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0 pointslelanthran15d ago0 comments

> Amazon was pretty famous for never actually posting a profit for their first ~10 years of operation

They were spending the profit from each user, not making a loss on each user.

It's a big difference.

To turn a profit all AMZN had to do was stop spending (and the consumers would not have been affected by the halting of spending).

For the AI providers, to turn a profit they have to raise the price.

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5 comments · 1 top-level

mnicky15d ago· 4 in thread

It’s the same here. Inference alone is profitable. It’s the R&D cost of making a new model that drives up expenses.

miyoji15d ago

This doesn't make sense. Inference alone is profitable but you have to continually train new models. There isn't a point where you will have a model that is the final model and you can just serve inference and profit, you always have to train more models.

It's not at all the same as what Amazon was doing. At any point, Amazon could have turned off the expansion engine and turned on the profits. AI companies don't have that luxury, if they stop training they'll just fall behind and die because they don't have a competitive model. They are locked into training in order to be competitive, they are not by default profitable and choosing growth over profit.

mnicky14d ago

I think there's another point of view - let's consider each model as an investment. It is now sufficient that each model earns more than it cost to develop. And this generally holds (I heard that GPT-4.5 was a notable exception).

swiftcoder14d ago

> At any point, Amazon could have turned off the expansion engine and turned on the profits

Maybe, but they wouldn't be in the dominant position they are today if they had turned off the expansion early - spending to suppress big competitors like Wallmart in the online shopping market pays dividends.

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recursivecaveat14d ago

Yeah they can probably be almost entirely depreciated within 2-3 years, and pretty substantially front-loaded within that. Like, the expensive part of being a CPU company is making new ones, but Intel can't exactly just rest on their laurels and sell Pentiums for the rest of time.

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