It won't happen with AI models either.
It's almost ingrained in the American business model now. Outsource everything. Nobody wants to manage a room full of servers when they can spend 2-3x as much and outsource that headache along with the responsibility for it.
Same will happen with AI. Whether that means paying Anthropic that premium or paying AWS.
I'm in a relatively small business, we recently had an outage related to our local infrastructure.
I got pressure from the CEO saying it wasn't reliable to host our own infrastructure anymore even though our total internal down time over the last 5 years is significantly less than even a single of the larger recent AWS outages.
Everyone wants to shuck the chore and the responsibility.
AI is different.
Cloud computing genuinely is cheaper on average. It's better than paying for cisco servers, and at scale, it's cheaper than managed platforms (ala Heroku), and it's a coin toss for when you're in the middle ground and constantly approaching the point of rebuilding poor-man versions of existing products but with very very expensive engineering salaries.
In contrast, local models offer dramatic savings, and are magnitude of orders better in certain aspects: like stability - the performance is all over the place with traditional AI companies as they divert compute to their next big thing.
The benefits to maintaining your own infrastructure are pretty moderate to low, with very high risk.
And also, alternate models are pretty easy to use and easy to swap out unlike the vendor lock-in that exists with cloud services.
I agree. The other thing here is that, once you can run LLMs on a single piece of commodity hardware (whether that includes one GPU or several), the difference between cloud vs. on-premise LLMs will largely be about where your hardware is located. There will be very little software configuration involved (just an HTTP endpoint that talks to the GPU). This is decidedly different from cloud products where the moat of hyperscalers is largely in the software and services on top of the hardware, not the hardware itself. (Sure, GPUs will eventually break & need replacement, too, but there's no state to lose, so that's already orders of magnitude easier than replacing hard drives.)
Same reason people pay for things through the AWS marketplace (like Vanta) instead of having to go through their invoicing process.
But AI is just weights, you can run a reasonably intelligent model at home, or on a few GPUs if you're a small-medium sized company, and it doesn't require dedicated maintenance.
Same here. My job as a software dev does not require me to self-host services we need and use. Quite the opposite. But, I am reluctant to hand over all control to AWS or equivalent for several reasons that I will get into here.
I have found that Infrastructure as Code (IaC) and modern tools like opentofu, ansible, combined with frontier AI models and harnesses gives you superpowers in this space. Almost all of our self-hosted services are fully managed by these tools. e.g. We perform backups and test them more often now than we ever did before. Entirely because it is so much easier to do all of that now.
1. Individual dev machines
2. Shared local server
3. Shared server in corporate cloud
4. Third-party LLM SaaS provider
The OS needs updates, file systems get corrupted.
Fans get dirty.
All the things that you need to deal with in hosting your own server infrastructure you have to deal with when hosting your own AI infrastructure (which runs on servers...)
A lot of the reason people outsource normal software is its brittle security properties, not sure that even applies to an LLM - it can go and look up the latest security best practices just like an engineer can.
You know what gives me headaches? When I'm in the middle of a session and the model gets rug-pulled out from under me because somebody at the model provider didn't pay the Trump bill that month.
Or when someone at the model provider decides that the curve-fitting algorithm in my graphics package looks a little too much like Skynet for comfort.
Or when they do any number of other things to undermine my work for the sake of their business model, some of which I won't even notice until the damage is done.
The sad thing is, if you know how inference works, you know that it really is insanely wasteful for everybody to run it locally. If anything naturally belongs in the cloud, it's inference. But at the same time, what choice are we being given?
I think that's basically Geohot's business model at Tiny Corp.
If things change to token usage billing for everyone, maybe I'll be singing a different tune but on a subscription, I don't think it makes sense financially.
Fun? Yes. Financially sound? No.
What's interesting/exciting is that local models are _already_ quite good at tasks we never imagined AI _ever_ doing before ChatGPT hit the scene just a few short years ago.
We're also in an interesting point in time where companies are releasing the fruits of their research/labor (the LLMs) to the general public for free. For now, I think they see it in their best interest to gain mindshare and rapport, as well as advancing the state of the art in smaller LLMs ("a rising tide lifts all boats") but I fear and expect that these will dry up as the major players buy the minor players, and all will seek a return on their considerable investments in AI research.
We have set up something where you create a ticket, Make sure it contains enough information, and with the right tag added it will make a branch with PR for you which stays up to date based on updates to the ticket and comments on the PR.
It’s creepy in a way. But you also can’t really use local (as in workstation LLM) for that. Sure we could run something like a distributed task scheduler across all our engineer devices but just pushing it to copilot is easier.
That's what I mean by diminishing returns.
Accountants are reasonably good at figuring this out - there are a lot of different things that need a large upfront investment before you can charge anything. People still debate if they are correct in this each case.
And those are going to all be big enterprise companies that probably will set up LLM services entirely in-house, because they've got the headcount to utilize servers at 100%.
I wonder if there will be (or is currently) business in selling their compute while they're not working, to opposite time zones, etc.
What's left for the big providers will be the dregs of individual subscriptions and small businesses that at their least paranoid might let employees just use their own subscriptions for work.