More Thoughts On The Economics Of AI Not Adding Up

I wrote a piece last month expressing some thoughts on how and why I think the economics of Artificial Intelligence don’t add up. I’m expanding on a couple of those thoughts. 

First, the cold feet of the bean counters are getting colder when it comes to the cost of token usage. Tokens, being the measure of how the cost of computing all of those requests to whatever AI engine is waiting to invoice for hallucinating, are proving to still be expensive and probably will be for some time to come. Unless the costs have been vastly overvalued to increase margins, those costs aren’t going to come down any time soon. 

Second, in order to keep the pumps primed the race seems to be shifting from cloud servers to on device use. That sounds smart. It certainly is as a possible security measure and selling point. But at the moment, and probably in the end, already rising costs of hardware will continue to inflate as the memory demands needed to turn those on device dreams into hallucinations escalate. Segmentation of the market will continue. 

Already we’re seeing strong hints that more and more memory is required to run the latest and supposedly greatest. That means newer devices with more memory, already becoming too expensive a proposition for many. As an example, only the newest Apple devices will be able to run all of the new features of Siri AI. Frankly, I don’t think that will turn into big new hardware upgrade cycles.

Third, for those already turned off and pushing back on the AI curve I don’t think any of this matters at the moment. Will it matter down the road? Most likely, yes. It’s not about more expensive devices or service prices, it will all be about how the costs are spread around in other ways that we’ll never really see outlined in any price or feature comparison. 

The bottom line is still the bottom line. Costs are going to continue to rise one way or the other, whether bubbles pop or not. And then the advertising will kick in. 

(Image from Viktoria_P on Shutterstock)

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