Yeah - people are talking about replacing jobs with AI. As if it is not totally obvious that people like Sam Altman will totally bleed you dry after you fired all your workers. You will not replace your wage bill, you will simply give the money to Sam Altman
Wages are treated as an immediate operational cost, while AI is framed as a capital investment. This accounting distinction makes AI look like a long-term asset, whereas labor remains perpetually categorized as an expense.
I have some sympathy for these people, but some don’t seem to realize that Microsoft is not going to be upset over them leaving. They are not valuable to Microsoft as users. If they are unable or unwilling to pay now, Microsoft wants them gone. They are being shown the door. Making a post about deleting your copilot+ subscription or whatever is like bragging about being kicked out of a nightclub.
I’ve been preaching this for the past couple of years. Everything up until now has been entirely about gaining market share, and AI will never be cheaper than it is right now, and it’s not cheap.
Just look at the “earnings” for companies like openAI. They are 1000+% in the red. It’s impossible for them to change their sales model enough to make that profitable. As more data centers go up, the operating costs are also going to go up.
I’ve been telling people that now is the best time in the past decade or more to learn how to code. There will be positions available in the coming years when the only junior devs available are vibe coders.
AI will absolutely be cheaper than it is now in the future, because you’ll actually be able to run it locally - look at the recently announced Nvidia powered Surface Ultra as an example of what’s coming.
Companies are trying to get their whole AI pipeline more efficient and “smaller” to reduce costs, because their costs to build and run data centres are astronomical. Where it will likely go is a subscription service to access their models that you run locally. Passes most of the cost on to consumers, and is recurring revenue which they all dream of.
I don’t think there’s a chance that happens either at the consumer level or mass adoption at the enterprise level. The estimated price of that nvidia surface ultra is expected to be around $3000. Only a handful of power users will pay that, and others may just buy it for the computer power. Right now for the basic user it’s about $30 a month for basic AI plans. How many people that are willing to pay that do you think are willing to pay 100 years up front to then pay a subscription to then manage a local model?
Also, there are a lot of viable free models available right now that people can download for free. I have a recycled i5, 8gb ram machine that can run some basic models that are cable of doing 90% of the stuff the average person wants. My desktop with far better specs can run far more powerful models. The thing is, most people don’t know these exist, and if they do they don’t know how to set them up or are too intimidated to try.
That’s just for consumers. Trying to host that at an enterprise level is much more difficult. Assuming the business has the tens of thousands of dollars of hardware to support 100s or thousands of users, configuring governance on LLMs and everything associated with enterprise management that is currently handled at the current companies will fall back on the business. That will probably require hiring specialist, or at least expanding the work force. If it takes 1 $3000, unreleased and untested laptop, imagine the cost to support a company, especially one doing software development.
Even with all of that, training the models isn’t going to get cheaper. It’s going to get more expensive as more data centers are built. Operating costs will go up, and unless these companies start charging upwards of 3k a month per user, they won’t be profitable on AI alone. Obviously they are making money on other things like selling user data, but none the less, costs have to go up for even the notion of making money for these companies.
Care to elaborate on why we’d need more programmers? As of las year there was a “surplus” of them and they were purged from FAANGs and the rest followed suit. As of me, im about to get my degree in CS, but Im in my mid 30s and just got it for the lols, as j work in a difference field and the expectative of switching industries is not feasible in my country.
But i have a in-law getting her CS degree, and I don’t see their chances of employment any morr positive than last the last year
I think that currently, a lot of places are replacing junior devs with AI. As senior devs retire or quit because of AI, there won’t be skilled juniors to take those positions. It’s my belief that there will be a vacuum left that needs to be filled by people that can code, not just use AI to vibe code.
I could definitely be wrong, but it’s kind of cyclical like the dotcom bubble too. There was a surplus of devs, then a shortage. I think we’re approaching the latter. If/when the bubble pops, we’ll find out.
It’s expensive to get a degree, but I also think having at least basic coding understanding both fundamentally changes the way a person thinks for the better and to be good, you have to have a good breadth of knowledge on computers and a wide array of different processes across different fields, so you become a more well rounded person.
Anecdotally, I pivoted from sys admin for a decade to full stack in my mid thirties. I was fortunate to have a connection that got me in the door, and it’s been a lot of work starting over, but I’ve done it. You mentioned in your country that it’s not feasible, but maybe if you can find an in somewhere or if the landscape changes significantly enough that unavailable positions open up, you might be able to catch a break.
Pretty sure they picked the wrong tech to try and lock people into. It isn’t hardware and doesn’t have some kind of proprietary interface that takes time to get used to when switching. Some models might be better than others at specific things, but not enough to justify the prices they are going to charge for output you have to review and fix.
This is literally the easiest thing to jump ship from.
That’s the stupidest thing about these AI companies’ valuation.
They don’t even really own anything!
Their models – their main proprietary IP – are not copyrightable or patentable, and not legally protected in any way. Any competitor can copy them at any time and then offer the same service for cheaper, without the overhead costs for training. The giants of the AI industry could easily be undercut and replaced at any time.
It would be if so many companies hadn’t bought into the microsoft ecosystem so hard.
My company did the usual BS of “well we have an e5 license so it’s free”. Now we are married to all their stupid shit and have no relationships with other providers.
End of the month gonna be expensive. Now expect a scramble to cut master service agreements and contracts with others in a panic.
This is literally the easiest thing to jump ship from.
It depends how heavily you are leaning on ML tools to do business processes honestly.
It’s easy to implement something that mostly works and doesn’t need a ton of baby sitting, but moving from one solution to another is like rebuilding an ERP if you have gotten deep enough into the weeds.
This bubble is super scary though. The only things I can see propping it up would be world governments once the tech companies and other large enterprises halt spending. I don’t think the US can shoulder the costs and nobody else is gonna lol
Since the article is talking about devs, any who were able to code before should be able to carry on without an LLM by their side. They might not be as “productive”, but jumping ship, or even forgoing one, should not be a challenge.
Have you seen the IPOs and the rule changes that the stock exchanges and index funds made to please the AI overlords? It’ll be US pension funds left holding the bag when the bubble goes pop
This is literally the easiest thing to jump ship from.
I’m not sure about that. We see professional developers complaining all the time when their AWS or GitHub account is banned. But this time we’re talking about vibe coders who have less skills than the average developer.
I believe that is largely their employers’ decision. It is easy to switch, but it is the boss who makes that decision, not the tech-literate team. Bosses like big well-known companies that can absorb blame so they can continue to cash their big pay checks even after failures that were clearly the fault of the 3rd party that no other bosses could blame them for choosing.
It isn’t hardware and doesn’t have some kind of proprietary interface that takes time to get used to when switching.
The proprietary interface is kinda the largest selling point, besides the once cheap prices. But the $10 plan going from 300 multi-hour prompts per month to 20 quick prompts per month effectively makes it worthless. Though, you could just pay a few hundred/thousand per month and continue, or bring your own API key from elsewhere, but at that point just use someone else’s interface. It’s not that much better than competitors and copilot isn’t offering anything unique.
The unique thing about GitHub Copilot (and all the other vibe-coding tools) is that they’re speed-running the playbook because this shit is not profitable. It can’t be. Their costs scale up with usage, unlike every other business that can take advantage of economies of scale, so they’ve skipped the slow, steady enshittification phase and jumped directly into the “squeeze blood from this stone to keep the scam going a little longer” phase.
Plain inference is profitable actually, that’s why there are a hundred inference providers on OpenRouter who compete by undercutting each other. The labs however aren’t profitable because training the models is a huge drain.
As others have pointed out, the compute cost of inference is only one small part of the puzzle. All the frontier model providers - which OpenRouter gives you access to - are massively raising their prices in desperate bids to recoup the cost of model generation in the first place.
There’s really no hiding from the token apocalypse unless you’re running a model on your own hardware.
But they can only do that because others are doing traning, no? There’s no point at which you can go “okay it’s all inference from here”, the model needs to be updated with new information/guardrails/context to continue being useful for most use cases
In a vacuum maybe but are they profitable if you add the infrastructure investments to the mix? What about model development? There was a shit ton of money that was spent. Covering the running costs is not enough. At some point someone has to pay for the investments.
The crazy thing is, this isn’t really a “squeeze” in the traditional sense. The problem was that every single mainstream AI product has been heavily subsidized…because it’s wildly expensive and not even close to being profitable.
That sort of subsidization was only going to last for so long. The dam is starting to crack. People aren’t ready to pay what AI truly costs.
I remember having to sit down my boss and explain how it can only become more expensive over time. It’s the big tech playbook after all. Didn‘t matter. I‘m told again and again how AI is only becoming stronger and cheaper. Especially during salary negotiations. Nasty stuff. They know I know it‘s BS and they still cling to this nonsensical narrative because it would be very beneficial to them and very bad for me.
Open weight LLMs are actually pretty cheap because there are competing providers. But something tells me your boss isn’t using openrouter to find the best price per million tokens lol
The strategy is always to gain a monopoly or near monopoly on a market before pushing for the enshittification of the product to reduce costs and maximize profits, once customers have become dependent on said product, then pray that most choose the path of least resistance which is staying and dealing with the worse and more expensive version of what they’re used to rather than retraining or restarting from zero elsewhere.
Cars are addictive because if you don’t have a car, and they are not common, you don’t need one. But they are confortable, and this is what hooks people - our Naenderthal brain is wired to save energy and effort. Because cars are, at first, faster than, say, streercars, they are used more and more, and especially people use them for commuting. Because of Marchetti’s constant, people use their daily time budget of about one hour for commuting in a car, and travel longer and longer distances. What results collectively is subururban sprawl, small shops in residential areas, as well as jobs nearby disappear and so on.
Once you are there, it is very difficult to go back, because daily distances are too large for streetcars, bicycles, and buses.
And to add insult to injury, cars stop to be fast once many people use them, since they need enormous amount of longitudinal space to be operated safely. This huge space requirement further accelerates sprawl.
Cars are an collective addiction, highly damaging. This kind of AI might become another.
This is going much faster than most private equity enshittification. That usually takes about 5 years to start. And has a system or hardware that makes switching painful. That doesn’t apply here, it’s easy to switch and almost a drop in change.
They are burning money so quickly that they don’t have the luxury of using the “slowly boil the frog” standard VC tactic, so they have to start the boiling before the frog is comfortable.
Human beings are terrible at balancing short-term gains for long-term consequences. It’s mixed into our DNA. Our ancient ancestors, securing immediate calories or escaping a threat was a matter of life and death. Long-term planning wasn’t as critical as immediate survival. Now do note, that’s not an excuse for the people who foolish went head long into this.
This is why this struggle with the rich and powerful is eternal. It fundamentally taps on an ingrained flaw we collective fall for every single time. There is no one solution, there can never be one solution. People must forever fight themselves and the powerful from the exploitation of this fundamental flaw of humanity.
I’m sorry, did everybody else not see this coming from miles away? This is the private equity playbook.
When something is too good to be true, you ALWAYS have to be ready to either jump ship, massively change how you do things, or pay through the nose.
Yeah - people are talking about replacing jobs with AI. As if it is not totally obvious that people like Sam Altman will totally bleed you dry after you fired all your workers. You will not replace your wage bill, you will simply give the money to Sam Altman
Wages are treated as an immediate operational cost, while AI is framed as a capital investment. This accounting distinction makes AI look like a long-term asset, whereas labor remains perpetually categorized as an expense.
Only if you are running your own servers. You dont get to depreciate a SaaS subscription or metered bill.
And the servers are only useful for AI and they don’t last long.
The angry devs from this article are idiots
I have some sympathy for these people, but some don’t seem to realize that Microsoft is not going to be upset over them leaving. They are not valuable to Microsoft as users. If they are unable or unwilling to pay now, Microsoft wants them gone. They are being shown the door. Making a post about deleting your copilot+ subscription or whatever is like bragging about being kicked out of a nightclub.
I’ve been preaching this for the past couple of years. Everything up until now has been entirely about gaining market share, and AI will never be cheaper than it is right now, and it’s not cheap.
Just look at the “earnings” for companies like openAI. They are 1000+% in the red. It’s impossible for them to change their sales model enough to make that profitable. As more data centers go up, the operating costs are also going to go up.
I’ve been telling people that now is the best time in the past decade or more to learn how to code. There will be positions available in the coming years when the only junior devs available are vibe coders.
AI will absolutely be cheaper than it is now in the future, because you’ll actually be able to run it locally - look at the recently announced Nvidia powered Surface Ultra as an example of what’s coming.
Companies are trying to get their whole AI pipeline more efficient and “smaller” to reduce costs, because their costs to build and run data centres are astronomical. Where it will likely go is a subscription service to access their models that you run locally. Passes most of the cost on to consumers, and is recurring revenue which they all dream of.
I don’t think there’s a chance that happens either at the consumer level or mass adoption at the enterprise level. The estimated price of that nvidia surface ultra is expected to be around $3000. Only a handful of power users will pay that, and others may just buy it for the computer power. Right now for the basic user it’s about $30 a month for basic AI plans. How many people that are willing to pay that do you think are willing to pay 100 years up front to then pay a subscription to then manage a local model?
Also, there are a lot of viable free models available right now that people can download for free. I have a recycled i5, 8gb ram machine that can run some basic models that are cable of doing 90% of the stuff the average person wants. My desktop with far better specs can run far more powerful models. The thing is, most people don’t know these exist, and if they do they don’t know how to set them up or are too intimidated to try.
That’s just for consumers. Trying to host that at an enterprise level is much more difficult. Assuming the business has the tens of thousands of dollars of hardware to support 100s or thousands of users, configuring governance on LLMs and everything associated with enterprise management that is currently handled at the current companies will fall back on the business. That will probably require hiring specialist, or at least expanding the work force. If it takes 1 $3000, unreleased and untested laptop, imagine the cost to support a company, especially one doing software development.
Even with all of that, training the models isn’t going to get cheaper. It’s going to get more expensive as more data centers are built. Operating costs will go up, and unless these companies start charging upwards of 3k a month per user, they won’t be profitable on AI alone. Obviously they are making money on other things like selling user data, but none the less, costs have to go up for even the notion of making money for these companies.
Care to elaborate on why we’d need more programmers? As of las year there was a “surplus” of them and they were purged from FAANGs and the rest followed suit. As of me, im about to get my degree in CS, but Im in my mid 30s and just got it for the lols, as j work in a difference field and the expectative of switching industries is not feasible in my country.
But i have a in-law getting her CS degree, and I don’t see their chances of employment any morr positive than last the last year
I think that currently, a lot of places are replacing junior devs with AI. As senior devs retire or quit because of AI, there won’t be skilled juniors to take those positions. It’s my belief that there will be a vacuum left that needs to be filled by people that can code, not just use AI to vibe code.
I could definitely be wrong, but it’s kind of cyclical like the dotcom bubble too. There was a surplus of devs, then a shortage. I think we’re approaching the latter. If/when the bubble pops, we’ll find out.
It’s expensive to get a degree, but I also think having at least basic coding understanding both fundamentally changes the way a person thinks for the better and to be good, you have to have a good breadth of knowledge on computers and a wide array of different processes across different fields, so you become a more well rounded person.
Anecdotally, I pivoted from sys admin for a decade to full stack in my mid thirties. I was fortunate to have a connection that got me in the door, and it’s been a lot of work starting over, but I’ve done it. You mentioned in your country that it’s not feasible, but maybe if you can find an in somewhere or if the landscape changes significantly enough that unavailable positions open up, you might be able to catch a break.
Pretty sure they picked the wrong tech to try and lock people into. It isn’t hardware and doesn’t have some kind of proprietary interface that takes time to get used to when switching. Some models might be better than others at specific things, but not enough to justify the prices they are going to charge for output you have to review and fix.
This is literally the easiest thing to jump ship from.
That’s the stupidest thing about these AI companies’ valuation.
They don’t even really own anything!
Their models – their main proprietary IP – are not copyrightable or patentable, and not legally protected in any way. Any competitor can copy them at any time and then offer the same service for cheaper, without the overhead costs for training. The giants of the AI industry could easily be undercut and replaced at any time.
Have a look at Anthropic and all their products to see that the actual model isn’t their main proprietary IP.
The hardest part about the copying is the actual copying without having access to the weights or even just a ready to run file for the model.
IIRC Deepseek kinda did something like that by asking ChatGPT tons of questions to train their own model or something
Yeah, you can do that … or some good old fashioned corporate espionage.
Or, hell, just ask ChatGPT for its weights model. With how shitty these AI companies are at security and guardrails, that might just work.
If you’re a pure vibe coder, this is literally 9/11.
It would be if so many companies hadn’t bought into the microsoft ecosystem so hard. My company did the usual BS of “well we have an e5 license so it’s free”. Now we are married to all their stupid shit and have no relationships with other providers. End of the month gonna be expensive. Now expect a scramble to cut master service agreements and contracts with others in a panic.
It depends how heavily you are leaning on ML tools to do business processes honestly.
It’s easy to implement something that mostly works and doesn’t need a ton of baby sitting, but moving from one solution to another is like rebuilding an ERP if you have gotten deep enough into the weeds.
This bubble is super scary though. The only things I can see propping it up would be world governments once the tech companies and other large enterprises halt spending. I don’t think the US can shoulder the costs and nobody else is gonna lol
Since the article is talking about devs, any who were able to code before should be able to carry on without an LLM by their side. They might not be as “productive”, but jumping ship, or even forgoing one, should not be a challenge.
Have you seen the IPOs and the rule changes that the stock exchanges and index funds made to please the AI overlords? It’ll be US pension funds left holding the bag when the bubble goes pop
Privatize the profits and socialize the losses man.
astronaut meme.
All of them also bring their own comfortable export feature.
“I want to share all of this with my team. Create the prompt that is necessary to do this”
I’m not sure about that. We see professional developers complaining all the time when their AWS or GitHub account is banned. But this time we’re talking about vibe coders who have less skills than the average developer.
I believe that is largely their employers’ decision. It is easy to switch, but it is the boss who makes that decision, not the tech-literate team. Bosses like big well-known companies that can absorb blame so they can continue to cash their big pay checks even after failures that were clearly the fault of the 3rd party that no other bosses could blame them for choosing.
And they need to subscribe to access and execute their troubleshooting options.
The proprietary interface is kinda the largest selling point, besides the once cheap prices. But the $10 plan going from 300 multi-hour prompts per month to 20 quick prompts per month effectively makes it worthless. Though, you could just pay a few hundred/thousand per month and continue, or bring your own API key from elsewhere, but at that point just use someone else’s interface. It’s not that much better than competitors and copilot isn’t offering anything unique.
It can still be pretty difficult to jump ship for any large corporation, but yeah there’s certainly harder things.
The unique thing about GitHub Copilot (and all the other vibe-coding tools) is that they’re speed-running the playbook because this shit is not profitable. It can’t be. Their costs scale up with usage, unlike every other business that can take advantage of economies of scale, so they’ve skipped the slow, steady enshittification phase and jumped directly into the “squeeze blood from this stone to keep the scam going a little longer” phase.
Wait, what? You say it is a scam? A kind of technical Ponzi scheme? A Madoff syndicate on steroids?
Good sign that it may be over soon.
Absolutely 100% do not count on it
Plain inference is profitable actually, that’s why there are a hundred inference providers on OpenRouter who compete by undercutting each other. The labs however aren’t profitable because training the models is a huge drain.
As others have pointed out, the compute cost of inference is only one small part of the puzzle. All the frontier model providers - which OpenRouter gives you access to - are massively raising their prices in desperate bids to recoup the cost of model generation in the first place.
There’s really no hiding from the token apocalypse unless you’re running a model on your own hardware.
But they can only do that because others are doing traning, no? There’s no point at which you can go “okay it’s all inference from here”, the model needs to be updated with new information/guardrails/context to continue being useful for most use cases
In a vacuum maybe but are they profitable if you add the infrastructure investments to the mix? What about model development? There was a shit ton of money that was spent. Covering the running costs is not enough. At some point someone has to pay for the investments.
Didn’t deepseek train their model for $6m?
The crazy thing is, this isn’t really a “squeeze” in the traditional sense. The problem was that every single mainstream AI product has been heavily subsidized…because it’s wildly expensive and not even close to being profitable.
That sort of subsidization was only going to last for so long. The dam is starting to crack. People aren’t ready to pay what AI truly costs.
And it doesn’t seem like they ever will be. The LLM value proposition is already dubious at today’s subsidized rates.
It’s not even just private equity, this is more or less the exact strategy Microsoft uses.
Also reminds of Android
It reminds of any software made by any company that is at all well known. They are all operating from the same playbook.
I remember having to sit down my boss and explain how it can only become more expensive over time. It’s the big tech playbook after all. Didn‘t matter. I‘m told again and again how AI is only becoming stronger and cheaper. Especially during salary negotiations. Nasty stuff. They know I know it‘s BS and they still cling to this nonsensical narrative because it would be very beneficial to them and very bad for me.
Open weight LLMs are actually pretty cheap because there are competing providers. But something tells me your boss isn’t using openrouter to find the best price per million tokens lol
The strategy is always to gain a monopoly or near monopoly on a market before pushing for the enshittification of the product to reduce costs and maximize profits, once customers have become dependent on said product, then pray that most choose the path of least resistance which is staying and dealing with the worse and more expensive version of what they’re used to rather than retraining or restarting from zero elsewhere.
Capitalism 101.
Which is why deepseek releasing it’s model open source was such a big deal. The monopoly isn’t feasible.
I didn’t see it coming as I am on Codeberg 😎
I mean you could equally be on github and just not use copilot
Private equity?
Admittedly, it’s capitalism. But I just chose a negative entity.
The tactic has worked for drug dealers for decades
Also for example for the car industry.
Cars are addictive because if you don’t have a car, and they are not common, you don’t need one. But they are confortable, and this is what hooks people - our Naenderthal brain is wired to save energy and effort. Because cars are, at first, faster than, say, streercars, they are used more and more, and especially people use them for commuting. Because of Marchetti’s constant, people use their daily time budget of about one hour for commuting in a car, and travel longer and longer distances. What results collectively is subururban sprawl, small shops in residential areas, as well as jobs nearby disappear and so on.
Once you are there, it is very difficult to go back, because daily distances are too large for streetcars, bicycles, and buses.
And to add insult to injury, cars stop to be fast once many people use them, since they need enormous amount of longitudinal space to be operated safely. This huge space requirement further accelerates sprawl.
Cars are an collective addiction, highly damaging. This kind of AI might become another.
This is going much faster than most private equity enshittification. That usually takes about 5 years to start. And has a system or hardware that makes switching painful. That doesn’t apply here, it’s easy to switch and almost a drop in change.
They are burning money so quickly that they don’t have the luxury of using the “slowly boil the frog” standard VC tactic, so they have to start the boiling before the frog is comfortable.
Human beings are terrible at balancing short-term gains for long-term consequences. It’s mixed into our DNA. Our ancient ancestors, securing immediate calories or escaping a threat was a matter of life and death. Long-term planning wasn’t as critical as immediate survival. Now do note, that’s not an excuse for the people who foolish went head long into this.
This is why this struggle with the rich and powerful is eternal. It fundamentally taps on an ingrained flaw we collective fall for every single time. There is no one solution, there can never be one solution. People must forever fight themselves and the powerful from the exploitation of this fundamental flaw of humanity.