Coding with LLMs (Claude Code, OpenAI Codex) is often presented as the ‘killer app’ for Generative AI. But looking at data, it seems the one piece of the puzzle missing is actual cost. …
Honestly Google is likely to beat openAI and Anthropic as things are.
OpenAI and Anthropic have to buy/rent their hardware from Nvidia, while Google is making their own TPU hardware. Google’s hardware costs on AI is way lower, every dollar they spend on it goes a lot farther.
And unlike the other two, they’re already a profitable company. They’re making record profits right now. They don’t have a desperate need to figure out how to make back billions on their AI models, they can just keep offering Gemini at a comparatively cheap price and wait for anthropic and open AI to bankrupt themselves.
That’s definitely costing them more than running it on their own hardware, but it doesn’t mean AI is costing them more than the AI startups. Anthropic for example is already paying SpaceX 1.25 Billion a month for compute, and has agreed to pay Google 200Billion oflcer the next 5 years for access to Google’s compute and TPU chips.
Google’s deal with xAI specifically lets them terminate the deal with 90 days notice after the end of the year. Google is also investing heavily in building new data centers with their hardware. I’m assuming this deal means they’ve eclipsed their current TPU capacity, and are just looking for a short term bandaid until they can catch up with their new constructions.
Plus they have a hook with the common folk, the phone steers you toward Gemini (Android phones, obviously, and Apple currently partners with Google for Gemini for iPhone…).
For Claude and OpenAI, you have to explicitly want to go out of your way to use them, or use them indirectly through another service that has a hook.
Claude seems to have some software developers explicitly preferring them, though a alot of the corporate money is on Microsoft and Microsoft leveraged Visual Studio and Github to become the business-friendly frontend, and sure, you can use Anthropic models too… Though Microsoft ultimately has control of what is reasonably available and how much each one costs. Anthropic has a shot but I could see Microsoft pivot to really mess with Anthropic. The one gap in Microsoft strategy is the “native AI” workflow where Claude Code has won hearts and minds, but it uses massively more tokens for frankly marginal or sometimes negative value compared to a more curated use in-editor.
OpenAI I see as the most exposed. Lot’s of data showing they are suffering from people being over the fad of going out of their way to use ChatGPT, especially since their phones have started embracing ‘default’ Chatbot. Software developers that are inclined to use LLM are also inclined to be pretty dismissive of anything other than either Anthropic or open weight models, depending on their inclination. Also Altman seemed the most agressive in committing to spending money they didn’t have, though all of them exhibit this to some extent.
I predict Microsoft ultimately pivots to in-house models and convinces the businesses to go that way. Apple may continue with Gemini or roll their own eventually. Anthropic currently has the stronger position between OpenAI and them, but I think you are right that both have risk of just being left behind.
Claude just kills the other models, it’s not close. Microsoft could ban claude extension from VSC tonight and ill start using command line Claude tomorrow. There’s just no comparison right now. Itd be like Microsoft trying to ban NVidia gpus from Windows, they’ll just lose.
Honestly Google is likely to beat openAI and Anthropic as things are.
OpenAI and Anthropic have to buy/rent their hardware from Nvidia, while Google is making their own TPU hardware. Google’s hardware costs on AI is way lower, every dollar they spend on it goes a lot farther.
And unlike the other two, they’re already a profitable company. They’re making record profits right now. They don’t have a desperate need to figure out how to make back billions on their AI models, they can just keep offering Gemini at a comparatively cheap price and wait for anthropic and open AI to bankrupt themselves.
I guess you missed this story from last week: Google To Pay SpaceX $920 Million Per Month For Massive AI Compute Power
That’s definitely costing them more than running it on their own hardware, but it doesn’t mean AI is costing them more than the AI startups. Anthropic for example is already paying SpaceX 1.25 Billion a month for compute, and has agreed to pay Google 200Billion oflcer the next 5 years for access to Google’s compute and TPU chips.
Google’s deal with xAI specifically lets them terminate the deal with 90 days notice after the end of the year. Google is also investing heavily in building new data centers with their hardware. I’m assuming this deal means they’ve eclipsed their current TPU capacity, and are just looking for a short term bandaid until they can catch up with their new constructions.
Anthropic is doing the same too. SpaceX over here providing the shovels and pans for the modern day gold rush, sheesh.
Plus they have a hook with the common folk, the phone steers you toward Gemini (Android phones, obviously, and Apple currently partners with Google for Gemini for iPhone…).
For Claude and OpenAI, you have to explicitly want to go out of your way to use them, or use them indirectly through another service that has a hook.
Claude seems to have some software developers explicitly preferring them, though a alot of the corporate money is on Microsoft and Microsoft leveraged Visual Studio and Github to become the business-friendly frontend, and sure, you can use Anthropic models too… Though Microsoft ultimately has control of what is reasonably available and how much each one costs. Anthropic has a shot but I could see Microsoft pivot to really mess with Anthropic. The one gap in Microsoft strategy is the “native AI” workflow where Claude Code has won hearts and minds, but it uses massively more tokens for frankly marginal or sometimes negative value compared to a more curated use in-editor.
OpenAI I see as the most exposed. Lot’s of data showing they are suffering from people being over the fad of going out of their way to use ChatGPT, especially since their phones have started embracing ‘default’ Chatbot. Software developers that are inclined to use LLM are also inclined to be pretty dismissive of anything other than either Anthropic or open weight models, depending on their inclination. Also Altman seemed the most agressive in committing to spending money they didn’t have, though all of them exhibit this to some extent.
I predict Microsoft ultimately pivots to in-house models and convinces the businesses to go that way. Apple may continue with Gemini or roll their own eventually. Anthropic currently has the stronger position between OpenAI and them, but I think you are right that both have risk of just being left behind.
Claude just kills the other models, it’s not close. Microsoft could ban claude extension from VSC tonight and ill start using command line Claude tomorrow. There’s just no comparison right now. Itd be like Microsoft trying to ban NVidia gpus from Windows, they’ll just lose.