The absolute value of those numbers matters a lot. The cloud providers could be 100 times cheaper than running locally, but if it still costs say, 10 cents a day to run locally, you’re not going to care about this difference very much. And what you keep in privacy out-weighs the trivial savings afforded by the cloud provider.

There is a coherent argument that once LLMs reach the top of their S curve, the gap between small/medium local models and large cloud hosted ones converges.

Especially if GPU performance increases or market oversupply mean you can get good performance for a couple thousand dollars.

I’m not sure about the nature or timeframe for an S curve in LLMs but I don’t think it’s unreasonable to think about one, nor to entertain the hosting consequences of a progression on one.