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Users have to pay for the compute somehow. Maybe by paying for models run in datacenters. Maybe paying for hardware that's capable enough to run models locally.
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I can upgrade to a bigger LLM I use through an API with one click. If it runs on my device device I need to buy a new phone.
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I* can run the model on my device, no matter if I have an internet connection, nor if I have a permission from whoever controls the datacenter. I can run the model against highly private data while being certain that the private data never leaves my device.

It's a different set of trade-offs.

* Theoretically; I don't own an iPhone.

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Well, unless it's open source, you can't be so certain. But more certain than when processing in the cloud, that's true.
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If iPhones were the efficient/smart way to pay for compute then Apple's datacenter would be built with those instead of servers.
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But also: if Apple's way works, it’s incredibly wasteful.

Server side means shared resources, shared upgrades and shared costs. The privacy aspect matters, but at what cost?

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Server side means an excuse to not improve model handling everywhere you can, and increasing global power usage by noticable percentage point, at a time when we're approaching "point of no return" with burning out the only planet we can live on.

The cost, so far, is greater.

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> Server side means an excuse to not improve model handling everywhere you can...

How so if efficiency is key for datacenters to be competitive? If anything it's the other way around.

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Or, instead of improving efficiency, they go ahead and just deploy more generators [0]. Stop gap measures are cheaper.

[0] https://interestingengineering.com/innovation/elon-musk-xai-...

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Well, if it were easier to build power stations, they'd do so.
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The previous commenter is right in that server-side companies have little incentive to do less, especially when they're backed by investors money. Client-side AI will be bound by device capabilities and customer investment in new devices.
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How does running AI workloads on end user devices magically make them use less energy?
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More like squinting to see if it's still visible in the rear view mirror.
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With the wave of enshitiffication that's surrounding everything tech or tech-adjacent, the privacy cost is pretty~ high.
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