the desire for this sentiment to be true; it feels like people say these things, but then at the same time say - well, Claude/Chatgpt is still marginally better for me now. But clearly they are catching up so maybe one day!!!

In that sense, I'm really not sure if Kimi/chinese models are really competing against Anthropic/OAI? Not to mention that for individuals, the subscription model is extremely different, and Kimi subs are (I think) worse value, and chinese API's maybe marginally end up cheaper than using american subscriptions.

[–] qlte 4 days ago
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.

[–] ngruhn 4 days ago
I guess I don't understand "enterprise psychology" but why are auditing features worth a 50x premium? I think we're currently blasting through $1000 worth of tokens a month per dev.
[–] ehnto 4 days ago
Because enterprises have compliance and certification requirements, meaning the enterprise is essentially held hostage by providers on price.

You could argue it's worth that much because of the value that compliance brings the enterprise, but it's just another gouging excercise. Certainly nothing unique to AI companies.

[–] mike_hearn 4 days ago
They aren't but both firms tell bigger/richer clients that the subs just aren't available to them no matter what. It's not a policy, it's an email that says "we're moving you onto API rates". They have no obligation to follow a systematic policy!
[–] CodesInChaos 4 days ago
Claude "team" plans are limited to 150 seats per company. So big companies have no choice.
[–] mschuster91 4 days ago
> I guess I don't understand "enterprise psychology" but why are auditing features worth a 50x premium?

Alternatively, one can say that the enterprise customers plus a metric shitload of VC and shareholder/investor money heavily subsidizes cheap personal plans.

It's the same playbook that Adobe used, provide cheap plans for academia and turn a blind eye towards piracy from non-commercial actors, get the young people hooked hard on Adobe's software and workflows, and they will demand that their employers purchase the nice, high profit commercial/enterprise plans.

[–] ywvcbk 4 days ago
> heavily subsidizes cheap personal plans.

They are of course are the ones paying for R&D of new models but its not exactly clear if gross margins on subscriptions are negative. It might be just normal market segmentation just like SaaS companies charging enterprise users many times more than private individuals.

[–] SR2Z 3 days ago
DeepSeek announced that each GPU they have makes about $38 an hour in revenue during off-peak times. That's $331k a year, and DeepSeek is cheap.

I think that it's not only possible but likely that the frontier labs are profitable on an ongoing basis, and it's mainly the research and capex which make them look like impending disasters.

Realistically, OpenAI and Anthropic are each probably worth ~$1T each. Anthropic can already easily justify that based on revenue alone. OpenAI isn't far off. Consider how quickly these companies are growing and the fact that they maintain a small but significant edge, I don't think the bubble is going to pop. Just deflate a little.

[–] mschuster91 3 days ago
> I think that it's not only possible but likely that the frontier labs are profitable on an ongoing basis, and it's mainly the research and capex which make them look like impending disasters.

And that is the much more relevant problem. Capable open-weight models from China, European labs or competitors with cash to burn (i.e. Meta!) erode all the moat that the major labs have, and tooling functionality like MCP, CLI interfaces or integration into third-party tools like IDEs quickly gets cloned.

Simply printing money by running inference does not justify valuations in the billions of dollars, because anyone can do so.

[–] SR2Z 2 days ago
Having a frontier model is worth something beyond just inference costs, I'm sure. It seems likely that the labs will maintain at least a small lead.
[–] baq 4 days ago
Let’s not forget that Luna max is actually extremely capable for the price, you can get a lot done on the $20 sub.

Haven’t tried haiku 5.5, I expect it to simply run out too fast, but they did change the price below 100k tokens recently; perhaps I should check it out.

[–] Schlagbohrer 3 days ago
Keeping a workflow under 100k tokens limits it to very tiny tasks
[–] smodo 4 days ago
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.
[–] mbreese 4 days ago
But, Openrouter stats can only measure the usage they see. I'm not sure it is really all that representative of total LLM usage across the market.

I think that's the difference here -- OpenAI and Anthropic are competing more with each other (and Google Gemini) than they are with open weight models. While people on HN are familiar with Kimi and GLM models, I'm not sure how many casual users of LLMs know about them. I think the competitive risk open weight models pose to OpenAI and Anthropic is much further in the future.

There is a lot of usage that's only known by Anthropic or OpenAI that's not visible to the rest of the world.

[–] InsidiousWombat 3 days ago
And the share of the tasks where cheap open model is enough only grows in time.

Frontier models just fight over smaller and smaller piece of the pie and I suspect them pushing for security work is way to open potentially infinite token sink as attackers pay for tokens so defenders need to spend even more tokens to defens

[–] peddling-brink 4 days ago
> most people are just speedrunning notetaking apps in JavaScript frameworks.

I feel seen. But seriously, my app, with my preferences, written by a semi-trustworthy entity that isn’t trying to shove ads down my throat. That’s really great.

[–] sbarre 3 days ago
Yep, this. I've seen it coined as "the age of personal software" and I totally agree.

I've built easily a dozen personal apps in the last few months that I have no plans on releasing or sharing, run locally, and solve very specific productivity (or one-off) issues for me.

I would never have spent the time building these apps in the pre-LLM days because the effort wouldn't have been worth the gains.

But now? Sure Claude, build me a MacOS app in Swift that does this exact thing I need. Less than an hour later, it's done.

[–] nekooooo 3 days ago
i mean, i made myself a dvd player for my steam machine. i don't see how that makes anthropic money at real token costs.

when lyft line was heavily subsidized in SF by VC money, i used it almost daily to commute to work because it cost $2.50 each way. Now that it's $20, I don't use it.

[–] AtlasBarfed 3 days ago
Psst.... that's called "dumping".
[–] specialist 3 days ago
Yup.

Methinks (hopes) we're entering the era of mass customization.

[–] PeterStuer 22 hours ago
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.
[–] hobofan 4 days ago
> 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.

[–] fultonn 3 days ago
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.

[–] SkiFire13 4 days ago
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.
[–] lousken 3 days ago
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.

[–] NewJazz 4 days ago
Have you considered you are reading comments from different people?
[–] dimaggiosghost 3 days ago
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?
[–] phoghed 4 days ago
If prices were not being significantly lowered by Anthropic and OpenAI then you’d probably see more people using the Chinese models
[–] smallmancontrov 3 days ago
The frontier labs think the switching threats are credible or they would not have cut prices.
[–] rienbdj 4 days ago
Of course they compete with each other. Codex and Claude Code have direct feature overlap.

But they do have a common enemy in open weight models.

[–] HWR_14 3 days ago
Competition in a duopoly looks very different from competition with a large number of suppliers.
[–] InsidiousWombat 3 days ago
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

[–] snek_case 3 days ago
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.
[–] WarmWash 4 days ago
free/local/open weight don't have the compute available to serve on a level to compete with the big labs