If model performance asymptotes and CPU/GPU and RAM keep growing, even slowly, then eventually we will have frontier models on desktop that are totally competitive with hosted. It’s only a matter of time.

You already can if you’re willing to spend many thousands of dollars on a beast of a machine. I’m talking about middle tier desktops and laptops here. Maybe eventually even phones.

The only way hosted stays strongly competitive in that world is if they can keep pushing the frontier or by playing the classic social media and SaaS games of network effect building and integrations.

Many people might still use hosted, of course, but what I really mean is that their multiples won’t be justified and they will have little to no moat. AI will become commoditized, like a sophisticated next generation form of an encyclopedia with search.