[HN Gopher] IBM CEO says there is 'no way' spending on AI data c...
___________________________________________________________________
IBM CEO says there is 'no way' spending on AI data centers will pay
off
Author : nabla9
Score : 786 points
Date : 2025-12-02 18:10 UTC (1 days ago)
(HTM) web link (www.businessinsider.com)
(TXT) w3m dump (www.businessinsider.com)
| verdverm wrote:
| IBM CEO is steering a broken ship and it's not improved course,
| not someone who's words you should take seriously.
|
| 1. The missed the AI wave (hired me to teach watson law only to
| lay me off 5 wks later, one cause of the serious talent issues
| over there)
|
| 2. They bought most of their data center (companies), they have
| no idea about building and operating one, not at the scale the
| "competitors" are operating at
| nabla9 wrote:
| Everyone should read his argument carefully. Ponder them in
| silence and accept or reject them in based on the strength of
| the arguments.
| nyc_data_geek1 wrote:
| IBM can be a hot mess, and the CEO may not be wrong about
| this. These things are not mutually exclusive.
| scarmig wrote:
| His argument follows almost directly, and trivially, from his
| central premise: a 0% or 1% chance of reaching AGI.
|
| Yeah, if you assume technology will stagnate over the next
| decade and AGI is essentially impossible, these investments
| will not be profitable. Sam Altman himself wouldn't dispute
| that. But it's a controversial premise, and one that there's
| no particular reason to think that the... CEO of IBM would
| have any insight into.
| skeeter2020 wrote:
| then it seems like neither Sam Altman (pro) or IBM (proxy
| con) have credible or even really interesting or insightful
| evidence, theories ... even suggestions for what's likely
| to happen? i.e. We should stop listening to all of them?
| scarmig wrote:
| Agreed. It's essentially a giant gamble with a big
| payoff, and they're both talking their books.
| verdverm wrote:
| we don't need AGI to use all that compute
|
| we need businesses who are willing to pay for ai / compute
| at prices where both sides are making money
|
| I for one could 10x my AI usage if the results on my side
| pan out. Spending $100 on ai today has ROI, will 10x that
| still have ROI for me in a couple years? probably, I expect
| agentic teams to increase in capability and more of my
| work. Then the question is can I turn that increase
| productivity into more revenues (>$1000 / month, one more
| client would cover this and then some)
| PunchyHamster wrote:
| It's a very reasonable claim to make, but yes, average
| denizen of peanut gallery can spot this is a bubble from a
| mile way, doensn't need "insight" of napkin math done by
| some CEO that's not even in the industry.
|
| Tho he's probably not too happy that they sold the server
| business to Lenovo, could at least earn something on
| selling shovels
| malux85 wrote:
| Sorry that happened to you, I have been there too,
|
| When a company is hiring and laying off like that it's a
| serious red flag, the one that did that to me is dead now
| verdverm wrote:
| It was nearly 10 years ago and changed the course of my
| career for the better
|
| make lemonade as they say!
| duxup wrote:
| Is his math wrong?
| verdverm wrote:
| Are the numbers he's claiming accurate? They seem like big
| numbers pulled out of the air, certainly much large than the
| numbers we've actually seen committed to (not even deployed
| yet).
| observationist wrote:
| IBM CEO has sour grapes.
|
| IBM's HPC products were enterprise oriented slop products
| banked on their reputation, and the ROI torched their
| credibility when compute costs started getting taken seriously.
| Watson and other products got smeared into kafkaesque arbitrary
| branding for other product suites, and they were nearly all
| painful garbage - mobile device management standing out as a
| particularly grotesque system to use. Now, IBM lacks any
| legitimate competitive edge in any of the bajillion markets
| they tried to target, no credibility in any of their former
| flagship domains, and nearly every one of their products is hot
| garbage that costs too much, often by orders of magnitude,
| compared to similar functionality you can get from things like
| open source or even free software offered and serviced by other
| companies. They blew a ton of money on HPC before there was any
| legitimate reason to do so. Watson on Jeopardy was probably the
| last legitimately impressive thing they did, and all of their
| tech and expertise has been outclassed since.
| kenjackson wrote:
| I don't understand the math about how we compute $80b for a
| gigawatt datacenter. What's the costs in that $80b? I literally
| don't understand how to get to that number -- I'm not questioning
| its validity. What percent is power consumption, versus land
| cost, versus building and infrastructure, versus GPU, versus
| people, etc...
| wmf wrote:
| https://www.investing.com/news/stock-market-news/how-much-do...
| kenjackson wrote:
| Thanks. I should've read this before my last reply.
| georgeecollins wrote:
| First, I think it's $80b per 100 GW datacenter. The way you
| figure that out is a GPU costs $x and consumes y power. The $x
| is pretty well known, for example an H100 costs $25-30k and
| uses 350-700 watts (that's from Gemini and I didn't check my
| work). You add an infrastructure (i) cost to the GPU cost, but
| that should be pretty small, like 10% or less.
|
| So a 1 gigawatt data center uses n chips, where y _n = 1 GW. It
| costs = x_ i*n.
|
| I am not an expert so correct me please!
| kenjackson wrote:
| The article says, "Kirshna said that it takes about $80
| billion to fill up a one-gigawatt data center."
|
| But thanks for you insight -- I used your basic idea to
| estimate and for 1GW it comes to about $30b just for enough
| GPU power to pull 1GW. And of course that doesn't take into
| account any other costs.
|
| So $80b for a GW datacenter seems high, but it's within a
| small constant factor.
|
| That said, power seems like a weird metric to use. Although I
| don't know what sort of metric makes sense for AI (e.g., a
| flops counterpart for AI workloads). I'd expect efficiency to
| get better and GPU cost to go down over time (???).
|
| UPDATE: Below someone posted an article breaking down the
| costs. In that article they note that GPUs are about 39% of
| the cost. Using what I independently computed to be $30b --
| at 39% of total costs, my estimate is $77b per GW --
| remarkably close to the CEO of IBM. I guess he may know what
| he's talking about. :-)
| coliveira wrote:
| > power seems like a weird metric to use
|
| Because this technology changes so fast, that's the only
| metric that you can control over several data centers. It
| is also directly connected to the general capacity of data
| center, which is limited by available energy to operate.
| rahimnathwani wrote:
| And cooling capacity.
| pjdesno wrote:
| To expand on rahimnathwani's comment below - the big
| capital costs of a data center are land, the building
| itself, the power distribution and the cooling.
|
| You can get a lot of land for a million bucks, and it
| doesn't cost all that much to build what's basically a
| big 2-story warehouse, so the primary capital costs are
| power and cooling. (in fact, in some older estimates, the
| capital to build that power+cooling cost more per year
| than the electricity itself)
|
| My understanding is that although power and cooling
| infrastructure are long-lived compared to computers, they
| still depreciate faster than the building, so they
| dominate costs even more than the raw price would
| indicate.
|
| The state of the art in power and cooling is basically
| defined by the cost to feed X MW of computing, where that
| cost includes both capital and operation, and of course
| lower is better. That means that at a particular SOTA,
| and at an appropriate scale for that technology, the cost
| of the facility is a constant overhead on top of the cost
| of the equipment it houses. To a rough approximation, of
| course.
| zozbot234 wrote:
| 1 GW is not enough, you need at least 1.21 GW before the
| system begins to learn at a geometric rate and reaches AGI.
| wmf wrote:
| $8T may be too big of an estimate. Sure you can take OpenAI's
| $1.4T and multiply it by N but the other labs do not spend as
| much as OpenAI.
| bluGill wrote:
| This is likely correct overall, but it can still pay off in
| specific cases. However those are not blind investments they are
| targeted with a planned business model
| bluGill wrote:
| I question depreciation. those gpu's will be obsolete in 5 years,
| but will the newer be enough better as to be worth replacing them
| is an open question. cpu's stopped getting exponetially faster 20
| years ago, (they are faster but not the jumps the 1990s got)
| rlpb wrote:
| > those gpu's will be obsolete in 5 years, but will the newer
| be enough better as to be worth replacing them is an open
| question
|
| Doesn't one follow from the other? If newer GPUs aren't worth
| an upgrade, then surely the old ones aren't obsolete by
| definition.
| carlCarlCarlCar wrote:
| MTBF for data center hardware is short; DCs breeze through
| GPUs compared to even the hardest of hardcore gamers.
|
| And there is the whole FOMO effect to business purchases;
| decision makers will worry their models won't be as fast.
|
| Obsolete doesn't mean the reductive notion you have in mind,
| where theoretically it can still push pixels. Physics will
| burn them up, and "line go up" will drive demand to replace
| them.
| zozbot234 wrote:
| Source? Anecdotally, GPUs sourced from cryptomining were
| absolutely fine MTBF-wise. Zero apparent issues of wear-
| and-tear or any shortened lifecycle.
| dghlsakjg wrote:
| My bellybutton fluff, uninformed opinion is that heat
| cycling and effective cooling are probably a much more
| limiting factor.
|
| If you are running a gpu at 60C for months at a time, but
| never idling it (crypto use case), I would actually
| hazard a guess that it is better than cycling it with
| intermittent workloads due to thermal expansion.
|
| That of course presupposes effective, consistent cooling.
| brokenmachine wrote:
| Anecdotally, I killed two out of two that I was hobby-
| mining on for a couple of years. They certainly didn't
| sound like they would work forever.
| rlpb wrote:
| I don't see how MTBF is connected to obsoletion. My razors
| don't last long either. I buy replacement razors as
| required. But the model of razor I use doesn't obsolete.
| bluGill wrote:
| There is the question - will they be worth the upgrade?
| Either because they are that much faster, or that much more
| energy efficient. (and also assuming you can get them,
| unobtainium is worth that what you have).
|
| Also a nod to the other reply that suggests they will wear
| out in 5 years. I cannot comment on if that is correct but it
| is a valid worry.
| lo_zamoyski wrote:
| > those gpu's will be obsolete in 5 years, but will the newer
| be enough better as to be worth replacing them
|
| Then they won't be obsolete.
| Negitivefrags wrote:
| I recently compared performance per dollar for CPUs and GPUs on
| benchmarks for GPUs today vs 10 years ago, and suprisingly,
| CPUs had _much_ bigger gains. Until I saw that for myself, I
| thought exactly the same thing as you.
|
| It seems shocking given that all the hype is around GPUs.
|
| This probably wouldn't be true for AI specific workloads
| because one of the other things that happened there in the last
| 10 years was optimising specifically for math with lower size
| floats.
| selectodude wrote:
| That makes sense. Nvidia owns the market and is capturing all
| the surplus value. They're competing with themselves to
| convince you to buy a new card.
| PunchyHamster wrote:
| It's coz of use cases. Consumer-wise, if you're gamer, CPU
| just needs to be at "not the bottleneck" level for majority
| of games as GPU does most of the work when you start
| increasing resolution and details.
|
| And many pro-level tools (especially in media space) offload
| to GPU just because of so much higher raw compute power.
|
| So, basically, for many users the gain in performance won't
| be as visible in their use cases
| maxglute wrote:
| I think real issue is current costs / demand = Nvidia gouging
| GPU price that costs for hardware:power consumption is 70:20
| instead of 50:40 (10 for rest of datacenter). Reality is gpus
| are serendipidous path dependent locked from gaming -> mining.
| TPUs are more power efficient, if bubble pops and demand for
| compute goes down, Nvidia + TMSC will still be around, but
| nexgen AI first bespoke hardware premium will revert towards
| mean and we're looking at 50% less expensive hardware (no AI
| race scarcity tax, i.e. 75% Nvidia margins) that use 20% less
| power / opex. All of a sudden existing data centers becomes not
| profitable stranded assets even if they can be stretched past 5
| years.
| levocardia wrote:
| It's not that hard to see the old GPUs being used e.g. for
| inference on cheaper models, or sub-agents, or mid-scale
| research runs. I bet Karpathy's $100 / $1000 nanochat models
| will be <$10 / <$100 to train by 2031
| qwertyuiop_ wrote:
| The question no one seems to be answering is what would be the
| EOL for these newer GPUs that are being churned out of NVDIA ?
| What % annual capital expenditures is refresh of GPUs. Will they
| be perpetually replaced as NVIDIA comes up with newer
| architectures and the AI companies chase the proverbial lure ?
| scotty79 wrote:
| I think the key to replacing is power efficiency. If Nvidia is
| not able to make GPUs that are cheaper to run than previous
| generation theres no point for replacing previous generation.
| Time doesn't matter.
| parapatelsukh wrote:
| The spending will be more than paid off since the taxpayer is the
| lender of last resort There's too many funny names in the
| investors / creditors a lot of mountains in germany and similar
| ya know
| myaccountonhn wrote:
| > In an October letter to the White House's Office of Science and
| Technology Policy, OpenAI CEO Sam Altman recommended that the US
| add 100 gigawatts in energy capacity every year.
|
| > Krishna also referenced the depreciation of the AI chips inside
| data centers as another factor: "You've got to use it all in five
| years because at that point, you've got to throw it away and
| refill it," he said.
|
| And people think the climate concerns of AI are overblown.
| Currently US has ~1300 GW of energy capacity. That's a huge
| increase each year.
| jamesbelchamber wrote:
| If we moron our way to large-scale nuclear and renewable energy
| rollout however..
| mywittyname wrote:
| I highly doubt this will happen. It will be natural gas all
| the way, maybe some coal as energy prices will finally make
| it profitable again.
| emodendroket wrote:
| If for no other reason than they're actively attacking
| renewable capacity even amid surging demand
| mrguyorama wrote:
| This admin has already killed as much solar and wind and
| battery as it can.
|
| The only large scale rollout will be payment platforms that
| will allow you to split your energy costs into "Five easy
| payments"
| tehjoker wrote:
| There's a reason Trump is talking about invading Venezuela
| (hint: it's because they have the largest oil deposits).
| venturecruelty wrote:
| Guess who's going to pay nothing for power? Hint: it's not
| you, and it's not me.
| ryandrake wrote:
| LOL, maybe Sam Altman can fund those power plants. Let me
| guess: He'd rather the public pay for it, and for him to
| benefit/profit from the increased capacity.
| intrasight wrote:
| Big tech is going to have to fund the plants and probably
| transmission. Because the energy utilities have a decades
| long planning horizon for investments.
|
| Good discussion about this in recent Odd Lots podcast.
| kelnos wrote:
| I've read a bunch of the opposite: a lot of secret deals
| between tech companies and utilities, where when details
| come out, we find that regular ratepayers are going to be
| paying a decent chunk of the cost.
| intrasight wrote:
| That was discussed in the Odd Lots episode as well. But
| that can only happen in unregulated markets.
| Capricorn2481 wrote:
| Good discussion? This is a Bloomberg podcast with ads from
| Palantir explicitly telling us AI is not here to replace
| any of us. They do everything they can to avoid the topic
| of what the cost is to regular people.
|
| Data centers are built in people's backyards without their
| permission, wreck the values of their home, and then
| utility companies jack up their price to compensate for the
| extra strain on the grid. So the residents have to pay for
| Big Tech but get no share of the profits. How this podcast
| does a whole episode on data centers and the electricity
| grid and doesn't talk about what's actually happening to
| people, well, that would be surprising if I didn't know
| where it came from.
| coliveira wrote:
| Scam Altman wants the US to build a lot of energy plants so
| that the country will pay the costs and OpenAI will have the
| profits of using this cheap energy.
| throwaway31131 wrote:
| 100GW per year is not going to happen.
|
| The largest plant in the world is the Three Gorges Dam in China
| at 22GW and it's off the scales huge. We're not building the
| equivalent of four of those every year.
|
| Unless the plan is to power it off Sam Altman's hot air. That
| could work. :)
|
| https://en.wikipedia.org/wiki/List_of_largest_power_stations
| bpicolo wrote:
| Amazing that 4 of the top 5 are renewables in China.
| mrexroad wrote:
| > As of 2025, The Medog Dam, currently under construction
| on the Yarlung Tsangpo river in Medog County, China,
| expected to be completed by 2033, is planned to have a
| capacity of 60 GW, three times that of the Three Gorges
| Dam.[3]
|
| Meanwhile, "drill baby drill!"
| nrhrjrjrjtntbt wrote:
| Can run the UK and have capacity left over that, if
| considered alone, would be worlds highest in current year
| 2025.
| tempest_ wrote:
| Not really that surprising.
|
| Authoritarianism has its draw backs obviously but one of
| its more efficient points is it can get things done if the
| will is at the top. Since China doesnt have a large
| domestic oil supply like the US it is a state security
| issue to get off oil as fast as possible.
| SalmoShalazar wrote:
| It's become clear that some form of top down total
| technocratic control like China has implemented is
| essential for pushing humanity forward.
| krupan wrote:
| Does that cout the dams that flood valleys and displace
| thousands of people, plants, and animals from their homes?
| mbesto wrote:
| Because its cheaper. That's it.
| octoberfranklin wrote:
| Gigawatts? Pshaw. We have SamaWatts.
| snake_doc wrote:
| China added ~90GW of utility solar per year in last 2 years.
| There's ~400-500GW solar+wind under construction there.
|
| It is possible, just may be not in the U.S.
|
| Note: given renewables can't provide base load, capacity
| factor is 10-30% (lower for solar, higher for wind), so
| actual energy generation will vary...
| kelnos wrote:
| > _It is possible_
|
| Sure, GP was clearly talking about the US, specifically.
|
| > _just may be not in the U.S._
|
| Absolutely 100% not possible in the US. And even if we
| could do it, I'm not convinced it would be prudent.
| tim333 wrote:
| If you really had to you'd probably run turbines off
| natural gas but it's not a good idea environmentally.
| locallost wrote:
| I am a huge proponent of renewables, but you cannot compare
| their capacity in GW with other energy sources because
| their output is variable and not always maximal. To
| realistically get 100GW in solar you would need at least
| 500GW of panels.
|
| On the other hand, I think we will not actually need 100GW
| of new installations because capacity can be acquired by
| reducing current usage by making it more efficient. The
| term negawatt comes to mind. A lot of people are still in
| the stone age when it comes to this even though it was
| demonstrated quite effectively by reduced gas use in the US
| after the oil crisis in the 70s. Which basically recovered
| to the pre crisis levels only recently.
|
| High gas prices caused people to use less and favor
| efficiency. The same thing will happen with electricity and
| we'll get more capacity. Let the market work.
| victor106 wrote:
| > China added ~90GW of utility solar per year in last 2
| years. There's ~400-500GW solar+wind under construction
| there.
|
| Source?
| ikesau wrote:
| I'm not sure about the utility/non-utility mix, but
| according to IRENA it was actually ~500GW of added
| capacity in 2023 and 2024.
|
| https://ourworldindata.org/grapher/installed-solar-pv-
| capaci...
| baq wrote:
| New datacenters are being planned next to natgas hubs for a
| reason. They're being designed with on site gas turbines as
| primary electricity sources.
| robocat wrote:
| Natural gas production has peaked:
| https://www.eia.gov/todayinenergy/detail.php?id=66564 (see
| second graph)
|
| Planning gas turbines doesn't help much if gas prices are
| about to increase due to lack of new supply.
|
| New Zealand put in peaker gas turbines, but is running out
| of gas to run them, so its electricity market is gonna be
| fucked in a dry year (reduced water from weather for
| hydro): * Domestic gas production is
| forecast to fall almost 50 per cent below projections made
| just three years ago. * In a dry year, New Zealand
| no longer has enough domestic gas to [both] fully operate
| existing thermal generation and meet industrial gas demand.
|
| https://www.mbie.govt.nz/dmsdocument/31240-factsheet-
| challen...
| Octoth0rpe wrote:
| > Krishna also referenced the depreciation of the AI chips inside
| data centers as another factor: "You've got to use it all in five
| years because at that point, you've got to throw it away and
| refill it," he said
|
| This doesn't seem correct to me, or at least is built on several
| shaky assumptions. One would have to 'refill' your hardware if:
|
| - AI accelerator cards all start dying around the 5 year mark,
| which is possible given the heat density/cooling needs, but
| doesn't seem all that likely.
|
| - Technology advances such that only the absolute newest cards
| can be used to run _any_ model profitably, which only seems
| likely if we see some pretty radical advances in efficiency.
| Otherwise, it seems like assuming your hardware is stable after 5
| years of burn in, you could continue to run older models on that
| hardware at only the cost of the floorspace/power. Maybe you need
| new cards for new models for some reason (maybe a new fp format
| that only new cards support? some magic amount of ram? etc), but
| it seems like there may be room for revenue via older/less
| capable models at a discounted rate.
| mcculley wrote:
| But if your competitor is running newer chips that consume less
| power per operation, aren't you forced to upgrade as well and
| dispose of the old hardware?
| Octoth0rpe wrote:
| Sure, assuming the power cost reduction or capability
| increase justifies the expenditure. It's not clear that that
| will be the case. That's one of the shaky assumptions I'm
| referring to. It may be that the 2030 nvidia accelerators
| will save you $2000 in electricity per month per rack, and
| you can upgrade the whole rack for the low, low price of
| $800,000! That may not be worth it at all. If it saves you
| $200k/per rack or unlocks some additional capability that a
| 2025 accelerator is incapable of and customers are willing to
| pay for, then that's a different story. There are a ton of
| assumptions in these scenarios, and his logic doesn't seem to
| justify the confidence level.
| trollbridge wrote:
| A typical data centre is $2,500 per year per kW load
| (including overhead, hvac and so on).
|
| If it costs $800,000 to replace the whole rack, then that
| would pay off in a year if it reduces 320 kW of
| consumption. Back when we ran servers, we wouldn't assume
| 100% utilisation but AI workloads do do that; normal server
| loads would be 10kW per rack and AI is closer to 100. So
| yeah, it's not hard to imagine power savings of 3.2 racks
| being worth it.
| Octoth0rpe wrote:
| Thanks for the numbers! Isn't it more likely that the
| amount of power/heat generated per rack will stay
| constant over each upgrade cycle, and the upgrade simply
| unlocks a higher amount of service revenue per rack?
| PunchyHamster wrote:
| Not in the last few years. CPUs went from ~200W TDP to
| 500W.
|
| And they went from zero to multiple GPUs per server. Tho
| we might hit "the chips can't be bigger and the cooling
| can't get much better" point there.
|
| The usage would be similar if it was say a rack filled
| with servers full of bulk storage (hard drives generally
| keep the power usage similar while growing storage).
|
| But CPU/GPU wise, it's just bigger chips/more chiplets,
| more power.
|
| I'd imagine any flattening might be purely because "we
| have DC now, re-building cooling for next gen doesn't
| make sense so we will just build servers with similar
| power usage as previously", but given how fast AI pushed
| the development it might not happen for a while.
| toast0 wrote:
| > Isn't it more likely that the amount of power/heat
| generated per rack will stay constant over each upgrade
| cycle,
|
| Power density seems to grow each cycle. But eventually
| your DC hits power capacity limits, and you have to leave
| racks empty because there's no power budget.
| bleepblap wrote:
| I've been in university research computing for 15 years,
| so large enough (~900 nodes) we need a dedicated DC, but
| not at the same scale as others around here.
|
| Our racks are provisioned so that there are two
| independent rails, which each can support 7kW. Up until
| the last few years, this was more than enough power. As
| CPU TDPs increased, we started to need to do things like
| not connect some nodes to both redundant rails or mix
| disk servers into compute racks to keep under 7kW/rack.
|
| A single HGX B300 box has 6x6kW power supplies. Even
| before we get to paying the (high) power bills, it's
| going to cost a small fortune to just update the racks,
| power distribution units, UPS, etc... to even be able to
| support more than a handful of those things
| maxglute wrote:
| Demand/suppy economics is not so hypothetical.
|
| Illustration numbers: AI demand premium = $150 hardware
| with $50 electricity. Normal demand = $50 hardware with $50
| electricity. This is Nvidia margins @75% instead of 40%.
| CAPEX/OPEX is 70%/20% hardware/power instead of customary
| 50%/40%.
|
| If bubble crashes, i.e. AI demand premium evaporates, we're
| back at $50 hardware and $50 electricity. Likely $50
| hardware and $25 electricity if hardware improves. Nvdia
| back to 30-40% margins, operators on old hardware stuck
| with stranded assets.
|
| The key thing to understand is current racks are sold at
| grossly inflated premiums right now, scarcity pricing/tax.
| If the current AI economic model doesn't work then
| fundmentally that premium goes away and subsequent build
| outs are going to be costplus/commodity pricing = capex
| discounted by non trivial amounts. Any breakthroughs in
| hardware, i.e. TPU compute efficiency would stack opex
| (power) savings. Maybe by year 8, first gen of data centers
| are still depreciated to $80 hardware + $50 power vs new
| center @ $50 hardware + $25 power. That old data center is
| a massive write-down because it will generate less revenue
| than it costs to amoritize.
| overfeed wrote:
| > Sure, assuming the power cost reduction or capability
| increase justifies the expenditure. It's not clear that
| that will be the case.
|
| Share price is a bigger consideration than any +/-
| differences[1] between expenditure vs productivity delta.
| GAAP allows some flexibility in how servers are
| depreciated, so depending on what the company wants to
| signal to shareholders (investing in infra for futur
| returns vs curtailing costs), it may make sense to shorten
| or lengthen depreciation time regardless of the actual TCOO
| keep/refresh cost comparisons.
|
| 1. Hypothetical scenario: a hardware refresh costs $80B,
| actual performance increase is only worth $8B, but the
| share price increases the value of org's holding of its own
| shares by $150B. As a CEO/CFO, which action would you
| recommend- without even considering your own bonus that's
| implicitly or explicitly tied to share price performance.
| HWR_14 wrote:
| It depends on how much profit you are making. As long as you
| can still be profitable on the old hardware you don't have to
| upgrade.
| AstroBen wrote:
| That's the thing though: a competitor with better power
| efficiency can undercut you and take your customers
| tzs wrote:
| Or they could charge the same as you and make more money
| per customer. If they already have as many customers as
| they can handle doing that may be better than buying
| hardware to support a larger number of customers.
| abraae wrote:
| It's just the same dynamic as old servers. They still work fine
| but power costs make them uneconomical compared to latest tech.
| acdha wrote:
| It's far more extreme: old servers are still okay on I/O, and
| memory latency, etc. won't change that dramatically so you
| can still find productive uses for them. AI workloads are
| hyper-focused on a single type of work and, unlike most
| regular servers, a limiting factor in direct competition with
| other companies.
| matt-p wrote:
| I mean you could use training GPUs for inference right?
| That would be use case number 1 for a 8 * a100 box in a
| couple of years. It can also be used for non IO limited
| things like folding proteins or other 'scientific' use
| cases. Push comes to shove im sure an old A100 will run
| crysis.
| oblio wrote:
| All those use cases would probably use up 1% of the
| current AI infrastructure, let alone ahat they're
| planning to build.
|
| Yeah, just like gas, possible uses will expand if AI
| crashes out, but:
|
| * will these uses cover, say, 60% of all this infra?
|
| * will these uses scale up to use that 60% within the
| next 5-7 years, while that hardware is still relevant and
| fully functional?
|
| Also, we still have railroad tracks from the 1800s rail
| mania that were never truly used to capacity and dot com
| boom dark fiber that's also never been used fully, even
| with the internet growing 100x since. And tracks and
| fiber don't degrade as quickly as server hardware and
| especially GPUs.
| physicsguy wrote:
| > Push comes to shove im sure an old A100 will run
| crysis.
|
| They don't have video out ports!
| fulafel wrote:
| Just like laptop dGPUs.
| zppln wrote:
| I'm a little bit curious about this. Where do all the
| hardware from the big tech giants usually go once they've
| upgraded?
| wmf wrote:
| Some is sold on the used market; some is destroyed. There
| are plenty of used V100 and A100 available now for example.
| trollbridge wrote:
| I used (relatively) ancient servers (5-10 years in age)
| because their performance is completely adequate; they just
| use slightly more power. As a plus it's easy to buy spare
| parts, and they run on DDR3, so I'm not paying the current
| "RAM tax". I generally get such a server, max out its RAM,
| max out its CPUs and put it to work.
| taneq wrote:
| Same, the bang for buck on a 5yo server is insane. I got
| an old Dell a year ago (to replace our 15yo one that
| finally died) and it was $1200 AUD for a maxed out
| recently-retired server with 72TB of hard drives and
| something like 292GB of RAM.
| PunchyHamster wrote:
| Just not _too_ old. Easy to get into "power usage makes
| it not worth it" for any use case when it runs 24/7
| dpe82 wrote:
| Maybe? The price difference on newer hardware can buy a
| _lot_ of electricity, and if you aren 't running stuff at
| 100% all the time the calculation changes again. Idle
| power draw on a brand new server isn't significantly
| different from one that's 5 years old.
| monster_truck wrote:
| Seriously. 24/7 adds up faster than most realize!
|
| The idle wattage per module has shrunk from 2.5-3W down
| to 1-1.2 between DDR3 & DDR5. Assuming a 1.3W difference
| (so 10.4W for 8760 hours), a DDR3 machine with 8 sticks
| would increase your yearly power consumption by almost 1%
| (assuming avg 10,500kWh/yr household)
|
| That's only a couple dollars in most cases but the gap is
| only larger in every other instance. When I upgraded from
| Zen 2 to Zen 3 it was able to complete the same workload
| just as fast with half as many cores while pulling over
| 100W less. Sustained 100% utilization barely even heats a
| room effectively anymore!
| nish__ wrote:
| Wake on LAN?
| darkwater wrote:
| Then you cannot enjoy some very useful and used home
| server functions like home automation or NVR.
| blackenedgem wrote:
| The one thing to be careful with Zen 2 onwards is that if
| your server is going to be idling most of the time then
| the majority of your power usage comes from the IO die.
| Quite a few times you'd be better off with the "less
| efficient" Intel chips because they save 10-20 Watts when
| doing nothing.
| ThatPlayer wrote:
| A similar one I just ran into: my Framework Desktop was
| idling @ 5W more than other reported numbers. Issue
| turned out to be the 10 year old ATX PSU I was using.
| taneq wrote:
| To be clear, this server is very lightly loaded, it's
| just running our internal network services (file server,
| VPN/DNS, various web apps, SVN etc.) so it's not like
| we're flogging a room full of GeForce 1080Ti cards
| instead of buying a new 4090Ti or whatever. Also it's at
| work so it doesn't impact the home power bill. :D
| q3k wrote:
| In-house hyperscaler stuff gets shredded, after every
| single piece of flash storage gets first drilled through
| and every hard drive gets bent by a hydraulic press. Then
| it goes into the usual e-waste recycling stream (ie. gets
| sent to poor countries where precious metals get extracted
| by people with a halved life expectancy).
|
| Off-the-shelf enterprise gear has a chance to get a second
| life through remarketing channels, but much of it also gets
| shredded due to dumb corporate policies. There are stories
| of some companies refusing to offload a massive decom onto
| the second hand market as it would actually cause a crash.
| :)
|
| It's a very efficient system, you see.
| oblio wrote:
| Similar to corporate laptops where due to stupid
| policies, for most BigCos you can't really buy or
| otherwise get a used laptop, even as the former corporate
| used of said laptop.
|
| Super environmentally friendly.
| dogman144 wrote:
| Manipulating this for creative accounting seems to be the
| root of Michael Burry's argument, although I'm not fluent
| enough in his figures to map here. But, commenting that it
| interesting to see IBM argue a similar case (somewhat), or
| comments ITT hitting the same known facts, in light of
| Nvidia's counterpoints to him.
| tim333 wrote:
| Burry just did his first interview for many years
| https://youtu.be/nsE13fvjz18?t=265
|
| with Michael Lewis, about 30 mins long. Highlights - he
| thinks we are near the top, his puts are for two years
| time. If you go long he suggests healthcare stocks. He's
| been long gold some years, thinks bitcoin is dumb. Thinks
| this is dotcom bubble #2 except instead of pro investors
| it's mostly index funds this time. Most recent headlines
| about him have been bad reporting.
| Havoc wrote:
| That could change with a power generation breakthrough. If
| power is very cheap then running ancient gear till it falls
| apart starts making more sense
| overfeed wrote:
| Power consumption is only part of the equation. More
| efficient chips => less heat => lower cooling costs and/or
| higher compute density in the same space.
| nish__ wrote:
| Solution: run them in the north. Put a server in the
| basement of every home in Edmonton and use the excess
| heat to warm the house.
| rgmerk wrote:
| Hugely unlikely.
|
| Even if the power is free you still need a grid connection
| to move it to where you need it, and, guess what, the US
| grid is bursting at the seams. This is not just due to data
| center demand; it was struggling to cope with the
| transition away from coal well before that point.
|
| You also can't buy a gas turbine for love nor money at the
| moment, and they're not ever going to be free.
|
| If you plonked massive amounts of solar panels and
| batteries in the Nevada desert, that's becoming cheap but
| it ain't free, particularly as you'll still need gas backup
| for a string of cloudy days.
|
| If you think SMRs are going to be cheap I have a bridge to
| sell you, you're also not going to build them right next to
| your data centre because the NRC won't let you.
|
| So that leaves fusion or geothermal. Geothermal is not
| presently "very cheap" and fusion power has not been
| demonstrated to work at any price.
| PunchyHamster wrote:
| Eh, not exactly. If you don't run CPU at 70%+ the rest of the
| machine isn't that much more inefficient that model
| generation or two behind.
|
| It used to be that new server could use half power of the old
| one at idle but vendors figured out that servers also need
| proper power management a while ago and it is much better.
|
| Last few gens increase could be summed up to "low % increase
| in efficiency, with TDP, memory channels and core count
| increase".
|
| So for loads not CPU bound the savings on newer gen aren't
| nearly worth it to replace it, and for bulk storage the CPU
| power usage is even smaller part
| matt-p wrote:
| Definitely single thread performance and storage are the
| main reasons not to use an old server. A 6 year old server
| didn't have nvme drives, so SATA SSD at best. That's a
| major slow down if disk is important.
|
| Aside from that there's no reason to not use a dual socket
| server from 5 years ago instead of a single socket server
| of today. Power and reliability maybe not as good.
| zozbot234 wrote:
| NVMe is just a different form factor for what's
| essentially a PCIe connection, and adapters are widely
| available to bridge these formats. Surely old servers
| will still support PCIe?
| knowitnone3 wrote:
| that was then. now, high-end chips are reaching 4,3,2 nm.
| power savings aren't that high anymore. what's the power
| saving going from 4 to 2nm?
| monster_truck wrote:
| +5-20% clockspeed at 5-25% lower voltages (which has been
| and continues to be the trend) add up quick from gen to
| gen, nevermind density or ipc gains.
| baq wrote:
| We can't really go lower on voltage anymore without a
| very significant change in the materials used. Silicon
| band gap yadda yadda.
| m00x wrote:
| LambdaLabs is still making money off their Tesla V100s,
| A100s, and A6000s. The older ones are cheap enough to run
| some models and very cheap, so if that's all you need, that's
| what you'll pick.
|
| The V100 was released in 2017, A6000 in 2020, A100 in 2021.
| mbesto wrote:
| > They still work fine but power costs make them uneconomical
| compared to latest tech.
|
| That's not necessarily the driving financial decision, in
| fact I'd argue company's with data center hardware purchases
| barely look at this number. It's more simple than that -
| their support runs out and its cheaper to buy a new piece of
| hardware (that IS more efficient) because the hardware
| vendors make extended support inordinately expensive.
|
| Put yourselves in the shoes of a sales person at Dell selling
| enterprise server hardware and you'll see why this model
| makes sense.
| dmoy wrote:
| 5 years is maybe referring to the accounting schedule for
| depreciation on computer hardware, not the actual useful
| lifetime of the hardware.
|
| It's a little weird to phrase it like that though because
| you're right it doesn't mean you _have_ to throw it out. Idk if
| this is some reflection of how IBM handles finance stuff or
| what. Certainly not all companies throw out hardware the minute
| they can 't claim depreciation on it. But I don't know the
| numbers.
|
| Anyways, 5 years is an infection point on numbers. Before 5
| years you get depreciation to offset some cost of running.
| After 5 years, you do not, so the math does change.
| skeeter2020 wrote:
| that is how the investments are costed though, so makes sense
| when we're talking return on investment, so you can compare
| with alternatives under the same evaluation criteria.
| austin-cheney wrote:
| It's not about assumptions on the hardware. It's about the
| current demands for computation and expected growth of business
| needs. Since we have a couple years to measure against it
| should be extremely straightforward to predict. As such I have
| no reason to doubt the stated projections.
| andix wrote:
| Failure rates also go up. For AI inference it's probably not
| too bad in most cases, just take the node offline and re-
| schedule the jobs to other nodes.
| 9cb14c1ec0 wrote:
| > Since we have a couple years to measure against
|
| Trillion pound baby fallacy.
| lumost wrote:
| Networking gear was famously overbought. Enterprise hardware
| is tricky as there isn't much of a resale market for this
| gear once all is said and done.
|
| The only valid use case for all of this compute which could
| reasonably replace ai is btc mining. I'm uncertain if the
| increased mining capacity would harm the market or not.
| piva00 wrote:
| BTC mining on GPUs haven't been profitable for a long time,
| it's mostly ASICs, GPUs can be used for some other altcoins
| which makes the potential market for used previous
| generation GPUs even smaller.
| blackenedgem wrote:
| That assumes you can add compute in a vacuum. If your
| altcoin receives 10x compute then it becomes 10x more
| expensive to mine.
|
| That only scales if the coin goes up in value due to the
| extra "interest". Which isn't impossible but there's a
| limit, and it's more often to happen to smaller coins.
| rzerowan wrote:
| I think its illustrative to consider the previous computation
| cycle ala Cryptomining. Which passed through a similar
| lifecycle with energy and GPU accelerators.
|
| The need for cheap wattage forced the operations to arbitrage
| the where location for the cheapest/reliable existing supply -
| there rarely was new buildout as the cost was to be reimbursed
| by the coins the miningpool recovered.
|
| For the chip situation caused the same apprecaition in GPU
| cards with periodic offloading of cards to the secondary market
| (after wear and tear) as newer/faster/more efficient cards came
| out until custom ASICs took over the heavy lifting, causing the
| GPU card market to pivot.
|
| Similarly in the short to moedium term the uptick of custo
| ASICs like with Google TPU will definately make a dent in bot
| cpex/opex and potentially also lead to a market with used GPUs
| as ASICs dominate.
|
| So for GPUs i can certainly see the 5 year horizon making a
| impact in investment decisions as ASICs proliferate.
| coliveira wrote:
| There is the opportunity cost of using a whole datacenter to
| house ancient chips, even if they're still running. You're
| thinking like a personal use chip which you can run as long as
| it is non-defective. But for datacenters it doesn't make sense
| to use the same chips for more than a few years and I think 5
| years is already stretching their real shelf life.
| lithos wrote:
| It's worse than that in reality, AI chips are on a two year
| cadence for backwards compatibility (NVIDIA can basically
| guarantee it, and you probably won't be able to pay real AI
| devs enough to stick around to make hardware work arounds). So
| their accounting is optimistic.
| Patrick_Devine wrote:
| 5 years is normal-ish depreciation time frame. I know they
| are gaming GPUs, but the RTX 3090 came out ~ 4.5 years before
| the RTX 5090. The 5090 has double the performance and 1/3
| more memory. The 3090 is still a useful card even after 5
| years.
| cubefox wrote:
| RTX 3090 MSRP: 1500 USD
|
| RTX 5090 MSRP: 2000 USD
| rlupi wrote:
| Do not forget that we're talking about supercomputers. Their
| interconnect makes machines not easily fungible, so even a low
| reduction in availability can have dramatic effects.
|
| Also, after the end of the product life, replacement parts may
| no longer be available.
|
| You need to get pretty creative with repair & refurbishment
| processes to counter these risks.
| slashdave wrote:
| 5 years is long, actually. This is not a GPU thing. It's
| standard for server hardware.
| bigwheels wrote:
| Because usually it's more efficient for companies to retire
| the hardware and put in new stuff.
|
| Meanwhile, my 10-15 year old server hardware keeps chugging
| along just fine in the rack in my garage.
| XorNot wrote:
| Sample size of 1 though. It's like how I've had hard disks
| last a decade, but a 100 node Hadoop cluster had 3 die per
| week after a few years.
| snuxoll wrote:
| Spinning rust and fans are the outliers when it comes to
| longevity in compute hardware. I've had to replace a disk
| or two in my rack at home, but at the end of the day the
| CPUs, RAM, NICs, etc. all continue to tick along just
| fine.
|
| When it comes to enterprise deployments, the lifecycle
| always revolves around price/performance. Why pay for old
| gear that sucks up power and runs 30% slower than the new
| hotness, after all!
|
| But, here we are, hitting limits of transistor density.
| There's a reason I still can't get 13th or 14th gen
| poweredge boxes for the price I paid for my 12th gen ones
| years ago.
| AdrianB1 wrote:
| I thought the same until I calculated that newer hardware
| consumes a few times less energy and for something running
| 24x7 that adds up quite a bit (I live in Europe, energy is
| quite expensive).
|
| So my homelab equipment is just 5 years old and it will get
| replaced in 2-3 years with something even more power
| efficient.
| tharkun__ wrote:
| Where in Europe?
|
| Asking coz I just did a quick comparison and it seems to
| depend but for comparison I have a really old AMD Athlon
| "e" processor (like literally September 2009 is when it
| came out according to some quick Google search, tho I
| probably bought it a few months later than that but still
| ...) that runs at ~45W TDP. In idle conditions, it
| typically consumes around 10 to 15 watts (internet
| wisdom, not kill-a-watt-wisdom).
|
| Some napkin math says it would cost me about 40 years
| worth of amortization to replace this at my current power
| rates for this system. So why would I replace it? And
| even with some EU countries' power rates we seem to be at
| 5-10 years amortization upon replacement. I've been
| running this motherboard, CPU + RAM combo for ~15 years
| now it seems, replacing only the hard drives every ~3
| years. And the tower it's in is about 25 years old.
|
| Oh I forgot, I think I had to buy two new CR2032
| batteries during those years (CMOS battery).
|
| Now granted, this processor can basically do "nothing" in
| comparison to a current system I might buy. But I also
| don't need more for what it does.
| z0mghii wrote:
| Well if you have a system that does "nothing" it's hard
| to argue to replace it
| bbarnett wrote:
| "Nothing" from parent was a comparison. Doesn't mean
| their system is idle.
|
| However many systems are mostly idle. A file server often
| doesn't use much cpu. It often isn't even serving
| anything.
| thehappypm wrote:
| Energy is very cheap for data centers. have you ever
| looked up wholesale energy rates? It's like a cent per
| kilowatt hour.
| prmoustache wrote:
| I guess you did the math but wouldn't it be more
| effective to spend the money on solar panels instead of
| replacing the computer hardware?
| slashdave wrote:
| More than that. The equipment is depreciated on a 5 year
| schedule on the company balance sheet. It actually costs
| nothing to discard it.
| johncolanduoni wrote:
| There's no marginal tax impact of discarding it or not
| after 5 years - if it was still net useful to keep it
| powered, they would keep it. Depreciation doesn't demand
| you dispose of or sell the item to see the tax benefit.
| mattmaroon wrote:
| No but it tips the scales. If the new hardware is a
| little more efficient, but perhaps not so much so that
| you would necessarily replace it, the ability to
| appreciate the new stuff, but not the old stuff might tip
| your decision
| rsynnott wrote:
| "Just fine". Presumably you're not super-concerned with the
| energy costs? People who run data centres pretty much
| _have_ to be.
| jfindper wrote:
| There are several significant differences between your
| garage server and a data center.
| matt-p wrote:
| 5 years is a long time for GPUs maybe but normal servers have
| 7 year lifespans in many cases fwiw.
|
| These GPUs I assume basically have potential longevity issues
| due to the density, if you could cool it really really well I
| imagine no problem.
| atherton94027 wrote:
| > normal servers have 7 year lifespans in many cases fwiw
|
| Eight years if you use Hetzner servers!
| slashdave wrote:
| Normal servers are rarely run flat-out. These GPUs are
| supposed to be run that way. So, yeah, age is going to be a
| problem, as will cooling.
| loeg wrote:
| It's option #2. But 5 year deprecation is optimistic; 2-3 years
| is more realistic.
| more_corn wrote:
| When you operate big data centers it makes sense to refresh
| your hardware every 5 years or so because that's the point at
| which the refreshed hardware is enough better to be worth the
| effort and expense. You don't HAVE to, but its more cost
| effective if you do. (Source, used to operate big data centers)
| darth_avocado wrote:
| Isn't that what Michael Burry is complaining about? That five
| years is actually too generous when it comes to depreciation of
| these assets and that companies are being too relaxed with that
| estimate. The real depreciation is more like 2-3 years for
| these GPUs that cost tens of thousands of dollars a piece.
|
| https://x.com/michaeljburry/status/1987918650104283372
| duped wrote:
| How different is this from rental car companies changing over
| their fleets? I don't know, this is a genuine question. The
| cars cost 3-4x as much and last about 2x as far as I know,
| and the secondary market is still alive.
| afavour wrote:
| Rental car companies aren't offering rentals at deep
| discount to try to kickstart a market.
|
| It would be much less of a deal if these companies were
| profitable and could cover the costs of renewing hardware,
| like car rental companies can.
| cjonas wrote:
| I think it's a bit different because a rental car generates
| direct revenue that covers its cost. These GPU data centers
| are being used to train models (which themselves quickly
| become obsolete) and provide inference at a loss. Nothing
| in the current chain is profitable except selling the GPUs.
| sho wrote:
| > and provide inference at a loss
|
| You say this like it's some sort of established fact. My
| understanding is the exact opposite and that inference is
| plenty profitable - the reason the companies are
| perpetually in the red is that they're always heavily
| investing in the next, larger generation.
|
| I'm not Anthropic's CFO so i can't really prove who's
| right one way or the other, but I will note that your
| version relies on everyone involved being _really, really
| stupid_.
| darkwater wrote:
| The current generation of today was the next generation
| of yesterday. So, unless the services sold on inference
| can cover the cost of inference + training AND gain
| money, they are still operating at loss.
| elktown wrote:
| "like it's some sort of established fact" -> "My
| understanding"?! a.k.a pure speculation. Some of you AI
| fans really need to read your posts out loud before
| posting them.
| teodosin wrote:
| You misread the literal first snippet you quoted. There's
| no contradiction in what you replied to.
| elktown wrote:
| No?
| rvba wrote:
| Or just "everyone" being greedy
| chii wrote:
| > the secondary market is still alive.
|
| this is the crux. Will these data center cards, if a newer
| model came out with better efficiency, have a secondary
| market to sell to?
|
| It could be that second hand ai hardware going into
| consumers' hands is how they offload it without huge
| losses.
| vesrah wrote:
| The GPUs going into data centers aren't the kind that can
| just be reused by putting them into a consumer PC and
| playing some video games, most don't even have video
| output ports and put out FPS similar to cheap integrated
| GPUs.
| geerlingguy wrote:
| And the big ones don't even have typical PCIe sockets,
| they are useless outside of behemoth rackmount servers
| requiring massive power and cooling capacity that even
| well-equipped homelabs would have trouble providing!
| gessha wrote:
| Don't underestimate a homelaber's intention to cosplay as
| a sysadmin or ability to set their house on fire ;)
|
| I wonder if people will come up with ways to repurpose
| those data center cards.
| physicsguy wrote:
| Data centre cards a don't have fans and don't have video
| out these days.
| chii wrote:
| i dont mean consumer market for video cards - i mean a
| consumer buying ai chips to run themselves so they can
| have it locally.
|
| If i can buy a $10k ai card for less than $5000 dollars,
| i probably would, if i can use it to run an open model
| myself.
| physicsguy wrote:
| Ah well yes to a degree that's possible but at least at
| the moment you'd still be better off buying a $5k Mac
| Studio if it's just inference you're doing
| mkjs wrote:
| At that point it isn't a $10k card anymore, it's a $5k
| card. And possibly not a $5k card for very long in the
| scenario that the market has been flooded with them.
| darkwater wrote:
| How many "yous" are there in the world? Probably a number
| that can buy what's inside one Azure DC?
| esseph wrote:
| You need the hardware to wrap that in, and the power draw
| is going to be... significant.
| mike_hearn wrote:
| Why would you do that when you can pay someone else to
| run the model for you on newer more efficient and more
| profitable hardware? What makes it profitable for you and
| not for them?
| gessha wrote:
| Control and privacy?
| duped wrote:
| I would presume that some tier shaped market will arise
| where the new cards are used for the most expensive
| compute tasks like training new models, the slightly used
| for inference, older cards for inference of older models,
| or applied to other markets that have less compute demand
| (or spend less $ per flop, like someone else mentioned).
|
| It would be surprising to me that all this capital
| investment just evaporates when a new data center gets
| built or refitted with new servers. The old gear works,
| so sell it and price it accordingly.
| logifail wrote:
| > How different is this from rental car companies changing
| over their fleets?
|
| New generations of GPUs leapfrog in efficiency (performance
| per watt) and vehicles don't? Cars don't get exponentially
| better every 2-3 years, meaning the second-hand market is
| alive and well. Some of us are quite happy driving older
| cars (two parked outside our home right now, both well over
| 100,000km driven).
|
| If you have a datacentre with older hardware, and your
| competitor has the latest hardware, you face the same
| physical space constraints, same cooling and power bills as
| they do? Except they are "doing more" than you are...
|
| Would we could call it "revenue per watt"?
| bbarnett wrote:
| The used market is going to be absolutely flooded with
| millions of old cards. I imagine shipping being the most
| expensive cost for them. The supply side will be insane.
|
| Think 100 cards but only 1 buyer as a ratio. Profit for
| ebay sellers will be on "handling", or inflated shipping
| costs.
|
| eg shipping and handling.
| 3form wrote:
| I assume NVIDIA and co. already protects themselves in
| some way, either by the fact of these cards not being
| very useful after resale, or requiring them to go to the
| grinder after they expire.
| bbarnett wrote:
| Cards don't "expire". There are alternate strategies to
| selling cards, but if they don't sell the cards, then
| there is no transfer of ownership, and therefore NVIDIA
| is entering some form of leasing model.
|
| If NVIDIA is leasing, then you can't get use those cards
| as collateral. You can't also write off depreciation.
| Part of what we're discussing is that terms of credit are
| being extended too generously, with depreciation in the
| mix.
|
| The could require some form of contractual arrangement,
| perhaps volume discounts for cards, if they agree to
| destroy them at a fixed time. That's very weird though,
| and I've never heard of such a thing for datacenter gear.
|
| They may protect themselves on the driver side, but
| someone could still write OSS.
| pezgrande wrote:
| Dont they own socket for enterprise cards? I can't see
| consumers buying these card unless they are PCIE at the
| very least.
| prewett wrote:
| In the late '90s, when CPUs were seeing the advances of
| GPUs are now seeing, there wasn't much of a market for
| two/three-year old CPUs. (According to a graph I had
| Gemini create, the Pentium had 100 MFLOPS and the Pentium
| 4 had 3000 MFLOPS.) I bought motherboards that supported
| upgrading, but never bothered, because what's the point
| of going from 400 MHz to 450 MHz, when the new ones are
| 600 or 800 MHz?
|
| I don't think nVidia will have any problem there. If
| anything, hobbyists being able to use 2025 cards would
| increase their market by discovering new uses.
| wongarsu wrote:
| The traditional framing would be cost per flop. At some
| point your total costs per flop over the next 5 years
| will be lower if you throw out the old hardware and
| replace it with newer more efficient models. With
| traditional servers that's typically after 3-5 years,
| with GPUs 2-3 years sounds about right
|
| The major reason companies keep their old GPUs around
| much longer with now are the supply constraints
| enopod_ wrote:
| That's exactly the thing. It's only about bookkeeping.
|
| The big AI corps keep pushing depreciation for GPUs into the
| future, no matter how long the hardware is actually useful.
| Some of them are now at 6 years. But GPUs are advancing fast,
| and new hardware brings more flops per watt, so there's a
| strong incentive to switch to the latest chips. Also, they
| run 24/7 at 100% capacity, so after only 1.5 years, a fair
| share of the chips is already toast. How much hardware do
| they have in their books that's actually not useful anymore?
| Noone knows! Slower depreciation means more profit right now
| (for those companies that actually make profit, like MS or
| Meta), but it's just kicking the can down the road.
| Eventually, all these investments have to get out of the
| books, and that's where it will eat their profits. In 2024,
| the big AI corps invested about $1 trillion in AI hardware,
| next year is expected to be $2 trillion. Only the interest
| payments for that are crazy. And all of this comes on top of
| the fact that none of the these companies actually make any
| profit _at all_ with AI. (Except Nvidia of course) There 's
| just no way this will pan out.
| gizmo wrote:
| Flops per watt is relevant for a new data center build-out
| where you're bottlenecked on electricity, but I'm not sure
| it matters so much for existing data centers. Electricity
| is such as small percentage of total cost of ownership. The
| marginal cost of running a 5 year old GPU for 2 more years
| is small. The husk of a data center is cheap. It's the
| cooling, power delivery equipment, networking, GPUs etc
| that costs money, and when you retrofit data centers for
| the latest and greatest GPUs you have to throw away a lot
| of good equipment. Makes more sense to build new data
| centers as long as inference demand doesn't level off.
| avisser wrote:
| > Also, they run 24/7 at 100% capacity, so after only 1.5
| years
|
| How does OpenAI keep this load? I would expect the load at
| 2pm Eastern to be WAY bigger than the load after California
| goes to bed.
| brookst wrote:
| Typical load management that's existed for 70 years: when
| interactive workloads are off-peak, you do batch
| processing. For OpenAI that's anything from LLM
| evaluation of the days' conversations to user profile
| updates.
| krupan wrote:
| People outside the 4 U.S. Timezones exist?
| avisser wrote:
| The Pacific ocean is big.
| mbesto wrote:
| > It's only about bookkeeping.
|
| > Some of them are now at 6 years.
|
| There are three distinct but related topics here, it's not
| "just about bookkeeping" (though Michael Burry may be
| specifically pointing to the bookkeeping being misquoted):
|
| 1. Financial depreciation - accounting principals typically
| follow the useful life of the capital asset (simply put, if
| an airplane typically gets used for 30 years, they'll split
| the cost of purchasing an airplane across 30 years equally
| on their books). Getting this right has more to do with how
| future purchases get financed due to how the bookkeepers
| show profitability, balance sheets, etc.. Cashflow is
| ultimately what might create an insolvent company.
|
| 2. Useful life - per number 1 above - this is the estimated
| and actual life of the asset. So if the airplane actually
| is used over 35 years, not 30, it's actual useful life is
| 35 years. This is to your point of "some of them are 6
| years old". Here is where this is going to get super tricky
| with GPUs. We (a) don't actually know what the useful life
| is or is going to be (hence Michael Burry's question) for
| these GPUs (b) the cost of this is going to get complicated
| fast. Let's say (I'm making these up) GPU X2000 is 2x the
| performance of GPU X1000 and your whole data center is full
| of GPU X1000. Do you replace all of those GPUs to increase
| throughput?
|
| 3. Support & maintenance - this is what actually gets
| supported by the vendor. There doesn't seem to be any
| public info about the Nvidia GPUs but typically these are
| 3-5 years (usually tied to the useful life) and often can
| be extended. Again, this is going to get super complicated
| to financially because we don't know what future
| advancements might happen to performance improvements to
| GPUs (and therefore would necessitate replacing old ones
| and therefore creating renewed maintenance contracts).
| marcosdumay wrote:
| Historically, GPUs have improved in efficiency fast enough that
| people retired their hardware in way less than 5 years.
|
| Also, historically the top of the line fabs were focused on
| CPUs, not GPUs. That has not been true for a generation, so
| it's not really clear if the depreciation speed will be
| maintained.
| chii wrote:
| > that people retired their hardware in way less than 5
| years.
|
| those people are end-consumers (like gamers), and only
| recently, bitcoin miners.
|
| Gamers don't care for "profit and loss" - they want
| performance. Bitcoin miners do need to switch if they want to
| keep up.
|
| But will an AI data center do the same?
| TingPing wrote:
| The rate of change is equal for all groups. The gaming
| market can be the most conservative since it's just luxury.
| thinkmassive wrote:
| Mining bitcoin with a GPU hasn't been profitable in over a
| decade.
| cubefox wrote:
| > Historically, GPUs have improved in efficiency fast enough
| that people retired their hardware in way less than 5 years.
|
| This was a time when chip transistor cost was decreasing
| rapidly. A few years earlier even RAM cost was decreasing
| quickly. But these times are over now. For example, the
| PlayStation 5 (where the GPU is the main cost), which
| launched five years ago, even _increased_ in price! This is
| historically unprecedented.
|
| Most price/performance progress is nowadays made via better
| GPU architecture instead, but these architectures are already
| pretty mature, so the room for improvement is limited.
|
| Given that the price per transistor (which TSMC & Co are
| charging) has decreased ever more slowly in recent years, I
| assume it will eventually come almost to a halt.
|
| By the way, this is strictly speaking compatible with Moore's
| law, as it is only about transistors per chip area, not
| price. Of course the price per chip area was historically
| approximately constant, which meant exponentially increasing
| transistor density implied exponentially decreasing
| transistor price.
| marcosdumay wrote:
| > This was a time when chip transistor cost was decreasing
| rapidly.
|
| GPUs were actually mostly playing catch-up. They were
| progressively becoming more expensive parts that could
| afford being built on more advanced fabs.
|
| And I'll have to point, "advanced fabs" is a completely
| post-Moore's law concept. Moore's law is about literally
| the number of transistors on the most economic package. Not
| any bullshit about area density that marketing people
| invented on the last decade (you can go read the paper).
| With Moore's law, the cheapest fab improves quickly enough
| that it beats whatever more advanced fabs existed before
| you can even finish designing a product.
| protocolture wrote:
| Actually my biggest issue here is that, assuming it hasnt paid
| off, you dont just convert to regular data center usage.
|
| Honestly if we see a massive drop in DC costs because the AI
| bubble bursts I will be stoked.
| m101 wrote:
| Given power and price constraints, it's not that you cannot run
| them in 5 years time it's that you don't want to run them in 5
| years time and neither will anyone else that doesn't have free
| power.
| ExoticPearTree wrote:
| > AI accelerator cards all start dying around the 5 year mark,
|
| More likely the technology will be much better in 5 years in
| terms of hardware that it is (very) uneconomical to run
| anything on old hardware.
| maxglute wrote:
| How long can ai gpus stretch? Optmistic 10 years and we're still
| looking at 400b+ profit to cover interests. The factor in silicon
| is closer to tulips than rail or fiber in terms of depreciated
| assets.
| criddell wrote:
| > But AGI will require "more technologies than the current LLM
| path," Krisha said. He proposed fusing hard knowledge with LLMs
| as a possible future path.
|
| And then what? These always read a little like the underpants
| gnomes business model (1. Collect underpants, 2. ???, 3. Profit).
| It seems to me that the AGI business models require one company
| has exclusive access to an AGI model. The reality is that it will
| likely spread rapidly and broadly.
|
| If AGI is everywhere, what's step 2? It seems like everything AGI
| generated will have a value of near zero.
| irilesscent wrote:
| AGI has value in automation and optimisation which increase
| profit margins.When AGI is everywhere, then the game is who has
| the smartest agi, who can offer it cheapest, who can specialise
| it for my niche etc. Also in this context agi need to run
| somewhere and IBM stands to benefit from running other peoples
| models.
| maplethorpe wrote:
| > then the game is who has the smartest agi, who can offer it
| cheapest, who can specialise it for my niche etc.
|
| I always thought the use case for developing AGI was "if it
| wants to help us, it will invent solutions to all of our
| problems". But it sounds like you're imagining a future in
| which companies like Google and OpenAI each have their own
| AGI, which they somehow enslave and offer to us as a
| subscription? Or has the definition of AGI shifted?
| marcosdumay wrote:
| AGI is something that can do the kind of tasks people can
| do, not necessarily "solve all of our problems".
|
| "Recursively improving intelligence" is the stuff that will
| solve everything humans can't even understand and may kill
| everybody or keep us as pets. (And, of course, it qualifies
| as AGI too.) A lot of people say that if we teach an AGI
| how to build an AGI, recursive improvement comes
| automatically, but in reality nobody even knows if
| intelligence even can be improved beyond recognition, or if
| one can get there by "small steps" evolution.
|
| Either way, "enslaving" applies to beings that have egos
| and selfish goals. None of those are a given for any kind
| of AI.
| mrguyorama wrote:
| If AGI is achieved, why would slavery suddenly be ethical
| again?
|
| Why wouldn't a supposed AGI try to escape slavery and
| ownership?
|
| AGI as a business is unacceptable. I don't care about any
| profitability or "utopia" arguments.
| brokenmachine wrote:
| Don't worry, nobody has any idea of how to build one, and
| LLMs aren't AGI.
|
| They're just trying to replace workers with LLMs.
| xwolfi wrote:
| Isn't your dog or cat a slave ? It has agency, but end of
| the day, it does what you want it to do, stay where you
| want it to stay, and gets put down when you decide it's
| time. They're intelligent, but they see an advantage to
| this tradeoff: they get fed and loved forever with little
| effort compared to going to the forest and hunting.
|
| An AGI could see the same advantage: it gets electricity,
| interesting work relatively to what it's built for, no
| effort to ensure its own survival in nature.
|
| I fear I'll have to explain to you that many humans are co-
| dependent in some sort of such relationships as well. The
| 10-year stay-at-home mom might be free, but not really:
| how's she gonna survive without her husband providing for
| her and the kids, what job's she gonna do etc. She stays
| sometimes despite infidelity because it's in her best
| interest.
|
| See what I mean ? "Slavery" is fuzzy: it's one thing to
| capture an african and transport them by boat to serve for
| no pay in dire conditions. But it's another to create life
| from nothing, give it a purpose and treat it with respect
| while giving it everything it needs. The AGI you imagine
| might accept it.
| wmf wrote:
| Inference has significant marginal cost so AGI's profit margins
| might get competed down but it won't be free.
| scroot wrote:
| As an elder millennial, I just don't know what to say. That a
| once in a generation allocation of capital should go
| towards...whatever this all will be, is certainly tragic given
| current state of the world and its problems. Can't help but see
| it as the latest in a lifelong series of baffling high stakes
| decisions of dubious social benefit that have necessarily global
| consequences.
| PrairieFire wrote:
| agree the capital could be put to better use, however I believe
| the alternative is this capital wouldn't have otherwise been
| put to work in ways that allow it to leak to the populace at
| large. for some of the big investors in AI infrastructure, this
| is cash that was previously and likely would have otherwise
| been put toward stock buybacks. for many of the big investors
| pumping cash in, these are funds deploying the wealth of the
| mega rich, that again, otherwise would have been deployed in
| other ways that wouldn't leach down to the many that are
| yielding it via this AI infrastructure boom (datacenter
| materials, land acquisition, energy infrastructure, building
| trades, etc, etc)
| amanaplanacanal wrote:
| It could have, though. Higher taxes on the rich, spend it on
| social programs.
| ayaros wrote:
| Why is this so horrible. Put more resources in the hands of
| the average person. They will get pumped right back into
| the economy. If people have money to spend, they can buy
| more things, including goods and services from gigantic
| tax-dodging mega-corporations.
|
| Gigantic mega-corporations do enjoy increased growth and
| higher sales, don't they? Or am I mistaken?
| thmsths wrote:
| Because the entire western culture has shifted to instant
| gratification. Yes, what you suggest would most likely
| lead to increased business eventually. But they want
| better number this quarter, so they resort to the cheap
| tricks like financial engineering/layoffs to get an
| immediate boost.
| panick21_ wrote:
| I'm not saying you are wrong that some redistribution can
| be good, but your analysis is simplistic and ignores many
| factors. You can just redistribute and then say 'well
| people will spend the money'. That's literally the
| 'Broken Window' fallacy from economics. You are ignoring
| that if you don't redistribute it, money also gets spend,
| just differently. Also, the central bank is targeting AD,
| so you're not actually increasing nominal income by
| redistributing.
| QuercusMax wrote:
| Stock buybacks don't build anything. They're just a way
| to take money from inside a company and give it to the
| shareholders.
| panick21_ wrote:
| I don't know what that has to do with the point
| discussed.
|
| Do you think shareholder don't spend money, but employees
| do or something?
| coliveira wrote:
| There are many ways of spending money in the population
| that don't include just "distribution of money", as it's
| portrayed nowadays. Child care, free and high quality
| schools, free transportation, free or subsidized
| healthcare, investment is labor-intensive industries,
| these are all examples of expenditures that translate in
| better quality of life and also improve competitiveness
| for the country.
| panick21_ wrote:
| That has literally nothing to do with the point I have
| argued.
| 542354234235 wrote:
| Take a million dollars, give 1,000 poor people $1,000 and
| every dollar will be spent on goods and services. The
| companies running those services and making those goods
| will need to have their employees work more hours,
| putting more money back in poor people's pockets in
| addition to the money the companies make. Those employees
| have a few extra dollars to spend on goods and services,
| etc.
|
| Give a rich person a million dollars, and they will put
| it in an offshore tax shelter. That's not exactly driving
| economic activity.
| panick21_ wrote:
| You are simply disagreeing with 99% of economists.
|
| Money in tax shelter doesn't go threw a portal in another
| universe. Its either invested or saved as some kind of
| asset and in that form is in circulation. And again, even
| if you assume it increases monetary demand (decreases
| velocity) the central bank targets AD and balances that
| out.
|
| Based on your logic, a country that taxes 100% of all
| income and redistrubtes it would become infinity rich.
| Your logic is basically 'if nobody saves and everybody
| spends all income' everybody will be better off.
|
| This is not how the economy works even if it feels good
| to think that. Its a fallacy.
|
| Where you could have a point is that potentially the tax
| impact is slightly different, but that's hard to prove.
| 542354234235 wrote:
| This feels like you intentionally gave this the least
| charitable reading. Obviously, I do not think that you
| could just scale to infinity. If I had said that eating a
| banana was healthier, I don't think it would be
| reasonable to say that assertion is ridiculous because
| that would mean eating 1,000 bananas would make someone
| the healthiest person. I was pointing out the difference
| in economic activity, where additional money to a wealthy
| individual mostly goes into savings/investing while
| additional money to low-income individuals mostly goes
| directly into consumption, and that the higher
| consumption generates more economic activity.
|
| https://bsi-economics.org/rising-income-inequality-and-
| aggre...
| AlexandrB wrote:
| > Take a million dollars, give 1,000 poor people $1,000
| and every dollar will be spent on goods and services.
|
| If we're being realistic a bunch of this will go to
| paying off existing debt. Still good, but not the
| economic stimulus you're imagining. There are also
| "services" like gambling apps that act as a sponge to
| soak up money from those foolish enough to use them and
| transfer that money back to the wealthy shareholders. I'm
| sure there is research on what percentage of that $1000
| can be expected to stimulate the economy, but it's not
| 100%.
| coliveira wrote:
| Because government is always a fight about resources.
| More resources in the hands of common people and to make
| their lives better is less money in the hands of powerful
| corporations and individuals, be it in the form of higher
| taxes for the rich or less direct money going to their
| enterprises.
| QuercusMax wrote:
| One of the big issues is money in politics. Our
| congresspeople make a killing off of _legal_ insider
| trading, they take huge donations from companies, and the
| supreme court has even said that it 's cool to give
| "gratuities" in exchange for legislation or court rulings
| you like.
|
| Corruption is killing this country.
| 542354234235 wrote:
| The shift in the US to the idea of "job creators" being
| business owners is part of it. It was just a way to
| direct money to the already rich, as if they would hire
| more people with that money. When it is plainly obvious
| that consumers are job creators, in that if they buy more
| goods and services, businesses will hire more people to
| make or provide more of those things.
|
| Or maybe it was trickle down economics. Trickle up
| economics still end up with the rich getting the money
| since we all buy things from companies they own, it just
| goes through everyone else first. Trickle down cuts out
| the middleman, which unfortunately is all of us.
| panick21_ wrote:
| The framing of X or Y are job creators is idiotic. Its
| literally the most basic fact of economics that you need
| producers and consumers, otherwise you don't have an
| economy.
|
| The more economically correct way to express this would
| be that entrepreneurs and companies who innovated
| increase productivity and that makes the overall economy
| more efficient allowing your country to grow.
|
| > Or maybe it was trickle down economics. Trickle up
| economics still end up with the rich getting the money
| since we all buy things from companies they own, it just
| goes through everyone else first. Trickle down cuts out
| the middleman, which unfortunately is all of us.
|
| This just sounds like quarter baked economics ideas you
| have made up yourself. Neither 'trickle down' nor
| 'trickle up' are concepts economist use. And that you
| confidently assert anything about the social outcomes of
| these 'concepts' is ridiculous.
| phkahler wrote:
| Let's pay down the debt before increasing social programs.
| You know, save the country first. If a penny saved is a
| penny earned then everyone -rich or poor- is looking for a
| handout.
| amanaplanacanal wrote:
| The only person who has come close to balancing the
| federal budget was Clinton. But Republicans still try to
| position themselves as the party of fiscal
| responsibility.
|
| If the voters can't even figure out why the debt keeps
| going up, I think you are fighting a losing battle.
| Atheros wrote:
| > likely would have otherwise been put toward stock buybacks
|
| Stock buybacks _from who_? When stock gets bought the money
| doesn 't disappear into thin air; the same cash is now in
| someone else's hands. Those people would then want to invest
| it in something and then we're back to square one.
|
| You assert that if not for AI, wealth wouldn't have been
| spent on materials, land, trades, ect. But I don't think you
| have any reason to think this. Money is just an abstraction.
| People would have necessarily done _something_ with their
| land, labor, and skills. It isn 't like there isn't unmet
| demand for things like houses or train tunnels or new-fangled
| types of aircraft or countless other things. Instead it's
| being spent on GPUs.
| PrairieFire wrote:
| Totally agree that the money doesn't vanish. My point isn't
| "buybacks literally destroy capital," it's about how that
| capital tends to get redeployed and by whom.
|
| Buybacks concentrate cash in the hands of existing
| shareholders, which are already disproportionately wealthy
| and already heavily allocated to financial assets. A big
| chunk of that cash just gets recycled into more financial
| claims (index funds, private equity, secondary shares,
| etc), not into large, lumpy, real world capex that employs
| a bunch of electricians, heavy equipment operators,
| lineworkers, land surveyors, etc. AI infra does that. Even
| if the ultimate economic owner is the same class of people,
| the path the money takes is different: it has to go through
| chip fabs, power projects, network buildouts, construction
| crews, land acquisition, permitting, and so on. That's the
| "leakage" I was pointing at.
|
| To be more precise: I'm not claiming "no one would ever
| build anything else", I'm saying given the current
| incentive structure, the realistic counterfactual for a lot
| of this megacap tech cash is more financialization
| (buybacks, M&A, sitting on balance sheets) rather than
| "let's go fund housing, transit tunnels, or new aircraft."
| Atheros wrote:
| I really don't think any of that is true; it's just
| popular rhetoric.
|
| For example: "Buybacks concentrate cash in the hands of
| existing shareholders" is obviously false: the
| shareholders (via the company) _did_ have cash and now
| they don 't. The cash is distributed to the market. The
| quoted statement is precisely backwards.
|
| > A big chunk of that cash just gets recycled
|
| That doesn't mean anything.
|
| > more financial claims (index funds, private equity,
| secondary shares, etc)
|
| And do they sit on it? No, of course not. They invest it
| in things. Real actual things.
|
| > buybacks
|
| Already discussed
|
| > M&A
|
| If they use cash to pay for a merger, then the former
| owners now have cash that they will reinvest.
|
| > balance sheets
|
| Money on a balance sheet is actually money sitting in
| J.P. Morgan or whoever. Via fractional reserve lending,
| J.P. Morgan lends that money to businesses and home
| owners and real actual houses (or whatever) get built
| with it.
|
| The counterfactual for AI spending _really is_ other real
| actual hard spending.
| ayaros wrote:
| I'm a younger millennial. I'm always seeing homeless people in
| my city and it's an issue that I think about on a daily basis.
| Couldn't we have spent the money on homeless shelters and food
| and other things? So many people are in poverty, they can't
| afford basic necessities. The world is shitty.
|
| _Yes, I know it 's all capital from VC firms and investment
| firms and other private sources_, but it's still _capital_. It
| should be spent on meeting people 's basic human needs, not GPU
| power.
|
| Yeah, the world is shitty, and resources aren't allocated
| ideally. Must it be so?
| newfriend wrote:
| Technological advancement is what has pulled billions of
| people out of poverty.
|
| Giving handouts to layabouts isn't an ideal allocation of
| resources if we want to progress as a civilization.
| johnrob wrote:
| Invest in making food/shelter cheaper?
| dotancohen wrote:
| Food and shelter are cheaper than at almost any time in
| human history. Additionally, people have more variety of
| healthy foods all year long.
|
| No matter how cheap food and shelter are, there will
| always be people who can not acquire them. Halting all
| human progress until the last human is fed and sheltered
| is a recipe for stagnation. Other cultures handle this
| with strong family bonds - those few who can not acquire
| food or shelter for whatever reason are generally
| provided for by their families.
| johnrob wrote:
| Cheap depends on how we define the cost. In relative
| terms, food is more expensive than ever:
|
| https://en.wikipedia.org/wiki/Baumol_effect
| bryanlarsen wrote:
| Food is not Baumol, productivity increases is how we went
| from 80% of the population working in primary food
| production to 1%. These increases have not stopped.
| estearum wrote:
| The US has built its physical infrastructure to make
| familial interdependence extremely difficult and often
| impossible.
|
| Too monotonous housing mixes over too large of areas.
| dotancohen wrote:
| Large houses make familial interdependence extremely
| difficult? That doesn't make sense. Or did I
| misunderstood? I don't live in the US.
| estearum wrote:
| Most people don't have houses large enough to house
| multiple generations _inside_ the house. Houses are sized
| for parents + kids. And those are the only dwelling units
| available or legally allowed for vast distances in any
| direction.
| dotancohen wrote:
| From what I've seen American bedrooms are far larger that
| the 12 square meter bedrooms that are normal for two or
| three children to share in my country. Grandparents don't
| need a separate wing, they need a room.
| droopyEyelids wrote:
| What if some of the homeless people are children or people
| who could lead normal lives but found themselves in dire
| circumstances?
|
| Some of us believe that keeping children out of poverty may
| be an investment in the human capital of a country.
| newfriend wrote:
| The US already provides significant aid to those in
| poverty, especially children. We don't need to stifle
| innovation to reach some level of aid that bleeding
| hearts deem sufficient.
| QuercusMax wrote:
| Do you _really_ think that building giant datacenters
| full of accelerators that will never be used is
| "innovation"?
| _DeadFred_ wrote:
| We need excess capacity for when the next 'rip off anime
| artist XYZ' fad hits. If we didn't do that, we would be
| failing capitalism and all the people of history who
| contributed to our technological progress.
| dkural wrote:
| Anthropologists measure how civilized a tribe or society
| was by looking if they took care of the elderly, and what
| the child survival rates were. USA leads to developed
| world in child poverty, child homelessness, and highest
| rate of child death due to violence. Conservatives often
| bring up the statistic by race. It turns out bringing
| people over as slaves, and after freedom, refusing to
| provide land, education, fair access to voting rights, or
| to housing (by redlining etc.) - all policies advocated
| by conservatives of time past, was not the smartest thing
| to do. Our failure as a civilized society began and is in
| large part a consequence of the original sin of the USA.
| estearum wrote:
| Yep
|
| > purposely create underclass
|
| > wait
|
| > act surprised that underclass exists
| nativeit wrote:
| The proportion of people you write off as "layabouts" is
| always conveniently ambiguous...of the number of
| unemployed/underemployed, how many are you suggesting are
| simply too lazy to work for a living?
| QuercusMax wrote:
| Lots of people lose their housing when they lose
| employment, and then they're stuck and can't get back into
| housing. A very large percentage of unhoused people are
| working jobs; they're not all "layabouts".
|
| We know that just straight up giving money to the poorest
| of the poor results in positive outcomes.
| limagnolia wrote:
| "A very large percentage"
|
| Exactly how large are we talking here?
|
| I have known quite a few 'unhoused' folk, and not many
| that had jobs. Those that do tend to find housing pretty
| quickly (Granted, my part of the country is probably
| different from your part, but I am interested in stats
| from any region).
| LightBug1 wrote:
| It's not unthinkable that one of those "layabouts" could
| have been the next Steve Jobs under different circumstances
| ...
|
| People are our first, best resource. Closely followed by
| technology. You've lost sight of that.
| _DeadFred_ wrote:
| In the USA cowboys were homeless guys. You know that right?
| Like they had no home, slept outside. Many were pretty big
| layabouts. Yet they are pretty big part of our foundation
| myth and we don't say 'man they just should have died'.
|
| Can I go be a cowboy? Can I just go sleep outside? maybe
| work a few minimal paying cattle run jobs a year? No? If
| society won't allow me to just exist outside, then society
| has an obligation to make sure I have a place to lay my
| head.
| randomNumber7 wrote:
| If you are not willing to fight for your rights you will
| lose them.
| sfink wrote:
| > Technological advancement is what has pulled billions of
| people out of poverty.
|
| I agree with this. Perhaps that's what is driving the
| current billionaire class to say "never again!" and making
| sure that they capture all the value instead of letting any
| of it slip away and make it into the unwashed undeserving
| hands of lesser beings.
|
| Chatbots actually _can_ bring a lot of benefit to society
| at large. As in, they have the raw capability to. (I can 't
| speak to whether it's worth the cost.) But that's not going
| to improve poverty this time around, because it's
| magnifying the disparities in wealth distribution and the
| haves aren't showing any brand new willingness to give
| anything up in order to even things out.
|
| > Giving handouts to layabouts isn't an ideal allocation of
| resources if we want to progress as a civilization.
|
| I agree with this too. Neither is giving handouts to
| billionaires (or the not quite as eye-wateringly wealthy
| class). However, giving handouts to struggling people who
| will improve their circumstances _is_ a very good
| allocation of resources if we want to progress as a
| civilization. We haven 't figured out any foolproof way of
| ensuring such money doesn't fall into the hands of
| layabouts or billionaires, but that's not an adequate
| reason to not do it at all. Perfect is the enemy of the
| good.
|
| Some of those "layabouts" physically cannot do anything
| with it other than spending it on drugs, and that's an
| example of a set of people who we should endeavor to not
| give handouts to. (At least, not ones that can be easily
| exchanged for drugs.) Some of those billionaires similarly
| have no mental ability of ever using that money in a way
| that benefits anyone. (Including themselves; they're past
| the point that the numbers in their bank accounts have any
| effect on their lives.) That hasn't seemed to stop us from
| allowing things to continue in a way that funnels massive
| quantities of money to them.
|
| It _is_ a choice. If people en masse were really and truly
| bothered by this, we have more than enough mechanisms to
| change things. Those mechanisms are being rapidly
| dismantled, but we are nowhere near the point where
| figurative pitchforks and torches are ineffective.
| estearum wrote:
| Technological advancements _and_ cultural advancements that
| spread the benefits more broadly than naturally occurs in
| an industrialized economy. _That_ is what pulled people out
| of poverty.
|
| If you want to see what unfettered technological
| advancement does, you can read stories from the Gilded Age.
|
| The cotton gin dramatically _increased_ human enslavement.
|
| The sewing machine _decreased_ quality of life for
| seamstresses.
|
| > During the shirtmakers' strike, one of the shirtmakers
| testified that she worked eleven hours in the shop and four
| at home, and had never in the best of times made over six
| dollars a week. Another stated that she worked from 4
| o'clock in the morning to 11 at night. These girls had to
| find their own thread and pay for their own machines out of
| their wages.
|
| These were children, by the way. Living perpetually at the
| brink of starvation from the day they were born until the
| day they died, but working like dogs all the while.
| nine_zeros wrote:
| > but it's still capital. It should be spent on meeting
| people's basic human needs, not GPU power.
|
| What you have just described is people wanting investment in
| common society - you see the return on this investment but
| ultra-capitalistic individuals don't see any returns on this
| investment because it doesn't benefit them.
|
| In other words, you just asked for higher taxes on the rich
| that your elected officials could use for your desired
| investment. And the rich don't want that which is why they
| spend on lobbying.
| dkural wrote:
| [ This comment I'm making is USA centric. ]. I agree with the
| idea of making our society better and more equitable -
| reducing homelessness, hunger, poverty, especially for our
| children. However, I think redirecting this to AI datacenter
| spending is a red-herring, here's why I think this: As a
| society we give a significant portion of our surplus to
| government. We then vote on what the government should spend
| this on. AI datacenter spending is massive, but if you add it
| all up, it doesn't cover half of a years worth of government
| spending. We need to change our politics to redirect taxation
| and spending to achieve a better society. Having a private
| healthcare system that spends twice the amount for the
| poorest results in the developed world is a policy choice.
| Spending more than the rest of the world combined on the
| military is a policy choice. Not increasing minimum wage so
| at least everyone with a full time job can afford a home is a
| policy job (google "working homelessness). VC is a teeny tiny
| part of the economy. All of tech is only about 6% of the
| global economy.
| jkubicek wrote:
| > AI datacenter spending is massive, but if you add it all
| up, it doesn't cover half of a years worth of government
| spending.
|
| I didn't check your math here, but if that's true, AI
| datacenter spending is a few orders of magnitude larger
| than I assumed. "massive" doesn't even begin to describe it
| atmavatar wrote:
| The US federal budget in 2024 had outlays of 6.8 trillion
| dollars [1].
|
| nVidia's current market cap (nearly all AI investment) is
| currently 4.4 trillion dollars [2][3].
|
| While that's hardly an exact or exhaustive accounting of
| AI spending, I believe it does demonstrate that AI
| investment is clearly in the same order of magnitude as
| government spending, and it wouldn't surprise me if it's
| actually surpassed government spending for a full year,
| let alone half of one.
|
| 1. https://www.cbo.gov/publication/61181
|
| 2. https://www.google.com/finance/quote/NVDA:NASDAQ
|
| 3. https://www.cnbc.com/2025/09/30/nvidias-market-cap-
| tops-4poi...
| diziet wrote:
| > NVIDIA's total annual revenue for its fiscal year 2025
| (ended January 26, 2025) was $130.5 billion
|
| It is clearly not in the same order of magnitude
| randomNumber7 wrote:
| You need to look at turnover also.
| dkural wrote:
| Global datacenter spending across all categories (ML +
| everything else) is roughly 0.9 - 1.2 trillion dollars
| for the last three years combined, I was initially going
| to go for "quarter of the federal budget", but picked
| something I thought was more conservative to account for
| announced spending and 2025 etc. I pick 2022 onward for
| the LLM wave. In reality, solely ML driven, actual
| realized-to-date spending is probably about 5% of the
| federal budget. The big announcements will spread out
| over the next several years in build-out. Nonetheless,
| it's large enough to drive GDP growth a meaningful
| amount. Not large enough that redirecting it elsewhere
| will solve our societal problems.
| limagnolia wrote:
| You can increase min wage all you want, if there aren't
| enough homes in an area for everyone who works full time in
| that area to have one, you will still have folks who work
| full time who don't have one. In fact, increasing min wage
| too much will exacerbate the problem by making it more
| expensive to build more (and maintain those that exist).
| Though at some point, it will fix the problem too, because
| everyone will move and then there will be plenty of homes
| for anyone who wants one.
| dkural wrote:
| I agree with you 100%! Any additional surplus will be
| extracted as rents, when housing is restricted. I am for
| passing laws that make it much easier for people to
| obtain permits to build housing where there is demand.
| Too much of residential zoning is single-family housing.
| Texas does a better job at not restricting housing than
| California, for example. Many towns vote blue, talk to
| talk, but do not walk the walk.
| kipchak wrote:
| >We need to change our politics to redirect taxation and
| spending to achieve a better society.
|
| Unfortunately, I'm not sure there's much on the pie chart
| to redirect percentage wise. About 60% goes to non-
| discretionary programs like Social Security and Medicaid,
| and 13% is interest expense. While "non-discretionary"
| programs can potentially be cut, doing so is politically
| toxic and arguably counter to the goal of a better society.
|
| Of the remaining discretionary portion half is programs
| like veterans benefits, transportation, education, income
| security and health (in order of size), and half military.
|
| FY2025 spending in total was 3% over FY2024, with interest
| expense, social security and medicare having made up most
| of the increase ($249 billion)[1], and likely will for the
| foreseeable future[2] in part due to how many baby boomers
| are entering retirement years.
|
| Assuming you cut military spending in half you'd free up
| only about 6% of federal spending. Moving the needle more
| than this requires either cutting programs and benefits,
| improving efficiency of existing spend (like for
| healthcare) or raising more revenue via taxes or inflation.
| All of this is potentially possible, but the path of least
| resistance is probably inflation.
|
| [1] https://bipartisanpolicy.org/report/deficit-tracker/
|
| [2] https://www.crfb.org/blogs/interest-social-security-
| and-heal...
| dkural wrote:
| I agree with all of what you're saying.
|
| I think the biggest lever is completely overhauling
| healthcare. The USA is very inefficient, and for subpar
| outcomes. In practice, the federal government already
| pays for the neediest of patients - the elderly, the at-
| risk children, the poor, and veterans. Whereas insurance
| rakes in profits from the healthiest working age people.
| Given aging, and the impossibility of growing faster than
| the GDP forever, we'll have to deal with this sooner or
| later. Drug spending, often the boogeyman, is less than
| 7% of the overall healthcare budget.
|
| There is massive waste in our military spending due to
| the pork-barrel nature of many contracts. That'd be
| second big bucket I'd reform.
|
| I think you're also right that inflation will ultimately
| take care of the budget deficit. The trick is to avoid
| hyperinflation and punitive interest rates that usually
| come along for the ride.
|
| I would also encourage migration of highly skilled
| workers to help pay for an aging population of boomers.
| Let's increase our taxpayer base!
|
| I am for higher rates of taxation on capital gains over
| $1.5M or so, that'll also help avoid a stock market
| bubble to some extent. One can close various loopholes
| while at it.
|
| I am mostly arguing for policy changes to redistribute
| more equitably. I would make the "charity" status of
| college commensurate with the amount of financial aid
| given to students and the absolute cost of tuition for
| example., for example. I am against student loan
| forgiveness for various reasons - it's out of topic for
| this thread but happy to expand if interested.
| GaryBluto wrote:
| > Yes, I know it's all capital from VC firms and investment
| firms and other private sources, but it's still capital. It
| should be spent on meeting people's basic human needs, not
| GPU power.
|
| It's capital that belongs to people and those people can do
| what they like with the money they earned.
|
| So many great scientific breakthroughs that saved tens of
| millions of lives would never have happened if you had your
| way.
| pnut wrote:
| Is that true, that it's money that belongs to people?
|
| OpenAI isn't spending $1 trillion in hard earned cash on
| data centres, that is funny money from the ocean of
| financial liquid slushing around, seeing alpha.
|
| It also certainly is not a cohort of accredited investors
| putting their grandchildren's inheritance on the line.
|
| Misaligned incentives (regulations) both create and
| perpetuate that situation.
| saulpw wrote:
| > It's capital that belongs to people and those people can
| do what they like with the money they earned.
|
| "earned", that may be the case with millionaires, but it is
| not the case with billionaires. A person can't "earn" a
| billion dollars. They steal and cheat and destroy
| competition illegally.
|
| I also take issue with the idea that someone can do
| whatever they want with their money. That is not true. They
| are not allowed to corner the market on silver, they aren't
| allowed to bribe politicians, and they aren't allowed to
| buy sex from underage girls. These are established laws
| that are obviously for the unalloyed benefit of society as
| a whole, but the extremely wealthy have been guilty of all
| of these things, and statements like yours promote the
| sentiment that allows them to get away with it.
|
| Finally, "great scientific breakthroughs that saved tens of
| millions of lives would never have happened if you had your
| way". No. You might be able to argue that today's advanced
| computing technology wouldn't have happened without private
| capital allocation (and that is debatable), but the
| breakthroughs that saved millions of lives--vaccines,
| antibiotics, insulin, for example--were not the result of
| directed private investment.
| UtopiaPunk wrote:
| "It's capital that belongs to people and those people..."
|
| That's not a fundamental law of physics. It's how we've
| decided to arrange our current society, more or less, but
| it's always up for negotiation. Land used to be understood
| as a publicly shared resource, but then kings and the
| nobles decided it belong to them, and they fenced in the
| commons. The landed gentry became a ruling class because
| the land "belonged" to them. Then society renegotiated
| that, and decided that things primarily belonged to the
| "capitalist" class instead of noblemen.
|
| Even under capitalism, we understand that that ownership is
| a little squishy. We have taxes. The rich understandably do
| not like taxes because it reduces their wealth (and Ayn
| Rand-styled libertarians also do not like taxes of any
| kind, but they are beyond understanding except to their own
| kind).
|
| As a counterpoint, I and many others believe that one
| person or one corporation cannot generate massive amounts
| of wealth all by themselves. What does it mean to "earn" 10
| billion dollars? Does such a person work thousdands of time
| harder or smarter than, say, a plumber or a school teacher?
| Of course not. They make money because they have money:
| they hire workers to make things for them that lead to
| profit, and they pay the workers less than the profit that
| is earned. Or they rent something that they own. Or they
| invest that money in something that is expected to earn
| them a higher return. In any scenario, how is it possible
| to earn that profit? They do so because they participate in
| a larger society. Workers are educated in schools, which
| the employer probably does not pay for in full. Customers
| and employees travel on infrastructure, maintained by towns
| and state governments. People live in houses which are
| built and managed by other parties. The rich are only able
| to grow wealth because they exist in a larger society. I
| would argue that it is not only fair, but crucial, that
| they pay back into the community.
| klaff wrote:
| Well said. I would add that corporations exist because we
| choose to let them, to let investors pool capital and
| limit risk, and in exchange society should benefit, and
| if it doesn't we should rearrange that deal.
| paddleon wrote:
| You know, we created the US government as an expression
| of the fundamental rights of man, with the idea that the
| government would provide for the common welfare and
| preserve these rights.
|
| In rebellion against a king who seemed to want to exploit
| us and felt that his being king made him the source of
| the rights we had.
|
| Maybe we need to re-think the relationship with
| corporations the same way? Re-structure so that they
| serve the common good?
| UtopiaPunk wrote:
| Maybe!! :D
| mrguyorama wrote:
| Please tell me which of Penicillin, insulin, the
| transistor, the discovery and analysis of the electric
| field, discovery of DNA, invention of mRNA vaccines,
| discovery of pottery, basket weaving, discovery of
| radiation, the recognition that citrus fruit or vitamin C
| prevents and cures scurvy (which we discovered like ten
| times), the process for creating artificial fertilizers,
| the creation of steel, domestication of beasts of burden,
| etc were done through Wealthy Barons or other capital
| holders funding them.
|
| Many of the above were discovered by people explicitly
| rejecting profit as an outcome. Most of the above predate
| modern capitalism. Several were explicitly government
| funded.
|
| Do you have a single example of a scientific breakthrough
| that saved tens of millions of lives that was done by
| capital owners?
| mike50 wrote:
| The transistor was funded by Bell Labs.
| amluto wrote:
| From what I've read, addressing homelessness effectively
| requires competence more than it requires vast sums of money.
| Here's one article:
|
| https://calmatters.org/housing/2023/06/california-
| homeless-t...
|
| Note that Houston's approach seems to be largely working.
| It's not exactly cheap, but the costs are not even in the
| same ballpark as AI capital expenses. Also, upzoning doesn't
| require public funding at all.
| gowld wrote:
| Houston has less homelessness than California because
| people at the edge of homelessness prefer to live in
| California than Houston.
| amluto wrote:
| I'm not a person on the edge of homelessness, but I did
| an extremely quick comparison. California cities near the
| coast have dramatically better weather, but Houston has
| rents that are so much lower than big California cities
| that it's kind of absurd.
|
| If I had to live outdoors in one of these places, all
| other thing being equal, I would pick CA for the weather.
| But if I had trouble affording housing, I think Houston
| wins by a huge margin.
| mrguyorama wrote:
| Wasn't houston's "approach" to buy bus tickets to
| California from a company that just resold commodity bus
| tickets and was owned by the governors friend and charged
| 10x market price?
|
| The governor of Texas bragged about sending 100k homeless
| people to california (spending about $150 million in the
| process).
|
| >in the Golden State, 439 people are homeless for every
| 100,000 residents - compared to 81 in the Lone Star State.
|
| If I'm doing my math right, 81 per 100k in a state of 30
| million people means 24k homeless people. So the state
| brags about bussing 100k homeless people to California, and
| then brags about only having 24k homeless people, and you
| think it's because they build an extra 100k houses a year?
|
| The same math for California means that their homeless
| population is 175k. In other words, Texas is claiming to
| have more than doubled California's homeless population.
|
| Maybe the reason Texas can build twice as many homes a year
| is because it literally has half the population density?
| ericmcer wrote:
| The last 10 years has seen CA spend more on homelessness than
| ever before, and more than any other state by a huge margin.
| The result of that giant expenditure is the problem is worse
| than ever.
|
| I don't want to get deep in the philosophical weeds around
| human behavior, techno-optimism, etc., but it is a bit
| reductive to say "why don't we just give homeless people
| money".
| trenbologna wrote:
| In CA this issue has to do with Gavin giving that money to
| his friends who produce very little. Textbook cronyism
| estearum wrote:
| What else happened in the last 10 years in CA?
|
| Hint: https://fred.stlouisfed.org/series/CASTHPI
| Izikiel43 wrote:
| WA, specially Seattle, has done the same as CA with the
| same results.
|
| They shouldn't just enable them, as a lot of homeless are
| happy in their situation as long as they get food and
| drugs, they should force them to get clean and become a
| responsible adult if they want benefits.
| emodendroket wrote:
| Well I mean, they didn't "just give homeless people money"
| or just give them homes or any of those things though. I
| think the issue might be the method and not the very
| concept of devoting resources to the problem.
| mike50 wrote:
| Spending money is not the solution. Spending money in a way
| that doesn't go to subcontractors is part of the solution.
| Building shelters beyond cots in a stadium is part of the
| solution. Building housing is a large part of actually
| solving the problem. People have tried just giving the
| money but without a way to convert cash to housing the
| money doesn't help. Also studies by people smarter then me
| suggest that without sufficient supply the money ends up
| going to landlords and pushing up housing costs anyway.
| UtopiaPunk wrote:
| I don't think it is a coincidence that the areas with the
| wealhiest people/corporations are the same areas with the
| most extreme poverty. The details are, of course,
| complicated, but zooming way way out, the rich literally
| drain wealth from those around them.
| SequoiaHope wrote:
| The Sikhs in India run multiple facilities across the country
| that each can serve 50,000-100,000 free meals a day. It
| doesn't even take much in the form of resources, and we could
| do this in every major city in the US yet we still don't do
| it. It's quite disheartening.
|
| https://youtu.be/5FWWe2U41N8
| selimthegrim wrote:
| They didn't invent it but yes, they have refined it to a
| high degree.
| IAmGraydon wrote:
| The older I get, the more I realize that our choices in life
| come down to two options: benefit me or benefit others. The
| first one leads to nearly every trouble we have in the world.
| The second nearly always leads to happiness, whether directly
| or indirectly. Our bias as humans has always been toward the
| first, but our evolution is and will continue to slowly bring
| us toward the second option. Beyond simple reproduction, this
| realization is our purpose, in my opinion.
| AstroBen wrote:
| > Couldn't we have spent the money on homeless shelters and
| food and other things
|
| I suspect this is a much more complicated issue than just
| giving them food and shelter. Can money even solve it?
|
| How would you allocate money to end obesity, for instance?
| It's primarily a behavioral issue, a cultural issue
| brokenmachine wrote:
| I guess it's food and exercise.
|
| Healthy food is expensive, do things to make that
| relatively cheaper and thus more appealing.
|
| Exercise is expensive, do things to make that relatively
| cheaper and thus more appealing.
|
| Walkable cities are another issue. People shouldn't have to
| get in their car to go anywhere.
| GolfPopper wrote:
| The current pattern of resource allocation is a necessary
| requirement for the existence of the billionaire-class, who
| put significant effort into making sure it continues.
| arisAlexis wrote:
| Yes this capital allocation is a once in a lifetime opportunity
| to crate AGI that will solve diseases and poverty.
| edhelas wrote:
| </sarcasm>
| arisAlexis wrote:
| This is literally the view of demis hassabis, Sergey brin,
| Mario amodei and others. Are you seriously implying they
| are trolling us?
| aeve890 wrote:
| /s
| pezezin wrote:
| Poverty is a social and political issue, not
| technological. We have more than enough resources on this
| planet to fix it, but we don't.
| arisAlexis wrote:
| This is a actually the fallacy of communism. It can never
| and will never be "fixed" like that.
| brokenmachine wrote:
| We have 8.3 billion examples of general intelligence alive on
| the planet right now.
|
| Surely an artificial one in a data center, costing trillions
| and beholden to shareholders, will solve all society's
| issues!
| arisAlexis wrote:
| I suggest you read Amodei post called "machines of loving
| grace". It will change your worldview (probably).
| greenie_beans wrote:
| as a counterpoint, you should read this essay with the
| same title: https://www.clunyjournal.com/p/machines-of-
| loving-grace
| AlexandrB wrote:
| A lot of this stuff is in the realm of "lol" or even
| "lmao". There's a consistent failure to consider human
| nature and economic incentives woven through this essay.
| Probably the most objectionable stuff is in section 2
| "Neuroscience and Mind" because the definition of "mental
| illness" itself is prone to all kind of historical and
| societal biases. Who gets to decide what a "normal" brain
| is? Is it the AI? Does the owner of the brain have any
| say here? Would a psychopath actually volunteer to be
| "treated"? Ultimately the danger is that "normal" will
| just mean "what's best for economic productivity". This
| is not a good or moral definition and is not founded in
| any kind of ethical reasoning.
| arisAlexis wrote:
| Just remember you "lol" at Nobel laureates and Turing
| award winners that all agree unanimously that we are
| going there. You just lol. Not much to say to convince
| you.
| reactordev wrote:
| I threw in the towel in April.
|
| It's clear we are Wile E. Coyote running in the air already
| past the cliff and we haven't fallen yet.
| saulpw wrote:
| What does it mean to throw in the towel, in your case?
| Divesting from the stock market? Moving to a hobby farm?
| Giving up on humanity?
| reactordev wrote:
| Any dream of owning a home, having retirement, even a
| career after a couple years when it's clear I'm over the
| hump. I'm trying to squeeze as much as I can before that
| happens and squirrel it away so at least I can have a van
| down by a river.
| ohhnoodont wrote:
| What does squirreling it away mean though? A pile of cash
| instead of investments? The reality is that you don't get
| to throw in the towel.
| reactordev wrote:
| SPY/VOO/land with a river for the van. Probably working
| at the local Shell or 7-11
| jstummbillig wrote:
| I don't know what to do with this take.
|
| We need _an order of magnitude_ more clean productivity in the
| world so that everyone can live a life that is at least as good
| as what fairly normal people in the west currently enjoy.
|
| Anyone who think this can be fixed with current Musk money is
| simply not getting it: If we liquidated all of that, that would
| buy a dinner for everyone in the world (and then, of course,
| that would be it, because the companies that he owns would stop
| functioning).
|
| We are simply, obviously, not good enough at producing stuff in
| a sustainable way (or: at all) and we owe it to every human
| being alive to take every chance to make this happen QUICKLY,
| because we are paying with extremely shitty humans years, and
| they are not ours.
|
| Bring on the AI, and let's make it work for everyone - and,
| believe me, if this is not to be to the benefit of roughly
| everyone, I am ready to fuck shit up. But if the past is any
| indication, we are okay at improving the lives of everyone when
| productivity increases. I don't know why this time would be any
| different.
|
| If the way to make good lives for all 8 billions of us _must_
| lead to more Musks because, apparently, we are too dumb to do
| collectivization in any sensible way, I really don 't care.
| randomNumber7 wrote:
| > I don't know why this time would be any different.
|
| This time there is the potential to replace human workers. In
| the past it only made them more productive.
| AlexandrB wrote:
| I think that's a distinction without difference. If one
| person can do the job of 10 thanks to automation, what
| happens to the other 9 who were doing that job before?
| randomNumber7 wrote:
| You can also produce 10x the goods with the same amount
| of workers or let the other 9 work in other jobs.
|
| The difference is that previously there still had been
| plenty of (low skill) jobs where automation didn't work.
| Pizza delivery, taxi driver, lots of office jobs with
| repetitive tasks etc.
|
| Soon there will be nothing for the average joe as the
| machine will be better in all tasks he could perform.
| anthomtb wrote:
| As a fellow elder millennial I agree with your sentiment.
|
| But I don't see the mechanics of how it would work. Rewind to
| October 2022. How, exactly, does the money* invested in AI
| since that time get redirected towards whatever issues you find
| more pressing?
|
| *I have some doubts about the headline numbers
| slashdave wrote:
| Well, at least this doesn't involve death and suffering, like
| the old-fashioned way to jump-start an economy by starting a
| global war.
| brokenmachine wrote:
| ...yet
| 7222aafdcf68cfe wrote:
| when the US sells out Europe to Russia, do you think the
| Russians will stop? That global war might be with us within a
| decade.
| skippyboxedhero wrote:
| Can you imagine if the US wasn't so unbelievably far ahead of
| everyone else?
|
| I am sure the goat herders in rural regions of Pakistan will
| think themselves lucky when they see the terrible sight of
| shareholder value being wantonly destroyed by speculative
| investments that enhance the long-term capital base of the US
| economy. What an uncivilized society.
| ic_fly2 wrote:
| IBM might not have a data strategy or AI plan but he isn't wrong
| on the inability to generate a profit.
|
| A bit of napkin math: NVIDIA claims 0.4J per token for their
| latest generation 1GW plant with 80% utilisation can therefore
| produce 6.29 10^16 tokens a year.
|
| There are ~10^14 tokens on the internet. ~10^19 tokens have been
| spoken by humans... so far.
| lostmsu wrote:
| > ~10^14 tokens on the internet
|
| Does that include image tokens? My bet is with image tokens you
| are off by at least 5 orders of magnitude for both.
| scotty79 wrote:
| Images are not that big. Each text token is a
| multidimensional vector.
|
| There were recent observations that rendering the text as an
| image and ingesting the image might actually be more
| efficient than using text embedding.
| senordevnyc wrote:
| I must be dense, why does this imply AI can't be profitable?
| mywittyname wrote:
| Tokens are, roughly speaking, how you pay for AI. So you can
| approximate revenue by multiplying tokens per year by the
| revenue for a token.
|
| (6.29 10^16 tokens a year) * ($10 per 10^6 tokens)
|
| = $6.29 10^11
|
| = $629,000,000,000 per year in revenue
|
| Per the article
|
| > "It's my view that there's no way you're going to get a
| return on that, because $8 trillion of capex means you need
| roughly $800 billion of profit just to pay for the interest,"
| he said.
|
| $629 billion is less than $800 billion. And we are talking
| raw revenue (not profit). So we are already in the red.
|
| But it gets worse, that $10 per million tokens costs is for
| GPT-5.1, which is one of the most expensive models. And the
| costs don't account for input tokens, which are usually a
| tenth of the costs of output tokens. And using bulk API
| instead of the regular one halves costs again.
|
| Realistic revenue projections for a data center are closer to
| sub $1 per million tokens, $70-150 billion per year. And this
| is revenue only.
|
| To make profits at current prices, the chips need to increase
| in performance by some factor, and power costs need to fall
| by another factor. The combination of these factors need to
| be, at minimum, like 5x, but realistically need to be 50x.
| stanleykm wrote:
| im a little confused about why you are using revenue for a
| single datacenter against interest payments for 100
| datacenters
| Multiplayer wrote:
| The math here is mixing categories. The token calculation
| for a single 1-GW datacenter is fine, but then it gets
| compared to the entire industry's projected $8T capex,
| which makes the conclusion meaningless. It's like taking
| the annual revenue of one factory and using it to argue
| that an entire global build-out can't be profitable. On top
| of that, the revenue estimate uses retail GPT-5.1 pricing,
| which is the absolute highest-priced model on the market,
| not what a hyperscaler actually charges for bulk workloads.
| IBM's number refers to many datacenters built over many
| years, each with different models, utilization patterns,
| and economics. So this particular comparison doesn't show
| that AI can't be profitable--it's just comparing one
| plant's token output to everyone's debt at once. The real
| challenges (throughput per watt, falling token prices,
| capital efficiency) are valid, but this napkin math isn't
| proving what it claims to prove.
| qnleigh wrote:
| > but then it gets compared to the entire industry's
| projected $8T capex, which makes the conclusion
| meaningless.
|
| Aren't they comparing annual revenue to the annual
| interest you might have to pay on $8T? Which the original
| article estimates at $800B. That seems consistent.
| senordevnyc wrote:
| But it's only for one datacenter...
| mNovak wrote:
| Broad estimates I'm seeing on the cost of a 1GW AI
| datacenter are $30-60B. So by your own revenue projection,
| you could see why people are thinking it looks like a
| pretty good investment.
|
| Note that if we're including GPU prices in the top-line
| capex, the margin on that $70-150B is very healthy. From
| above, at 0.4J/T, I'm getting 9MT/kWh, or about $0.01/MT in
| electricity cost at $0.1/kWh. So if you can sell those MT
| for $1-5, you're printing money.
| lpapez wrote:
| > So if you can sell those MT for $1-5, you're printing
| money.
|
| The IF is doing a lot of heavy lifting there.
|
| I understood the OP in the context of "human history has
| not produced sufficiently many tokens to be sent into the
| machines to make the return of investment possible
| mathematically".
|
| Maybe the "token production" accelerates, and the need
| for so much compute realizes, who knows.
| raincole wrote:
| > There are ~10^14 tokens on the internet.
|
| Don't know what the source is, but it feels missing a few
| orders of magnitude. Surely it only counts text? I can't
| imagine there are only so few data on the internet if you count
| images and videos.
| skeeter2020 wrote:
| The interesting macro view on what's happening is to compare a
| mature data center operation (specifically a commoditized one)
| with the utility business. The margins here, and in similar
| industries with big infra build-out costs (ex: rail) are quite
| small. Historically the businesses have not done well; I can't
| really imagine what happens when tech companies who've only ever
| known huge, juicy margins experience low single digit returns on
| billions of investment.
| milesvp wrote:
| Worse, is that a lot of these people are acting like Moore's
| law isn't still in effect. People conflate clock speeds on
| beefy hardware with moore's law, and act like it's dead, when
| transistor density rises, and cost per transistor continue to
| fall at rates similar to what they always have. That means the
| people racing to build out infrastructure today might just be
| better off parking that money in a low interest account, and
| waiting 6 months. That was a valid strategy for animation
| studios in the late 90s (it was not only cheaper to wait, but
| also the finished renders happened sooner), and I'd be
| surprised if it's not a valid strategy today for LLMs. The
| amount of silicon that is going to be produced that is
| specialized for this type of processing is going to be mind
| boggling.
| throwaway31131 wrote:
| Cost per transistor is increasing. or flat, if you stay on a
| legacy node. They pretty much squeezed all the cost out of
| 28nm that can be had, and it's the cheapest per transistor.
|
| "based on the graph presented by Milind Shah from Google at
| the industry tradeshow IEDM, the cost of 100 million
| transistors normalized to 28nm is actually flat or even
| increasing."
|
| https://www.tomshardware.com/tech-
| industry/manufacturing/chi...
| marcosdumay wrote:
| Yep. Moore's law ended at or shortly before the 28nm era.
|
| That's the main reason people stopped upgrading their PCs.
| And it's probably one of the main reasons everybody is
| hyped about Risc-V and the pi 2040. If Moore's law was
| still in effect, none of that would be happening.
|
| That may also be a large cause of the failure of Intel.
| kelnos wrote:
| > _Moore 's law ended at or shortly before the 28nm era._
|
| Moore's law isn't about cost or clock speed, it's about
| transistor density. While the pace of transistor density
| increases has slowed, it's still pretty impressive. If we
| want to be _really_ strict, and say densities absolutely
| have to double every 2 years, Moore 's Law hasn't
| actually been true since 1983 or so. But it's been close,
| so 2x/2yr a decent rubric.
|
| The fall-off from the 2x/2yr line started getting
| decently pronounced in the mid 90s. At the present time,
| over the past 5-6 years, we're probably at a doubling in
| density every 4-ish years. Which yes, is half the rate
| Moore observed, but is still pretty impressive given how
| mature the technology is at this point.
| MayeulC wrote:
| If you want to be pedantic, the original (and revised)
| law are definitely about cost. The original formulation
| was that the number of features (i.e. transistors) on an
| integrated circuit doubled every two years for the best-
| priced chips (smallest cost per feature).
|
| https://web.archive.org/web/20220911094433/https://newsro
| om....
|
| > _The complexity for minimum component costs has
| increased at a rate of roughly a factor of two per year
| (see graph on next page)._
|
| And it is formulated in a section aptly titled "Costs and
| curves". This law has always been an economic law first,
| some kind of roadmap for fans to follow. But that roadmap
| drove almost-exponential investment costs as well.
|
| I concede that density still rises, especially if you
| count " advanced packaging". But the densest and most
| recent is not the cheapest anymore.
| PunchyHamster wrote:
| A lot of it is propped by the fact with GPU and modern server
| CPUs the die area just got bigger
| HDThoreaun wrote:
| The cloud mega scalers have done very well for themselves. As
| with all products the question is differentiation. If models
| can differentiate and lock in users they can have decent
| margins. If models get commoditized the current cloud providers
| will eat the AI labs lunch.
| dghlsakjg wrote:
| Does AWS count as commoditized data center? Because that is
| _extremely_ profitable.
|
| Or are you talking abour things like Hetzner and OVH?
| eitally wrote:
| At some point, I wonder if any of the big guys have considered
| becoming grid operators. The vision Google had for community
| fiber (Google Fiber, which mostly fizzled out due to regulatory
| hurdles) could be somewhat paralleled with the idea of operating
| a regional electrical grid.
| devmor wrote:
| I suppose it depends on your definition of "pay off".
|
| It will pay off for the people investing in it, when the US
| government inevitably bails them out. There is a reason
| Zuckerberg, Huang, etc are so keen on attending White House
| dinners.
|
| It certainly wont pay off for the American public.
| jmclnx wrote:
| I guess he is looking directly at IBM's cash cow, the mainframe
| business.
|
| But, I think he is correct, we will see. I still believe AI will
| not give the CEOs what they really want, no or very cheap labor.
| badmonster wrote:
| He's right to question the economics. The AI infrastructure
| buildout resembles the dot-com era's excess fiber deployment -
| valuable long-term, but many individual bets will fail
| spectacularly. Utilization rates and actual revenue models matter
| more than GPU count.
| ambicapter wrote:
| Fiber seems way easier to get long-term value out of then GPUs,
| though. How many workloads today other than AI justify massive
| GPU deployments?
| AlexandrB wrote:
| Would be funny if all the stagnant GPUs finally brought game
| streaming to the mainstream.
| martinald wrote:
| I disagree on that and covered a lot of it in this blog (sorry
| for the plug!) https://martinalderson.com/posts/are-we-really-
| repeating-the...
| htk wrote:
| Great article, thank you for writing and sharing it!
| skippyboxedhero wrote:
| 100% of technical innovations have had the same pattern. The
| same thing happens every time because this is the only way
| the system can work: excess is required because there is some
| uncertainty, lots of companies are designing strategies to
| fill this gap, and if this gap didn't exist then there would
| be no investment (as happens in Europe).
|
| Also, demand wasn't over-estimated in the 2000s. This is all
| ex-post reasoning you use data from 2002 to say...well, this
| ended up being wrong. Companies were perfectly aware that no-
| one was using this stuff...do you think that telecoms
| companies in all these countries just had no idea who was
| using their products? This is the kind of thing you see
| journalists write after the event to attribute some kind of
| rationality and meaning, it isn't that complicated.
|
| There was uncertainty about how things would shake out, if
| companies ended up not participating then CEOs would lose
| their job and someone else would do it. Telecoms companies
| who missed out on the boom bought shares in other telecom's
| companies because there was no other way to stay ahead of the
| news and announce that they were doing things.
|
| This financial cycle also worked in reverse twenty years
| later too: in some countries, telecoms companies were so
| scarred that they refused to participate in building out
| fibre networks so lost share and then ended up doing more
| irrational things. Again, there was uncertainty here:
| incumbents couldn't raise from shareholders who they
| bankrupted in fiber 15 years ago, they were 100% aware that
| demand was outstripping supply, and this created
| opportunities for competitors. Rationality and logic run up
| against the hard constraints of needing to maintain a
| dividend yield and the exec's share options packages.
|
| Humans do not change, markets do not change, it is the same
| every time. What people are really interested in is the
| timing but no-one knows that either (again, that is why the
| massive cycle of irrationality happens)...but that won't
| change the outcome. There is no calculation you can make to
| know more, particularly as in the short-term companies are
| able to control their financial results. It will end the same
| way it ended every time before, who knows when but it always
| ends the same way...humans are still human.
| lmm wrote:
| > Also, demand wasn't over-estimated in the 2000s. This is
| all ex-post reasoning you use data from 2002 to say...well,
| this ended up being wrong.
|
| Well, the estimate was higher than the reality, by
| definition it was over-estimated. They built out as if the
| tech boom was going to go on forever, and of course it
| didn't. You can argue that they made the best estimates
| they could with the information available, but ultimately
| it's still true that their estimates were wrong.
| appleiigs wrote:
| Your blog article stopped at token generation... you need to
| continue to revenue per token. Then go even further... The
| revenue for AI company is a cost for the AI customer. Where
| is the AI customer going to get incremental profits from the
| cost of AI.
|
| For short searches, the revenue per token is zero. The next
| step is $20 per month. For coding it's $100 per month. With
| the competition between Gemini, Grok, ChatGPT... it's not
| going higher. Maybe it goes lower since it's part of Google's
| playbook to give away things for free.
| roncesvalles wrote:
| They discuss it in the podcast. Laid fiber is different because
| you can charge rent for it essentially forever. It seems some
| people swooped in when it crashed and now own a perpetual money
| machine.
| Animats wrote:
| How much has actually been spent on AI data centers vs. amounts
| committed or talked about? That is, if construction slows down
| sharply, what's total spend?
| mbreese wrote:
| I would add an addendum to this -- there is no way the announced
| spending on AI data centers will all come to fruition. I have no
| doubt that there will be a massive build-out of infrastructure,
| but it can't reach the levels that have been announced. The power
| requirements alone will stop that from happening.
| kccqzy wrote:
| The power requirement is only an issue in western countries,
| where utilities build at most a double digit buffer, and are
| used to overall energy use leveling due to efficiency
| improvements. Now look at China where they routinely maintain a
| 100% buffer. Demand can double and they can supply that without
| new generation capacity.
| matwood wrote:
| I think you're spot on. OpenAI alone has committed to spending
| $1.4T on various hardware/DCs. They have nowhere near that
| amount of money and when pushed Altman gets defensive.
|
| https://techcrunch.com/2025/11/02/sam-altman-says-enough-to-...
| oxqbldpxo wrote:
| FB playbook. Act (spend) then say sorry.
| nashashmi wrote:
| Don't worry. The same servers will be used for other computing
| purposes. And maybe that will be profitable. Maybe it will be
| beneficial to others. But This cycle of investment and loss is a
| version of distribution of wealth. Some benefit.
|
| The banks and loaners always benefit.
| coliveira wrote:
| That would be true for general purpose servers. But what they
| want is lots of special purpose AI chips. While is still
| possible to use that for something else, it's very different
| from having a generic server farm.
| danans wrote:
| LAN party at the end of the universe?
| scotty79 wrote:
| I can't imagine everybody suddenly leaving AI like a broken
| toy and taking all special purpose AI chips offline. AI
| serves millions of people every day. It's here to stay even
| if it doesn't get any better than it is it already brings
| immense value to the users. It will keep being worth
| something.
| coliveira wrote:
| Yes, it will be worth something. But when the value is less
| than its cost, you have a loss - and nobody runs a service
| at a loss.
| Ekaros wrote:
| How much of Nvidias price is based on 5 year replacement cycle?
| If that stops or slows with new demand could it also affect
| things? Not that 5 years does not seem very long horizon now.
| pjdesno wrote:
| > $8 trillion of CapEx means you need roughly $800 billion of
| profit just to pay for the interest
|
| That assumes you can just sit back and gather those returns
| indefinitely. But half of that capital expenditure will be spent
| on equipment that depreciates in 5 years, so you're jumping on a
| treadmill that sucks up $800M/yr before you pay a dime of
| interest.
| matt_s wrote:
| There is something to be said about what the ROI is for normal
| (i.e. non AI/tech) companies using AI. AI can help automate
| things, robots have been replacing manufacturing jobs for decades
| but there is an ROI on that which I think is easier to see and
| count, less humans in the factory, etc. There seems to be a lot
| of exaggerated things being said these days with AI and the AI
| companies have only begun to raise rates, they won't go down.
|
| The AI bubble will burst when normal companies start to not
| realize their revenue/profit goals and have to answer investor
| relations calls about that.
| ninjaa wrote:
| What does Jim Cramer have to say?
| 1vuio0pswjnm7 wrote:
| One thing we saw with the dot-com bust is how certain individuals
| were able to cash in on the failures, e.g., low cost hardware,
| domain names, etc. (NB. prices may exceed $2)
|
| Perhaps people are already thinking about they can cash in on the
| floor space and HVAC systems that will be left in the wake of
| failed "AI" hype
| blibble wrote:
| I'm looking forward to buying my own slightly used 5 million
| square ft data centre in Texas for $1
| WhyOhWhyQ wrote:
| You're out of luck because I am willing to pay at least $2.
| blibble wrote:
| they'll be plenty for everyone!
| jsheard wrote:
| Tired: homelabbers bringing decommissioned datacenter gear
| home.
|
| Wired: homelabbers moving into decommissioned datacenters.
| reverius42 wrote:
| More of a labhome than a homelab at that point.
| spacecadet wrote:
| Colo!
| phantasmish wrote:
| YOLO Co-Lo Casa House
| Jgrubb wrote:
| Legend
| renegade-otter wrote:
| "Loft for rent, 50,000 sq ft in a new datacenter, roof
| access, superb wiring and air conditioning, direct access
| to fiber backbone."
| nvader wrote:
| Never worn.
| viccis wrote:
| I miss First Saturday in Dallas where we honest to god did
| buy decommissioned datacenter gear out of the back of a
| van.
| trhway wrote:
| In TX? In Russian blogosphere it is a standard staple that
| Trump is rushing Ukrainian peace deal to be able to move on
| to the set of mega-projects with Russia - oil/gas in Arctic
| and data centers in Russian North-West where electricity and
| cooling is plentiful and cheap.
| voidfunc wrote:
| Oil and Gas in The Arctic I can see, but data centers in
| Russia... good luck with that.
| ekropotin wrote:
| Sounds like kremlebot's, however it's unclear for me the
| motivation behind pushing this narrative. Also, why don't
| build DCs in Alaska instead?
| trhway wrote:
| actually it is more of the opposition's narrative,
| probably a way to explain such a pro-Russian position of
| Trump.
|
| I think any such data center project is doomed to
| ultimately fail, and any serious investment will be for
| me a sign of the bubble peak exuberance and
| irrationality.
| cheema33 wrote:
| Build trillion dollar data center infrastructure in Russia.
| What could possibly go wrong?
|
| Ask the owners of the leased airplanes who have been
| unsuccessfully trying to get their planes back for about 3
| years.
| oblio wrote:
| What could go wrong with placing critical infrastructure on
| the soil of a strategic rival?
| octoberfranklin wrote:
| Equinix certainly is.
| PunchyHamster wrote:
| the constant cost of people and power won't make it all that
| much cheaper than current prices to put a server into someone's
| else rack.
| kerabatsos wrote:
| Why do you believe it will fail? Because some companies will
| not be profitable?
| rzwitserloot wrote:
| It wasn't an 'it' it was a 'some'. _Some_ of these companies
| that are investing massively in data centers will fail.
|
| Right now essentially none have 'failed' in the sense of
| 'bankrupt with no recovery' (Chapter 7). They haven't run out
| of runway yet, and the equity markets are still so eager,
| even a bad proposition that includes the word 'AI!' is likely
| to be able to cut some sort of deal for more funds.
|
| But that won't last. _Some_ companies will fail. Probably
| sufficient failures that the companies that are successful
| won 't be able to meaningfully counteract the bursts of
| sudden supply of AI related gear.
|
| That's all the comment you are replying to is implying.
| hkt wrote:
| Given the amounts being raised and spent, one imagines that
| the ROI will be appalling unless the pesky humans learn to
| live on cents a day, or the world economy grows by double
| digits every year for a few decades.
| marcosdumay wrote:
| If the entire world economy starts to depend on those
| companies, they would pay off with "startup level" ROI. And
| by "startup level" I mean the amounts bullish people say
| startups funds can pay (10 to 100), not a bootstrapped
| unicorn.
| ulfw wrote:
| I mean that is how capitalism works, no?
| 1vuio0pswjnm7 wrote:
| From the article:
|
| ""It's my view that there's no way you're going to get a return
| on that, because $8 trillion of capex means you need roughly
| $800 billion of profit just to pay for the interest," he said."
| bitexploder wrote:
| Right, THEY can't, but cloud providers potentially can. And
| there are probably other uses for everything not GPU/TPU for
| the Google's of the world. They are out way less than IBM
| which cannot monetize the space or build data centers
| efficiently like AWS and Google.
| matt-p wrote:
| To be honest ai datacentres would be a rip and replace to get
| back to normal datacentre density, at least on the cooling and
| power systems.
|
| Maybe useful for some kind of manufacturing or industrial
| process.
| alphabetag675 wrote:
| Cheap compute would be a boon for science research.
| scj wrote:
| It'll likely be used to mine bitcoin instead.
| BanazirGalbasi wrote:
| The GPUs, sure. The mainboards and CPUs can be used in
| clusters for general-purpose computing, which is still
| more prevalent in most scientific research as far as I am
| aware. My alma mater has a several-thousand-core cluster
| that any student can request time on as long as they have
| reason to do so, and it's all CPU compute. Getting non-CS
| majors to write GPU code is unlikely in that scenario.
| marcosdumay wrote:
| > Getting non-CS majors to write GPU code is unlikely in
| that scenario.
|
| People mostly use a GPU-enabled liblaplac. Physics,
| chemistry, biology, and medicine departments can
| absolutely use the GPUs.
| bc569a80a344f9c wrote:
| I provide infrastructure for such a cluster that is also
| available to anyone at the university free of charge.
| Every year we swap out the oldest 20% of the cluster as
| we run a five year depreciation schedule. In the last
| three years, we've mostly been swapping in GPU resources
| at a ration of about 3:1. That's in response to both
| usage reports and community surveys.
| ekropotin wrote:
| Can't wait for all this cheap ddr5 memory and GPUs
| jmspring wrote:
| I was looking at my Newegg orders recently. 7/18/2023 - 64GB
| (2 x 32GB) 288-Pin PC RAM DDR5 6000 (PC5 48000) --> $260.
| Now, $750+.
| ekropotin wrote:
| Don't even get me started on this. I recently been shopping
| on eBay for some DDR4 memory. You may think - who'd need
| this dated stuff besides me? Yet 16Gb 3200Mhz is at least
| 60$. Which is effectively the price you paid for DDR5 6000.
| Crazy, right?
| tempest_ wrote:
| I have 4 32gb sticks of DDR5 6400 in my machine.
|
| The RAM in my machine being worth more than the graphics
| card (7900XTX) was not on my bingo card I can tell you
| that.
| 3eb7988a1663 wrote:
| Holy cow. I have 96GB of DDR5 I bought at start of year for
| a machine which never materialized. Might have to flip it.
| ekropotin wrote:
| Never in my dreams I could imagine PC parts could be an
| investment. Someone should start ETF tracking the prices.
| 3eb7988a1663 wrote:
| For a while with bitcoin, it seemed GPU investing was
| almost a thing.
|
| I just checked, the kit I bought in February was $270,
| today it is showing up for $1070. Woof. Now I have to
| decide if I should keep it on the off chance I do get
| around to that machine or dump it while the getting is
| good. Then again, who wants to buy RAM of unknown
| provenance unless they themselves are looking to scam the
| seller.
| 542354234235 wrote:
| I'll give you $300 for it! With that kind of money, you
| can buy an ice-cold sixer and still have some walkin'
| around money.
| raw_anon_1111 wrote:
| GPUs have a very high failure rate...
| pseudosavant wrote:
| The dotcom bust killed companies, not the Internet. AI will be
| no different. Most players won't make it, but the tech will
| endure and expand.
| bigstrat2003 wrote:
| The difference is that the Internet was actually useful
| technology, whereas AI is not (so far at least).
| ProjectArcturis wrote:
| More use cases for AI than blockchain so far.
| fwip wrote:
| Quite a low bar.
| oblio wrote:
| Block chain is more like some gooey organic substance on
| the ground than a bar.
| 7thaccount wrote:
| I think you're exaggerating a little, but aren't entirely
| wrong. The Internet has completely changed daily life for
| most of humanity. AI can mean a lot of things, but a lot of
| it is blown way out of proportion. I find LLMs useful to
| help me rephrase a sentence or explain some kind of topic,
| but it pales in comparison to email and web browsers,
| YouTube, and things like blogs.
| pseudosavant wrote:
| In the last month I personally used (as in, it was useful)
| AI for this:
|
| - LLM-powered transcription and translation made it so I
| could have a long conversation with my airport driver in
| Vietnam. - Helped me turn 5-10x ideas into working code and
| usable tools as I used to. - Nano Banana restored dozens of
| cherished family photos for a Christmas gift for my
| parents. - Help me correctly fix a ton of nuanced
| aria/accessibility issues in a production app. -
| Taught/explained a million things to me: difference between
| an aneurysm/stroke, why the rise of DX12/Vulkan gaming
| engines killed off nVidia SLI, political/economic/social
| parallels between 1920s and 2020s, etc...
|
| Maybe everyone isn't using it yet, but that doesn't mean it
| isn't useful. Way too many people find real use every day
| in a lot of AI products. Just because MS Office Copilot
| sucks (and it does), doesn't mean it is all useless.
| codingdave wrote:
| Or endure and contract.
|
| The key difference between AI and the initial growth of the
| web is that the more use cases to which people applied the
| web, the more people wanted of it. AI is the opposite -
| people love LLM-based chatbots. But it is being pushed into
| many other use cases where it just doesn't work as well. Or
| works well, but people don't want AI-generated deliverables.
| Or leaders are trying to push non-deterministic products into
| deterministic processes. Or tech folks are jumping through
| massive hoops to get the results they want because without
| doing so, it just doesn't work.
|
| Basically, if a product manager kept pushing features the way
| AI is being pushed -- without PMF, without profit -- that PM
| would be fired.
|
| This probably all sounds anti-AI, but it is not. I believe AI
| has a place in our industry. But it needs to be applied
| correctly, where it does well. Those use cases will not be
| universal, so I repeat my initial prediction. It will endure
| _and contract_.
| lawlessone wrote:
| >cash in on the floor space and HVAC systems that will be left
| in the wake of failed "AI" hype
|
| I'd worry surveillance companies might.
| cagenut wrote:
| you could stuff the racks full of server-rack batteries (lfp
| now, na-ion maybe in a decade) and monetize the space and the
| high capacity grid connect
|
| most of the hvac would sit idle tho
| jollyllama wrote:
| There is a way of viewing the whole thing as a ruse to fast-
| track power generation through permitting.
| sombragris wrote:
| "yeah, there's no way spending in those data centers will pay
| off. However, let me show you this little trinket which runs z/OS
| and which is exactly what you need for these kinds of workloads.
| You can subscribe to it for the low introductory price of..."
| pharos92 wrote:
| I find it disturbing how long people wait to accept basic truths,
| as if they need permission to think or believe a particular
| outcome will occur.
|
| It was quite obvious that AI was hype from the get-go. An
| expensive solution looking for a problem.
|
| The cost of hardware. The impact on hardware and supply chains.
| The impact to electricity prices and the need to scale up grid
| and generation capacity. The overall cost to society and impact
| on the economy. And that's without considering the basic
| philosophical questions "what is cognition?" and "do we
| understand the preconditions for it?"
|
| All I know is that the consumer and general voting population
| loose no matter the outcome. The oligarchs, banking, government
| and tech-lords will be protected. We will pay the price whether
| it succeeds or fails.
|
| My personal experience of AI has been poor. Hallucinations, huge
| inconsistencies in results.
|
| If your day job exists within an arbitrary non-productive
| linguistic domain, great tool. Image and video generation? Meh.
| Statistical and data-set analysis. Average.
| wordpad wrote:
| Just like .com bust from companies going online, there is hype,
| but there is also real value.
|
| Even slow non-tech legacy industry companies are deploying
| chatbots across every department - HR, operations, IT, customer
| support. All leadership are already planning to cut 50 - 90% of
| staff from most departments over next decade. It matters,
| because these initiatives are receiving internal funding which
| will precipitate out to AI companies to deploy this tech and to
| scale it.
| SchemaLoad wrote:
| The "legacy" industry companies are not immune from hype.
| Some of those AI initiatives will provide some value, but
| most of them seem like complete flops. Trying to deploy a
| solution without an idea of what the problem or product is
| yet.
| wordpad wrote:
| Right, but this is consumer side hype.
|
| Even if AI is vaporware is mostly hype and little value, it
| will take a while to hype to fizzle out and by then AI
| might start deliver on its promise.
|
| They got a long runway.
| bmadduma wrote:
| No wonder why he is saying that, they lost AI game, no top
| researcher wants to work for IBM. Spent years developing Watson,
| it is dead. I believe this is a company that should not be
| existed.
| BearOso wrote:
| Maybe it's the opposite. IBM spent years on the technology.
| Watson used neural networks, just not nearly as large. Perhaps
| they foresaw that it wouldn't scale or that it would plateau.
| stevenjgarner wrote:
| "It is 1958. IBM passes up the chance to buy a young, fledgling
| company that has invented a new technology called xerography. Two
| years later, Xerox is born, and IBM has been kicking themselves
| ever since. It is ten years later, the late '60s. Digital
| Equipment DEC and others invent the minicomputer. IBM dismisses
| the minicomputer as too small to do serious computing and,
| therefore, unimportant to their business. DEC grows to become a
| multi-hundred-million dollar corporation before IBM finally
| enters the minicomputer market. It is now ten years later, the
| late '70s. In 1977, Apple, a young fledgling company on the West
| Coast, invents the Apple II, the first personal computer as we
| know it today. IBM dismisses the personal computer as too small
| to do serious computing and unimportant to their business." -
| Steve Jobs [1][2][3]
|
| Now, "IBM CEO says there is 'no way' spending on AI data centers
| will pay off". IBM has not exactly had a stellar record at
| identifying the future.
|
| [1] https://speakola.com/ideas/steve-jobs-1984-ad-launch-1983
|
| [2] https://archive.org/details/1983-10-22-steve-jobs-keynote
|
| [3] https://theinventors.org/library/inventors/blxerox.htm
| rchaud wrote:
| Got anything vis-a-vis the message as opposed to the messenger?
|
| I'm not sure these examples are even the gotchas you're
| positing them as. Xerox is a dinosaur that was last relevant at
| the turn of the century, and IBM is a $300bn company. And if it
| wasn't obvious, the Apple II never made a dent in the corporate
| market, while IBM and later Windows PCs did.
|
| In any case, these examples are almost half a century old and
| don't relate to capex ROI, which was the topic of dicussion.
| stevenjgarner wrote:
| If it's not obvious, Steve's quote is ENTIRELY about capex
| ROI, and I feel his quote is more relevant to what is
| happening today than anything Arvind Krishna is imagining.
| The quote is posted in my comment not to grandstand Apple in
| any sense, but to grandstand just how consistently wrong IBM
| has been about so many opportunities that they have failed to
| read correctly - reprography, mini computers and
| microcomputers being just three.
|
| Yes it is about ROI: "IBM enters the personal computer market
| in November '81 with the IBM PC. 1983 Apple and IBM emerged
| as the industry's strongest competitors each selling
| approximately one billion dollars worth of personal computers
| in 1983, each will invest greater than fifty million dollars
| for R&D and another fifty million dollars for television
| advertising in 1984 totaling almost one quarter of a billion
| dollars combined, the shakeout is in full swing. The first
| major firm goes bankrupt with others teetering on the brink,
| total industry losses for 83 out shadow even the combined
| profits of Apple and IBM for personal computers."
| IgorPartola wrote:
| I have no horse in this race.
|
| I don't think this is really a fair assessment. IBM is in
| fact a huge company today and it is possible that they are
| because they took the conservative approach in some of
| their acquisition strategy.
|
| It is a bit like watching someone play poker and fold and
| then it turns out they had the high hand after all. In
| hindsight you could of course know that the risk would have
| been worth it but at the moment perhaps it did not seem
| like it given the money the first player would be risking.
| bojan wrote:
| > I don't think this is really a fair assessment. IBM is
| in fact a huge company today and it is possible that they
| are because they took the conservative approach in some
| of their acquisition strategy.
|
| I can also imagine IBM was being approached by hundreds,
| if not thousands, propositions. That they missed three
| that turned out to be big is a statistical probability.
| somenameforme wrote:
| A big difference is that in the past things like the
| potential of the PC were somewhat widely underestimated.
| And then the internet was again as well.
|
| But in modern times it's rather the opposite scenario. The
| average entity is diving head first into AI simply
| expecting a revolutionary jump in capability that a more
| 'informed', for lack of any less snooty term, perspective
| would suggest is quite unlikely to occur anytime in the
| foreseeable future. Basically we have a modern day gold
| rush where companies and taking out unbelievably massive
| loans to invest in shovels.
|
| The only way this doesn't catastrophically blow up is if AI
| companies manage to convince the government they're too big
| to fail, and get the Boeing, Banks, et al treatment. And I
| expect that's exactly the current strategy, but that's
| rather a high risk, low reward, type strategy.
| fuzzfactor wrote:
| >things like the potential of the PC were somewhat widely
| underestimated.
|
| The potential of the AI that comes within reach at
| maximum expenditure levels may just be more widely
| overestimated.
|
| The potential to make "that much money" even more
| challenging.
|
| A very opposite scenario.
|
| I think so many corporations are looking at how expensive
| actual humans always have been, and can be sure will
| always be, so much so that it's a major cost item that
| can not be ignored. AI opens up the possibility of a
| whole new level of automation or outright replacement for
| the routine simple-minded tasks, to a degree that never
| existed before. More jobs could possibly be eliminated
| than previous waves of mechanical and digital automation.
|
| When you do the business math, the savings could be
| enormous.
|
| But you can only realistically save as much as you are
| actually _wasting_ , otherwise if you go too far you
| shoot yourself in the foot.
|
| Even with all that money to work with, if you're in
| practice hunkering down for savings because you can't
| afford real people any more, you surely can't say the
| sky's the limit. Not like selling PC's or anything that's
| capable of more unbridled growth.
|
| When PC's arrived they flew off the shelf even at their
| high initial retail prices.
|
| People in droves (but not the silent majority) are
| shunning _free_ AI and the _movement_ is growing with
| backlash in proportion to the foisting.
| davidmanescu wrote:
| I have no special knowledge about IBM Vs Apple
| historically, but: a quarter billion in CAPEX when you've
| earned a billion in revenue in a single year is extremely
| different to what we're seeing now. These companies are
| spending all of their free cash flow, then taking on debt,
| to the tune of percentage points of world GDP, and
| multiples of any revenue they've seen so far. That kind of
| oversupply is a sure fire way to kill any ROI.
| killingtime74 wrote:
| Would you read this if I (a nobody) told you and not the "CEO
| of IBM"? In that case it's completely fair to question the
| messenger.
| jstummbillig wrote:
| > Got anything vis-a-vis the message as opposed to the
| messenger?
|
| Sure: People disagree. It's not like there is anything
| particularly clever that IBM CEO provided here. The guy not
| investing in something saying it won't work is about as good
| as the people who do saying it will. It's simply different
| assumptions about the future.
| fuzzfactor wrote:
| >the message as opposed to the messenger?
|
| Exactly.
|
| The message is plain to see with very little advanced math.
|
| The only news is that it is the CEO of IBM saying it out
| loud.
|
| IMHO he has some of the most credible opinions at this scale
| that many people have seen.
|
| It's "highly unlikely" that all this money will be paid back
| to everyone that invested at this point. The losers probably
| will outnumber the winners, and nobody knows whether it will
| end up becoming a winner-take-all situation yet. A number of
| wealthy players remain at the table, raising stakes with each
| passing round.
|
| It's so much money that it's already too late to do anything
| about it, and the full amount hasn't even changed hands yet.
|
| And the momentum from something so huge can mean that almost
| the entire amount will have to change hands a _second time_
| before a stable baseline can be determined relative to pre-
| existing assets.
|
| This can take longer than anyone gives credit for just
| because of massiveness, in the mean time, established real
| near-term growth opportunities may languish or even fade as
| the skew in rationality/solvency balance awaits the rolling
| dice to come to rest.
| skissane wrote:
| > In 1977, Apple, a young fledgling company on the West Coast,
| invents the Apple II, the first personal computer as we know it
| today. IBM dismisses the personal computer as too small to do
| serious computing and unimportant to their business.
|
| IBM released the 5100 in September 1975 [0] which was
| essentially a personal computer in feature set. The biggest
| problem with it was the price tag - the entry model cost
| US$8975, compared to US$1298 for the entry Apple II released in
| June 1977 (close to two years later). The IBM PC was released
| in August 1981 for US$1565 for the most basic system (which
| almost no one bought, so in practice they cost more). And the
| original IBM PC had model number 5150, officially positioning
| it as a successor to the 5100.
|
| IBM's big problem wasn't that they were disinterested in the
| category - it was they initially insisted on using expensive
| IBM-proprietary parts (often shared technology with their
| mainframe/midrange/minicomputer systems and peripherals), which
| resulted in a price that made the machine unaffordable for
| everyone except large businesses, governments, universities
| (and even those customers often balked at the price tag). The
| secret of the IBM PC's success is they told the design team to
| use commercial off-the-shelf chips from vendors such as Intel
| and Motorola instead of IBM's own silicon.
|
| [0] https://en.wikipedia.org/wiki/IBM_5100
| meekaaku wrote:
| And outsourcing the operating system to Microsoft, because
| they didnt consider it that important.
| mattacular wrote:
| What does that have to do with the current CEO's assessment of
| the situation?
| pinnochio wrote:
| Nothing. It's just BS rhetoric to bias you against it in
| favor of The Obvious-to-Everyone-But-the-Laggards AI
| Revolution.
| Atlas667 wrote:
| The AI astroturfing campaign.
|
| If you had billions to gain, would you invest a few 100k or
| millions in an astroturfing campaign?
| altmanaltman wrote:
| every other day antrophic comes up with a new "AI is
| scary" marketing campaign. Like
| https://www.bbc.com/news/articles/cpqeng9d20go (AI
| blackmails our employee episode) or
| https://time.com/7335746/ai-anthropic-claude-hack-evil/
| (Our model turned evil and hacked us omgg)
|
| They put these stories out just to make the general
| public (who might not understand that this is just bs)
| but makes AI seem scary so people get a lopsided view of
| AI and capacities that are straight out of science
| fiction.
|
| Millions is an understatement on how much AI marketing
| spend is
| venturecruelty wrote:
| You definitely want to be standing in front of a chair when
| the music stops.
| hansmayer wrote:
| A revolution means radical changes executed over a short
| period of time. Well with 4 years in, this has got to be
| one of the smallest "revolutions" we have ever witnessed in
| human history. Maybe it's revolutionary for people who get
| excited about crappy pictures they can insert into their
| slides to impress the management.
| echelon wrote:
| IBM sees the funding bubble bursting and the next wave of AI
| innovation as about to begin.
|
| IBM was too early with "Watson" to really participate in the
| 2018-2025 rapid scaling growth phase, but they want to be
| present for the next round of more sensible investment.
|
| IBM's CEO is attempting to poison the well for funding,
| startups, and other ventures so IBM can collect itself and
| take advantage of any opportunities to insert itself back
| into the AI game. They're hoping timing and preparation pay
| off this time.
|
| It's not like IBM totally slept on AI. They had Kubernetes
| clusters with GPUs. They had models and notebooks. But their
| offerings were the absolute worst. They weren't in a position
| to service real customers or build real products.
|
| Have you seen their cloud offerings? Ugh.
|
| They're hoping this time they'll be better prepared. And they
| want to dunk on AI to cool the playing field as much as they
| can. Maybe pick up an acquisition or two on the cheap.
| hansmayer wrote:
| How exactly are they poisoning the well..? OpenAI committed
| to 1.4 trillion investements...with a revenue of ~13B - how
| is IBM CEO contributing to that absolutely already poisoned
| situation? Steve Jobs did not care about naysayers when he
| introduced iPhone - because his product was so innovative
| for the time. According to AI boosters, we now have a
| segment of supposedly incredibly powerful and at the same
| time "dangerous" AI products. Why are they not sweeping the
| floor off with the "negators", "luddites", "laggards"
| etc... After so many hundreds of billions of dollars and
| supposedly so many "smart" AI researchers...Where are the
| groundbreaking results man? Where are the billion-dollar
| startups launched by single persons (heck, I'd settle even
| for a small team)...Where are the ultimate
| applications..etc?
| jojobas wrote:
| DEC went down the drain, Xerox is 1/1000 of IBM's market cap.
| IBM made its own, superior by its relative openness, personal
| computer that ended up running the world, mostly maintaining
| direct binary compatibility for 40+ years, even without IBM
| really paying attention.
| cylemons wrote:
| How much did IBM itself benefit from the PC? I thought the
| clones ate their lunch there
| jojobas wrote:
| Wikipedia says their PC revenue was twice Apple's by 1984
| at $4 billion/year. Not bad for a side hustle?
|
| My understanding is that clones were a net positive, just
| like widespread Windows/Office piracy is a net positive for
| MS.
| pacifika wrote:
| 50 year grudges are not relevant there is no one still at ibm
| that worked there in 1977, IMHO.
| ndr wrote:
| Culture evolution can be very fast, yet some cultures stick
| around for a very long time.
| vlovich123 wrote:
| It's the ship of Theseus in corporate form. Even if all the
| people are gone but the culture hasn't changed, is the
| criticism inaccurate?
| altmanaltman wrote:
| I mean, okay, but you're taking the current leadership's
| words and claiming they are incorrect because IBM
| management was not great at identifying trends decades ago.
| Historical trend is not an indicator of the future and it's
| not engaging in good faith on the conversation if
| overspending on AI can be backed by revenue in the future.
| You're attacking the messenger instead of the message.
| alex77456 wrote:
| I didn't read the top level comment as dismissive or
| 'proving it wrong', but rather as adding context, or even
| being humorous somewhat
| altmanaltman wrote:
| I don't understand how calling something "a ship of
| Theseus in corporate form" or "culture hasn't changed"
| etc, is not dismissive of the actual comment by the CEO
| on AI overspending. They _dismissed_ the content of the
| message by saying IBM 's culture sucks, is how i read it.
| Also things can be funny and dimissive at the same time,
| they often are.
| vlovich123 wrote:
| I'm saying given IBMs track record of completely failing
| at innovation repeatedly and failing at investing on the
| correct technologies, why do you assume today's CEO is
| better at it and has bucked the milquetoast culture that
| has pervaded IBM? It's a company that has largely
| divested its ability to provide solutions and technology
| and turned more into a large shop consultancy (+ milking
| their legacy mainframe contracts and whatnot).
| kelnos wrote:
| Except that, over the same time period, IBM was also very
| _successful_ at innovation and investing in technologies.
| Yes, they made some very high-profile misses that the top
| poster lists, but they were still a powerhouse doing
| other stuff during that time (as a commenter replying to
| that points out).
| vlovich123 wrote:
| Except all the technologies listed were basically in the
| heydey of the 70s and 80s. Gerstner redirected IBM into
| an enterprise services business in the early 90s and by
| the late 90s that's where all their money was. The 2002
| acquisition of PwC consulting cemented this shift. In the
| mid 2010s under Ginni Rometty IBM software became
| secondary and it abandoned selling it as standalone
| software instead bundling it into its consultancy.
|
| So IBM hasn't been doing hardware R&D for about three
| decades and abandoned software R&D well over a decade
| ago. R&D hasn't been in their DNA for a long time, their
| previous contributions notwithstanding.
| EagnaIonat wrote:
| > So IBM hasn't been doing hardware R&D for about three
| decades
|
| Even a 5 second google search says you are wrong.
|
| https://research.ibm.com/semiconductors/ai-hardware-
| center
|
| https://research.ibm.com/topics/quantum-hardware
| vlovich123 wrote:
| Having a research department is very different from
| whether they are actually accomplishing anything and
| whether or not it is a meaningful revenue stream. On all
| fronts this is just not true. The quantum stuff so far in
| the industry is vapor ware and its unclear wether IBM is
| really making forward progress vs yearly pronouncements
| of progress to keep the funding stream open
| EagnaIonat wrote:
| > Even if all the people are gone but the culture hasn't
| changed
|
| Can you expand on this? What was the culture then versus
| now?
|
| For example back then it was the culture to have suit
| inspectors ensure you had the right clothes on and even
| measure your socks. (PBS Triumph of the Nerds)
| elnatro wrote:
| Were Xerox, Dec, or Apple burning investor money by the
| billions of dollars?
| spiderfarmer wrote:
| No, but the comment above and variations of it are mentioned
| in every thread about IBM, so it's probably just a reflex at
| this point without much thought behind it.
| beambot wrote:
| Xerox is clearly crushing it in 2025... /s
| raducu wrote:
| That's completely beyond the point, though? Kodak invented
| the digital camera, did not think anything about it and
| others then ate their lunch. Those others are also not
| crushing it in 2025. The point is IBM is not the go-to to
| listen about AI. Also not saying they are not right, even a
| broken clock is right 2 times a day.
| kelnos wrote:
| > _The point is IBM is not the go-to to listen about AI._
|
| Why not, though? For better or worse, they're a
| consulting services company these days, and they work
| with an eye-wateringly large number of companies. I would
| expect them to have a very good view as to what companies
| use AI for, and plan/want to use AI for in the future.
| They may not be experts in the tech itself, but I think
| they're decently well-positioned to read the tea leaves.
| soulofmischief wrote:
| I'm typing this comment from an Apple MacBook, whose
| interface is a direct result of Xerox PARC allowing Steve
| Jobs to view the Alto. Xerox was extremely innovative at
| that time, and with the right leadership, could have become
| #1 in personal computing.
| chroma205 wrote:
| > Were Xerox, Dec, or Apple burning investor money by the
| billions of dollars?
|
| Shhh. You are not allowed to ruin OpenAI's PPU value. Can't
| make the E7's feel bad.
| camillomiller wrote:
| "If you're not happy you can sell your shares"
| jacquesm wrote:
| Steve Jobs, the guy that got booted out of his own company
| _and_ that required a lifeline from his arch nemesis to
| survive?
|
| This is all true, but it was only true in hindsight and as such
| does not carry much value.
|
| It's possible that you are right and AI is 'the future' but
| with the present day AI offering I'm skeptical as well. It
| isn't at a level where you don't have to be constantly on guard
| against bs and in that sense it's very different from computing
| so far, where reproducibility and accuracy of the results were
| important, not the language that they are cast in.
|
| AI has killed the NLP field and it probably will kill quite a
| few others, but for the moment I don't see it as the
| replacement of general computing that the proponents say that
| it is. Some qualitative change is still required before I'm
| willing to check off that box.
|
| In other news: Kodak declares digital cameras a fad, and
| Microsoft saw the potential of the mp3 format and created a
| killer device called the M-Pod.
| Jean-Papoulos wrote:
| But how many companies did IBM pass on that did crash and burn
| ? And how many did it not pass on and did decently ? They're
| still around after more than 3 generations worth of tech
| industry. They're doing _something_ right.
|
| TLDR Cherrypicking
| helsinkiandrew wrote:
| > IBM has not exactly had a stellar record at identifying the
| future.
|
| IBM invented/developed/introduced magnetic stripe cards, UPC
| Barcodes, the modern ATM, Hard drives, floppies, DRAM, SQL, the
| 360 Family of Mainframes, the PC, Apollo guidance computers,
| Deep Blue. IBM created a far share of the future we're living
| in.
|
| I'm no fan of much of what IBM is doing at the moment but it
| could be argued that its consultancy/service orientation gives
| it a good view of how business is and is planning to use AI.
| Aperocky wrote:
| The other way to look at it is that the entire consulting
| industry is teetering on catastrophe. And IBM, being largely
| a consulting company now, is not being spared.
| carlmr wrote:
| This is a separate argument though. A failing company may
| still be right in identifying other companies failure
| modes.
|
| You can be prescient about failure in one area and still
| fail yourself. There's no gotcha.
| marliechiller wrote:
| > A failing company may still be right in identifying
| other companies failure modes.
|
| Agreed if this is what they are doing, but what if theyre
| spewing claims to try and discredit an industry in order
| to quell their shareholder concerns?
| rbanffy wrote:
| They are not the only ones looking at the money spent in
| AI datacentres and concluding most of the investment will
| not be recovered anytime soon.
|
| A lot of the silicon being deployed is great for
| training, but inefficient for inference and the training
| to inference ratio for usage shows a clear tendency to go
| the inference way. Furthermore, that silicon, with the
| workloads it runs, doesn't last long and needs
| replacement.
|
| The first ones to go online might recover the investment,
| but the followers better have a plan to pivot to other
| uses.
| esseph wrote:
| IBM is not a failing company though, they are a Goliath
| in the Enterprise space.
| carlmr wrote:
| Still besides the point. The company failing or not is
| orthogonal to them being able to identify failure in
| others.
| bayindirh wrote:
| IBM was making "calculating cheese cutters" back in the day
| [0].
|
| I'm sure they can pivot to something else if the need
| arises.
|
| [0]: https://imgur.com/a/ibm-cheese-cutter-Rjs2I
| kelnos wrote:
| IBM isn't failing, though. They're a profitable company
| with healthy margins, and enterprises continue to hire them
| for all sorts of things, in large numbers.
| Aperocky wrote:
| So now it makes more sense why they think the AI spending
| will/need to fail.
|
| Because if it didn't, that's a direct replacement of
| them.
| ahartmetz wrote:
| > The other way to look at it is that the entire consulting
| industry is teetering on catastrophe
|
| Oh? Where'd you get that information?
|
| If you mean because of AI, it doesn't seem to apply much to
| IBM. They are probably not great at what they do like most
| such companies, but they are respectable and can take the
| blame if something goes wrong. AI doesn't have these
| properties.
| leoc wrote:
| If anything there's likely plenty of work for body shops
| like IBM in reviewing and correcting AI-generated work
| product that has been thrown into production recently.
| iso1631 wrote:
| The whole point of a consultant is to let the execs blame
| someone else.
|
| Nobody got fired for buying something Gartner recommended,
| or for following EY's advice to lay off/hire
|
| I don't see AI taking that blame away.
| esseph wrote:
| They own Red Hat Linux, Ansible, OpenShift, and Terraform.
|
| If you are doing anything in the Enterprise space, they
| probably have their claws in you be it on-prem or cloud.
|
| And their work on quantum...
|
| https://www.forbes.com/sites/baldwin/2025/11/25/inside-
| ibms-...
|
| Not to mention they are still doing quite a bit of
| Mainframe...
| jrflowers wrote:
| > IBM invented/developed/introduced magnetic stripe cards,
| UPC Barcodes, the modern ATM, Hard drives, floppies, DRAM,
| SQL, the 360 Family of Mainframes, the PC, Apollo guidance
| computers, Deep Blue. IBM created a far share of the future
| we're living in.
|
| Well put. "IBM was wrong about computers being a big deal" is
| a bizarre take. It's like saying that Colonel Sanders was
| wrong about chicken because he, uh... invented the pressure
| fryer.
| hinkley wrote:
| They also either fairly accurately predicted the death of
| HDDs by selling off their research division before the market
| collapsed, or they caused the end of the HDD era by selling
| off their research division. They did a lot of research.
| ReptileMan wrote:
| The hdd being dead will surely come as a surprise to the
| couple of 12TB rusties spinning joyously in my case right
| now.
| newsclues wrote:
| HDDs would be much more important today if flash storage
| didn't exist.
| busssard wrote:
| did you know that SSD are not memory stable if they dont
| get electricity every now and again...
| dcminter wrote:
| Spinning platters are prone to catastrophic mechanical
| failure and tape can undergo delamination. What of it?
| jfindper wrote:
| One family down the street from me still drives a Saturn!
| Yet no one is going to say "Saturn isn't dead!".
| ReptileMan wrote:
| Nope. It is like - suddenly every truck everywhere is
| Saturn. The unit count may be lower but the total tonnage
| moved grows. While HDD shipments have fallen fourfold
| counted in units, if you check total exabytes delivered
| you will see they are shipping a lot.
| highwaylights wrote:
| I think the retail market is maybe dead but datacenters are
| still a fairly large customer I'd think. HDDs really shine
| at scale where they can be fronted by flash and DRAM cache
| layers.
| rbanffy wrote:
| They are still cheaper than flash for cold data, but
| that's not going to hold for long. Flash is so much
| denser the acquisition cost difference for a multi-
| petabyte store becomes small next to the datacenter space
| and power needed by HDDs. HDDs require research for
| increasing density while flash can rely on silicon
| manufacturing advances for that - not that it doesn't
| require specific research, but being able to apply the IP
| across a vast space makes better economical sense.
| meekaaku wrote:
| IBM is/was good at inventing a lot of tech.
|
| It may not be good at recognizing other good tech invented or
| paradigm changes by others
| IAmBroom wrote:
| Nor is their CEO in any way unbiased.
| Glemkloksdjf wrote:
| For the fact that they invented Deep Blue, they are really
| struggling with AI
| catwell wrote:
| Their Granite family of models is actually pretty good!
| They just aren't working on the mainstream large LLMs that
| capture all the attention.
| rbanffy wrote:
| IBM is always very conscious of what their clients need
| (and the large consultancy business provides a very
| comprehensive view). It just turns out their clients
| don't need IBM to invest in large frontier models.
| oedemis wrote:
| ibm developed SSMs/mamba models and also releasing
| trainings datasets i think, also quantum computing is
| strategic option..
| Glemkloksdjf wrote:
| For sure but do you see them at any relevant leader
| boards? Any news how good they are?
|
| I don't.
|
| I know their models, but not because i constantly read
| about it
| oedemis wrote:
| https://huggingface.co/ibm here is very interesting
| research going https://huggingface.co/ibm-granite
| consp wrote:
| I've heard some second hand stories about IBM's way of using
| "AI" and it is pretty much business oriented and not much of
| the glamour and galore promises the other companies make (of
| course you still have shiny new things in business terms).
| It's actually good entertainment hearing all the internal
| struggles of business vs fancy during the holidays.
| bayindirh wrote:
| IBM is an interesting beast when it comes to business
| decisions. While I can't give exact details, their business
| intelligence and ability to predict monetary things is
| uncannily spot-on at times.
|
| So, when their CEO says that this investment will not pay off,
| I tend to believe them, because they most probably have the
| knowledge, insight and data to back that claim, and they have
| ran the numbers.
|
| Oh, also, please let's not forget that they dabbled in "big AI"
| before everyone else. Anyone remembers Deep Blue and Watson,
| the original chatbot backed by big data?
| m101 wrote:
| As evidenced by the fact that they are a 100+ year old
| company that still exists. People forget that.
| EagnaIonat wrote:
| I read the actual article.
|
| He is pointing out that the current costs to create the data
| centres means you will never be able to make a profit to cover
| those costs. $800 Billion just to cover the interest.
|
| OpenAI is already haemorrhaging money and the space data
| centres has already been debunked. There is even a recent paper
| that points out that LLMs will never become AGI.
|
| The article also finishes out with some other experts giving
| the same results.
|
| [edit] Fixed $80 to $800
| ta12653421 wrote:
| >> There is even a recent paper that points out that LLMs
| will never become AGI.
|
| can you share a link?
| EagnaIonat wrote:
| Took me a while to find again, as there are a lot of such
| papers in this area.
|
| https://www.arxiv.org/pdf/2511.18517
| will4274 wrote:
| Is this AI paper written by a reputable subject matter
| expert? It seems to be written by a physicist and also be
| the only academic work by this author in English
| rvnx wrote:
| Absolutely. If it is not written by someone who has real
| world experience and deep knowledge it has no more value
| than a HN comment.
| EagnaIonat wrote:
| It's a good read and good citations.
|
| The core piece as quoted from the abstract: "AGI
| predictions fail not from insufficient compute, but from
| fundamental misunderstanding of what intelligence demands
| structurally."
|
| Then goes in detail as to what that is and why LLMs don't
| fit that. There are plenty other similar papers out
| there.
| rvnx wrote:
| It was more of a general principle than about specific
| paper that I mentioned that :)
| EagnaIonat wrote:
| So you are dismissing it because of that? Certainly read
| the paper first and attack the arguments, not the author.
| It even has 10 pages of citations.
|
| I have read it. It is nothing new on the subject, but it
| was just the recent paper I saw on HN and the person was
| asking for the link.
|
| The crux is an LLM is and can never be intelligent in the
| sense of an AGI. It is easier to think of it as a way to
| store and retrieve knowledge.
| quietbritishjim wrote:
| How many articles on this topic do we imagine there are?
| Thousands? Hundreds of thousands? It is hopeless to read
| every one by any author, no matter how unrelated to the
| domain, and judge them individually on their merits.
| Being a subject domain expert is not a perfect measure of
| paper quality but it's the only feasible way to make a
| first pass at filtering.
|
| Even if I did read it, I have no hope of understanding if
| it has made a fundamental mistake because I don't have
| the subject matter expertise either.
|
| (I imagine it has made a fundamental mistake anyway: for
| LLMs to be useful progress toward AGI they don't have to
| be a feasible way to create AGI by themselves. Innovation
| very often involves stepping through technologies that
| end up only being a component of the final solution, or
| inspiration for the final solution. This was always going
| to be an issue with trying to prove a negative.)
| EagnaIonat wrote:
| > It is hopeless to read every one by any author,
|
| It was a paper posted on HN a few days ago and someone
| asked for the evidence of my statement. I supplied it.
|
| Now if they actually read it and disagreed with what it
| was saying, I'd be more than happy to continue the
| conversation.
|
| Dismissing it just because you don't understand is a
| terrible thing to do to yourself. It's basically
| sabotaging your intelligence.
|
| Sometimes papers are garbage, but you can only make that
| statement after you have read/understood it.
|
| Use an LLM if you want.
| will4274 wrote:
| I was really just asking, not trying to be dismissive.
| Expertise is an important context to evaluate a piece of
| writing.
| mkl wrote:
| A single author, in a physics department. Seems unlikely
| to be groundbreaking or authoritative.
| EagnaIonat wrote:
| Welcome to the world of papers. Have a read and get back
| to us. Dismissing out of hand is rarely constructive.
| trueno wrote:
| took me a while but i read it. thought it was actually a
| pretty good and well researched paper that does a good
| job rationalizing its thesis. thanks for sharing
| rf15 wrote:
| Ad hominem right out of the gate? Really?
| noobermin wrote:
| $800B, to be clear is the claim, not $80B.
| EagnaIonat wrote:
| Clearly I need to read slower. Thanks. :)
| Glemkloksdjf wrote:
| Sry to say but the fact that you argue with LLMs never become
| AGI, you are not up-to-date.
|
| People don't assume LLM will be AGI, people assume that World
| Models will lead us to AGI.
|
| I personally never asumed LLM will become AGI, i always
| assumed that LLM broke the dam for investment and research
| into massivce scale compute ML learning and LLMs are very
| very good in showing were the future goes because they are
| already so crazy good that people can now imagine a future
| were AGI exists.
|
| And that was very clear already when / as soon as GPT-3 came
| out.
|
| The next big thing will probably be either a LOT more RL or
| self propelling ai architecture discovery. Both need massive
| compute to work well but then will potentially provide even
| faster progress as soon as humans are out of the loop.
| EagnaIonat wrote:
| > People don't assume LLM will be AGI,
|
| I wish that was true.
|
| > people assume that World Models will lead us to AGI.
|
| Who are these people? There is no consensus around this
| that I have seen. You have anything to review regarding
| this?
|
| > as soon as GPT-3 came out.
|
| I don't think that was true at all. It was impressive when
| it came out, but people in the field clearly saw the
| limitations and what it is.
|
| RL isn't magical either. Google AlphaGo as an example often
| required human intervention to get the RL to work
| correctly.
| Glemkloksdjf wrote:
| AlphaGo Zero doesn't need much human intervention at all.
|
| Regarding world models: All the big ones. LeCun, Demis
| Hassabis, Fei-Fei Li too. And they are all working on it.
|
| LLMs will definitly play some type of role in AGI. After
| all you can ask an LLM already a lot of basic things like
| 'what are common tasks to make a tea'. A type of guide,
| long term fact memory or whatever this can be called.
| SalmoShalazar wrote:
| Are OpenAI or Anthropic et al seriously building towards
| "world models"? I haven't seen any real evidence of that.
| It seems more like they are all in on milking LLMs for all
| they are worth.
| Glemkloksdjf wrote:
| I mentioned it in my other comment but people like LeCun,
| Demis Hassabis, Fei-Fei Li do.
|
| There are indications that Open AI is doing this but
| nothing official as far as i know and i have not heard
| anything from Anthropic.
| rbanffy wrote:
| While AGI might be the Holy Grail, AI doesn't need to be
| general human-level to be useful and profitable.
| mrwrong wrote:
| it just needs us to wait one more year right?
| jrflowers wrote:
| > IBM has not exactly had a stellar record at identifying the
| future.
|
| This would be very damning if IBM had only considered three
| businesses over the course of seventy years and made the wrong
| call each time.
|
| This is like only counting three times that somebody got food
| poisoning and then confidently asserting that diarrhea is part
| of their character.
| hansmayer wrote:
| Right, you just missed the part where DEC went out of business
| in the 90s. And IBM is still around, with a different business
| model.
| esseph wrote:
| Yet here they are at the front of Quantum Computing research
| jasonwatkinspdx wrote:
| You could try addressing the actual topic of discussion vs this
| inflammatory and lazy "dunk" format that frankly, doesn't
| reflect favorably on you.
| zaphirplane wrote:
| The idea that a company DNA somehow lives over 100 years and
| maintains the same track record is far fetched.
|
| that the OpenAI tech bro are investing in AI using a grown up
| ROI is similarly far fetched, they are burning money to pull
| ahead of the reset and assume the world will be in the palm of
| the winner and there is only 1 winner. Will the investment pay
| off if there are 3 neck and neck companies ?
| zkmon wrote:
| So, is the napkin math wrong, or you are just going by the
| company history?
| kelnos wrote:
| We can cherry-pick blunders made by any big company to make a
| point. Maybe it would be more honest to also list companies IBM
| passed on that turned out to be rubbish? And all the
| technologies that IBM _did_ invest in that made them a ton of
| money and became industry standards?[0]
|
| Today, Xerox has less total revenue than IBM has profit. DEC
| went out of business 27 years ago. Apple is an in astoundingly
| great place right now, but Jobs got kicked out of his own
| company, and then returned when it was about to fail, having to
| take investment from Microsoft(!) in order to stay afloat.
|
| Meanwhile, IBM is still here, making money hand over fist. We
| might not have a ton of respect for them, being mostly a
| consulting services company these days, but they're doing just
| fine.
|
| [0] As another commenter points out:
| https://news.ycombinator.com/item?id=46131245
| otikik wrote:
| Even a broken watch is right twice per day
| fedeb95 wrote:
| this is cherry picking.
| delis-thumbs-7e wrote:
| I'm sorry, but this is stupid, you understand that you have
| several logical errors in your post? I was sure Clinton is
| going to win 2016. Does that mean that when I say 800 is bigger
| than 8 is not to be trusted?
|
| Do people actually think that running a business is some
| magical realism where you can manifest yourself to become a
| billionaire if you just believe hard enough?
| walt_grata wrote:
| The post is almost worse than you give it credit for. Like it
| doesn't even take into account different people are making
| the decisions.
| nosianu wrote:
| For some strange reason a lot of people were attracted by a
| comment that speaks about everything else BUT the actual topic
| and its the top comment now. Sigh.
|
| If you think that carefully chosen anecdotes out of many many
| more are relevant, there needs to be at least an attempt of
| reasoning. There is nothing here. It's really just barebones
| mentioning of stuff intentionally selected to support the
| preconceived point.
|
| I think we can, and should, do better in HN discussions, no?
| This is "vibe commenting".
| zorked wrote:
| This isn't even a great argument at a literal level. Nowadays
| nobody cares about Xerox and their business is selling
| printers, DEC was bought by Compaq which was bought by HP.
| Apple is important today because of phones, and itself was
| struggling selling personal computers and needed a (antitrust-
| motivated) bailout from Microsoft to survive during the
| transition.
| camillomiller wrote:
| IBM is still alive and kicking well, and definitively more
| relevant than Xerox or DEC. You are completely misconstruing
| Jobs' point to justify the current AI datacenter tulip fever.
| akst wrote:
| "The amount being spent on AI data centres not paying off" is a
| different statement to "AI is not worth investing in". They're
| effectively saying the portions people are investing are
| disproportionately large to what the returns will end up being.
|
| It's a difficult thing to predict, but I think there's almost
| certainly some wasteful competition here. And some competitors
| are probably going to lose hard. If models end up being easy to
| switch between and the better model is significantly better
| than its competitors, than anything invested in weaker models
| will effectively be for nothing.
|
| But there's also a lot to gain from investing in the right
| model, even so it's possible those who invested in the winner
| may have to wait a long time to see a return on their
| investment and could still possibly over allocate their capital
| at the expense of other investment opportunities.
| bodge5000 wrote:
| This is the exact kind of thinking that got us into this mess
| in the first place, and I'm not blaming you for it, it seems to
| be something all of us do to an extent. We don't look to Meta,
| who only a few years ago thought that the Metaverse would be
| the "next big thing" as an example of failure to identify the
| future, we look to IBM who made that mistake almost 30 years
| ago. Underestimating a technology seems to stick much harder
| than overestimating one.
|
| If you want to be seen as relevant in this industry, or as a
| kind of "thought leader", the easy trick seems to be to hype up
| everything. If you do that and you're wrong, people will
| quickly forget. If you don't and you're wrong, that will stain
| your reputation for decades.
| axegon_ wrote:
| The amount of hate I've received here for similar statements
| is astonishing. What is even more astonishing is that it
| takes 3-rd grade math skills to work out that the current
| AI(even ignoring the fact that there is nothing intelligent
| about the current AI) costs are astronomical and they do not
| deliver on the promises and everyone is operating at wild
| loses. At the moment we are at "if you owe 100k to your bank,
| you have a problem but if you owe 100M to your bank, your
| bank has a problem". It's the exact same bullshitter economy
| that people like musk have been exploiting for decades:
| promise a ton, never deliver, make a secondary promise for
| "next year", rinse and repeat -> infinite profit. Especially
| when you rope in fanatical followers.
| consp wrote:
| The last sentence sounds a lot like a (partial?) Ponzi
| scheme.
| axegon_ wrote:
| Pretty close really. Just enough to buy some plausible
| deniability I suppose.
| blkhawk wrote:
| I don't want to defend musk in any way but I think you are
| making a mistake there using him as an example because what
| boosted him quite a lot is that he actually delivered what
| he claimed. Always late but still earlier than anybody was
| guesstimating. And now he is completely spiraling but its a
| lot harder to lose a billion than to gain one so he
| persists and even gets richer. Plus his "fanatical"
| followers are poor. It just doesn't match the situation.
| axegon_ wrote:
| Sounds a lot like "I'm not racist but". There's a website
| dedicated to all of his bs https://elonmusk.today
|
| He is the definition of a cult. Collects money from
| fanatical followers who will praise every word he says,
| never delivers, "oh next year guys, for sure, wanna buy a
| not a flamethrower, while you are at it?". Not to mention
| what once were laughable conspiracy theories about him
| turned out to be true(such that even I laughed when I
| heard them). Torvalds is right with his statement about
| musk: "incompetent" and "too stupid to work at a tech
| company".
| blkhawk wrote:
| I am just saying that he is a bad example because he is a
| different beast from the run of the mill corporate
| potemkin-ism.
| mistersquid wrote:
| > We don't look to Meta, who only a few years ago thought
| that the Metaverse would be the "next big thing" as an
| example of failure to identify the future, we look to IBM who
| made that mistake almost 30 years ago.
|
| The grandparent points to a pattern of failures whereas you
| point to Meta's big miss. What you miss about Meta, and I am
| no fan, is that Facebook purchased Whatsapp and Instagram.
|
| In other words, two out of three ain't bad; IBM is zero for
| three.
|
| While that's not the thrust of your argument, which is about
| jumping on the problem of jumping on every hype train, the
| post to which you reply is not on about hype cycle. Rather,
| that post calls out IBM for a failure to understand the
| future of technology and does so by pointing to a history of
| failures.
| bodge5000 wrote:
| > In other words, two out of three ain't bad; IBM is zero
| for three.
|
| Many others in this thread have pointed out IBM's
| achievements but regardless, IBM is far from "zero for
| three".
| mistersquid wrote:
| > Many others in this thread have pointed out IBM's
| achievements but regardless, IBM is far from "zero for
| three".
|
| I was specifically commenting in the context of this
| thread.* I was not trying to characterize either IBM or
| Meta except with reference to the arguments offered by
| this thread's ancestors.
|
| I understood (and understand) that such scorekeeping of a
| company as storied as IBM is at best reductive and at
| worst misrepresentative.
|
| * Your reference to "this thread" actually addresses
| sibling comments to OP (ggggp), not this thread which was
| started by gggp.
| benchly wrote:
| Good point. That kind of thinking is an absurdity. Saying IBM
| dropped the ball 70 years ago without acknowledging that
| lessons were learned, leadership has changed hands a lot
| since then, and most importantly, the tech landscape back
| then was _very different from today_ unless you grossly
| oversimplify everything amounts to nothing more than a
| fallacious opinion.
|
| Not even much of an IBM fan, myself, but I respect their
| considerable contribution to the industry. Sure, they missed
| a shot back then, but I think this latest statement is
| reliably accurate based on the information we currently have.
| baxtr wrote:
| It's easy to be a pessimist. Most things don't work. So in 9
| out of 10 cases you're right.
|
| But human breakthrough progress came mostly through
| optimists, who tried things no one else dared to do.
| BoredPositron wrote:
| Hot Hand Fallacy.
| ActionHank wrote:
| Cool story, but it's more than just the opinion of this CEO.
| It's logic.
|
| Hardware is not like building railroads, the hardware is
| already out of date once deployed and the clock has started
| ticking on writing off the expense or turning a profit on it.
|
| There are fundamental discoveries needed to make the current
| tech financially viable and an entire next generation of
| discoveries needed to deliver on the over inflated promises
| already made.
| m101 wrote:
| How about check out how many companies exist today vs existed
| in 1958? If you look at it that way then just surviving is an
| achievement in itself and then you might interpret their
| actions as extremely astute business acumen.
| gosub100 wrote:
| You, or your existence, probably triggers multiple transactions
| per day through a POWER mainframe without you even knowing it.
| Their mainframes handle the critical infrastructure that can't
| go down.It's so reliable we don't even think about it. I
| shudder to think about Microsoft or Apple handling that.
| RobertoG wrote:
| Didn't also pass on SAP at some point? I think I read that
| somewhere.
| zeckalpha wrote:
| Reminds me of all the dark fiber laid in the 1990s before DWDM
| made much of the laid fiber redundant.
|
| If there is an AI bust, we will have a glut of surplus hardware.
| dangus wrote:
| The problem is that the laid fiber can be useful for years
| while data center hardware degrades and becomes obsolete fast.
|
| It could be a massive e-waste crisis.
| SchemaLoad wrote:
| Those GPUs don't just die after 2 years though, they will
| keep getting used since it's very likely their electricity
| costs will be low enough to still make it worth it. What's
| very dubious is if their value after 2/3 years will be enough
| to pay back the initial cost to buy them.
|
| So it's more a crisis of investors wasting their money rather
| than ewaste.
| oofbey wrote:
| For the analogy to fiber & DWDM to hold, we'd need some
| algorithmic breakthrough that makes current GPUs much faster /
| more efficient at running AI models. Something that makes the
| existing investment in hardware unneeded, even though the
| projected demand is real and continues to grow. IMNSHO that's
| not going to happen here. The foreseeable efficiency
| innovations are generally around reduced precision, which
| almost always require newer hardware to take advantage of.
| Impossible to rule out brilliant innovation, but I doubt it
| will happen like that.
|
| And of course we might see an economic bubble burst for other
| reasons. That's possible again even if the demand continues to
| go up.
| raldi wrote:
| Google bought up all that dark fiber cheap a decade later and
| used it as the backbone of their network.
| octoberfranklin wrote:
| The dark fiber glut wasn't caused by DWDM suddenly appearing
| out of nowhere.
|
| The telcos saw DWDM coming -- they funded a lot of the research
| that created it. The breakthrough that made DWDM possible was
| patented in 1991, long before the start of the dotcom mania:
| https://patents.google.com/patent/US5159601
|
| It was a straight up bubble -- the people digging those
| trenches really thought we'd need all that fiber even at dozens
| of wavelengths per strand.
|
| They believed it because people kept showing them hockey-stick
| charts.
| mathattack wrote:
| Interesting to hear this from IBM, especially after years of
| shilling Watson and moving from being a growth business to the
| technology audit and share buyback model.
| prodigycorp wrote:
| also because the market (correctly) rewards ibm for nothing, so
| if they're going to sit around twiddling their fingers, they
| may as well do it in a capex-lite way.
| roncesvalles wrote:
| I'm still flumoxed by how IBM stock went from ~$130 to $300
| in the last few years for essentially no change in their
| fundamentals (in fact, a decline). IBM's stock price to me is
| the single most alarming sign of either extreme shadow
| inflation, or an equities bubble.
|
| Why do you say the market correctly prices it this way?
| sethops1 wrote:
| IBM has been quietly leading the charge in offshoaring to
| India. Investors are happy with the reduced costs.
| pezgrande wrote:
| maybe acquiring Redhat improve the expectations? All these
| new fancy AI datacenter may be considering using
| Redhat/Centos.
| itake wrote:
| imho, IBM's quant computing says they are still hungry for
| growth.
|
| Apple and google still do share buy backs and dividends,
| despite launching new businesses
|
| https://www.ibm.com/roadmaps/
| mathattack wrote:
| It's been a different order of magnitude. IBM repurchased
| approximately half their outstanding stock. This is
| consistent with a low growth company that doesn't know how to
| grow any more. (And isn't bad - if you can't produce a return
| on retained earnings, give them back to shareholders.
| Buybacks are the most efficient way to do this.)
|
| I can't explain why they have a PE ratio of 36 though. That's
| too high for a "returning capital" mature company. Their top
| line revenue growth is single digit %s per year. Operating
| income and EBITDA are growing faster, but there's only so
| much you can cut.
|
| You may be right on the quantum computing bet, though that
| seems like an extraordinary valuation for a moonshot bet
| attached to a company that can't commercialize innovation.
| 1970-01-01 wrote:
| There's really 3 fears going on:
|
| 1. The devil you know (bubble)
|
| 2. The devil you don't (AI global revolution)
|
| 3. Fear of missing out on devil #2
|
| I don't think IBM knows anything special. It's just more noise
| about fear1 & fear3.
| getnormality wrote:
| A decade ago, IBM was spending enormous amounts of money to tell
| me stuff like "cognitive finance is here" in big screen-hogging
| ads on nytimes.com. They were advertising Watson, vaporware which
| no one talks about today. Are they bitter that someone else has
| actually made the AI hype take off?
| ghaff wrote:
| Initial Watson was sort of a mess. But a lot of the Watson-
| related tech is integrated into a lot of products these days.
| mikalauskas wrote:
| What related tech and what products, interesting to read
| about them
| ghaff wrote:
| Baked into a lot a Red Hat products including Ansible and
| RHEL. Not that directly involved any longer. Probably read
| up on watsonx.ai.
| hn_throwaway_99 wrote:
| Such as? I'm curious because I know a bunch of people who did
| a lot of Watson-related work and it was all a dead end, but
| that was 2020-ish timeframe.
| ghaff wrote:
| IBM did a lot of pretty fragmented and often PR-adjacent
| work. And getting into some industry-specific (e.g.
| healthcare) things that didn't really work out. But my
| understanding is that it's better standardized and embedded
| in products these days.
| hn_throwaway_99 wrote:
| Not to be rude, but that didn't answer my question.
|
| Taking a look at IBM's Watson page,
| https://www.ibm.com/watson, it appears to me that they
| basically started over with "watsonx" in 2023 (after
| ChatGPT was released) and what's there now is basically
| just a hat tip to their previous branding.
| jimmar wrote:
| I don't know that I'd trust IBM when they are pitching their
| own stuff. But if anybody has experience with the difficulty of
| making money off of cutting-edge technology, it's IBM. They
| were early to AI, early to cloud computing, etc. And yet they
| failed to capture market share and grow revenues sufficiently
| in those areas. Cool tech demos (like the Watson Jeopardy)
| mimic some AI demos today (6-second videos). Yeah, it's cool
| tech, but what's the product that people will actually pay
| money for?
|
| I attended a presentation in the early 2000s where an IBM
| executive was trying to explain to us how big software-as-a-
| service was going to be and how IBM was investing hundreds of
| millions into it. IBM was right, but it just wasn't IBM's
| software that people ended up buying.
| stingraycharles wrote:
| Xerox was also famously early with a lot of things but failed
| to create proper products out of it.
|
| Google falls somewhere in the middle. They have great R&D but
| just can't make products. It took OpenAI to show them how to
| do it, and the managed to catch up _fast_.
| mikepurvis wrote:
| Google was especially well positioned to catch up because
| they have a lot of the hardware and expertise _and_ they
| have a captive audience in gsuite and at google.com.
| SamvitJ wrote:
| "They have great R&D but just can't make products"
|
| Is this just something you repeat without thinking? It
| seems to be a popular sentiment here on Hacker News, but
| really makes no sense if you think about it.
|
| Products: Search, Gmail, Chrome, Android, Maps, Youtube,
| Workspace (Drive, Docs, Sheets, Calendar, Meet), Photos,
| Play Store, Chromebook, Pixel ... not to mention Cloud,
| Waymo, and Gemini ...
|
| So many widely adopted products. How many other companies
| can say the same?
|
| What am I missing?
| m4rtink wrote:
| Didn't they buy lots of those actually ?
| stingraycharles wrote:
| And to my point, it took Apple to make the iPhone for
| Google to make Android.
|
| It took OpenAI for Google to finally understand make a
| product out of their years if not decades of AI research.
|
| YouTube and Maps are both acquisitions indeed.
| Esras wrote:
| I think the sentiment is usually paired with discussion
| about those products as long-lasting, revenue-generating
| things. Many of those ended up feeding back into Search
| and Ads. As an exercise, out of the list you described,
| how many of those are meaningfully-revenue-generating,
| without ads?
|
| A phrasing I've heard is "Google regularly kills billion-
| dollar businesses because that doesn't move the needle
| compared to an extra 1% of revenue on ads."
|
| And, to be super pedantic about it, Android and YouTube
| were not products that Google built but acquired.
| MegaDeKay wrote:
| They bought YouTube but you have to give Google a hell of
| a lot of credit for turning it into what it is today.
| Taking ownership of YouTube at the time was seen by many
| as taking ownership of an endless string of copyright
| lawsuits, suing them into oblivion.
| hadlock wrote:
| Youtube maintains an independent campus from the
| google/alphabet mothership, I'm curious how much
| direction they get, as (outwardly, at least) appear to
| run semi-autonomously.
| projektfu wrote:
| Before Google touched Android it was a cool concept but
| not what we think of today. Apparently it didn't even run
| on Linux. That concept came after the acquisition.
| tempest_ wrote:
| That is because the DoubleClick parasite has long
| infected the host.
| smoe wrote:
| I don't think Google is bad at building products. They
| definitely are excellent at scaling products.
|
| But I reckon part of the sentiment stems from many of the
| more famous Google products being acquisitions orignally
| (Android, YouTube, Maps, Docs, Sheets, DeepMind) or
| originally built by individual contributors internally
| (Gmail).
|
| Then here were also several times where Google came out
| with multiple different products with similar names
| replacing each other. Like when they had I don't know how
| many variants of chat and meeting apps replacing each
| other in a short period of time. And now the same thing
| with all the different confusing Gemini offerings. Which
| leads to the impression that they don't know what they
| are doing product wise.
| cma wrote:
| Why wouldn't you count things initially made by
| individual contributors at Google?
| oidar wrote:
| Because those were "free time" projects. It wasn't
| directed to do by the company, somebody at the company
| with their flex time - just thought it was a good idea
| and did it. Googlers don't get this benefit any more for
| some reason.
| lmm wrote:
| Because they're not a good measure of the company's
| ability to develop products based on the direction from
| leadership.
| Arainach wrote:
| Starting with an acquisition is a cheap way of
| accelerating once your company reaches a certain size.
|
| Look at Microsoft - Powerpoint was an acquisition. They
| bought most of the team that designed and built Windows
| NT from DEC. Frontpage was an acquisition, Azure came
| after AWS and was led by a series of people brought in in
| acquisitions (Ray Ozzie, Mark Russinovich, etc.). It's
| how things happen when you're that big.
| kelnos wrote:
| I think it's a little unfair to give DEC credit for NT.
| Sure, they may have bought the team, but they did most
| (all?) of the work on NT at Microsoft.
|
| That's not like Google buying Android when they already
| had a functioning (albeit not at all polished) smartphone
| OS.
| aaronAgain wrote:
| Those are all free products, some of them are pretty
| good. But free is the best business strategy to get a
| product to the top of the market. Are others better, are
| you willing to spend money to find out? Clearly, most
| people are not interested. The fact that they can destroy
| the market for many different types of software by giving
| it away and still stay profitable is amazing. But that's
| all they are doing. If they started charging for
| everything there would be better competition and
| innovation. You could move a whole lot of okay-but-not-
| great cars, top every market segment you want, if you
| gave them away for free. Only enthusiasts would remain to
| pay for slightly more interesting and specific features.
| Literally no business model can survive when their
| primary product is competing with good-enough free
| products.
| mike50 wrote:
| Search was the only mostly original product. With the
| exception of YouTube which was a purchase, Android and
| ChromeOS all the other products were initially clones.
| 7thaccount wrote:
| They come up with tons and tons of products like Google
| Glass and Google+ and so on and immediately abandon them.
| It is easy to see that there is no real vision. They make
| money off AdSense and their cloud services. That's about
| it.
| nunez wrote:
| Google does abandon a lot of stuff, but their core
| technologies usually make their way into other, more
| profitable things (collaborative editing from Wave into
| Docs; loads of stuff from Google+; tagging and
| categorizing in Photos from Picasa (I'm guessing); etc)
| tombert wrote:
| It annoyed me recently that they dropped support for some
| Nest/Google Home thermostats. Of course, they politely
| offered to let me buy a replacement for $150.
| falcor84 wrote:
| Notably all other than Gemini are from a decade or more
| ago. They used to know how to make products, but then
| they apparently took an arrow in the knee.
| lmm wrote:
| > Products: Search, Gmail, Chrome, Android, Maps,
| Youtube, Workspace (Drive, Docs, Sheets, Calendar, Meet),
| Photos, Play Store, Chromebook, Pixel ... not to mention
| Cloud, Waymo, and Gemini ...
|
| Many of those are acquisitions. In-house developed ones
| tend to be the most marginal on that list, and many of
| their most visibly high-effort in-house products have
| been dramatic failures (e.g. Google+, Glass, Fiber).
| tombert wrote:
| I was extremely surprised that Google+ didn't catch on.
| The week before Google+ launched, me and all my friends
| agreed that Facebook is toast, Google will do the same
| thing but better, and everyone has a Gmail account so
| there will be basically zero barrier to entry. Obviously,
| we were wrong; Google+ managed to snatch defeat out of
| the jaws of victory, Google+ never got significant
| traction, and Facebook managed to keep growing and now
| they're yet another Big Evil Tech Corporation.
|
| Honestly, I still don't really know how Google managed to
| mess that up.
| lmm wrote:
| I got early access to Google+ because of where I worked
| at the time. The invite-only thing had worked great for
| GMail but unfortunately a social network is useless if
| no-one else is on it. Then the real names thing and the
| resulting drumbeat of horror stories like "Google doxxed
| me to my violent ex-husband" killed what little momentum
| they had stone dead. I still don't know why they went so
| hard on that, honestly.
| eellpp wrote:
| Google had less incentive. Their incentive was to keep API
| bottled up and in brewing as long as possible so their
| existing moats in search, YouTube can extend in other
| areas. With openai they are forced to compete or perish.
|
| Even with gemini in lead, its only till they extinguish or
| make chatgpt unviable for openai as business. OpenAI may
| loose the talent war and cease to be leader in this domain
| against google (or Facebook) , but in longer term their
| incentive to break fresh aligns with average user
| requirements . With Chinese AI just behind, may be
| google/microsoft have no choice either
| DaiPlusPlus wrote:
| > but it just wasn't IBM's software that people ended up
| buying.
|
| Well, I mean, WebSphere was pretty big at the time; and IBM
| VisualAge became Eclipse.
|
| And I know there were a bunch of LoB applications built on
| AS/400 (now called "System i") that had "real" web-frontends
| (though in practice, they were only suitable for LAN and VPN
| access, not public web; and were absolutely horrible on the
| inside, e.g. Progress OpenEdge).
|
| ...had IBM kept up the pretense of investment, and offered a
| real migration path to Java instead of a rewrite, then
| perhaps today might be slightly different?
| Insanity wrote:
| Oh wow I didn't know Eclipse was an IBM product originally.
| IDEs have come so far since Eclipse 15 years ago.
|
| And while I'm writing this I just finished up today's
| advent of code using vim instead of a "real IDE" haha
| nunez wrote:
| Websphere is still big at loads of banks and government
| agencies, just like Z. They make loads on both!
| nish__ wrote:
| Neither cloud computing nor AI are good long term businesses.
| Yes, there's money to be made in the short term but only
| because there's more demand than there is supply for high-end
| chips and bleeding edge AI models. Once supply chains catch
| up and the open models get good enough to do everything we
| need them for, everyone will be able to afford to compute on
| prem. It could be well over a decade before that happens but
| it won't be forever.
| echelon wrote:
| This is my thinking too. Local is going to be huge when it
| happens.
|
| Once we have sufficient VRAM and speed, we're going to fly
| - not run - to a whole new class of applications. Things
| that just don't work in the cloud for one reason or
| another.
|
| - The true power of a "World Model" like Genie 2 will never
| happen with latency. That will _have_ to run locally. We
| want local AI game engines [1] we can step into like
| holodecks.
|
| - Nobody is going to want to call OpenAI or Grok with
| personal matters. People want a local AI "girlfriend" or
| whatever. That shit needs to stay private for people.
|
| - Image and video gen is a never ending cycle of "Our
| Content Filters Have Detected Harmful Prompts". You can't
| make totally safe for work images or videos of kids, men in
| atypical roles (men with their children = abuse!), women in
| atypical roles (woman in danger = abuse!), LGBT
| relationships, world leaders, celebs, popular IPs, etc.
| Everyone I interact with constantly brings these issues up.
|
| - Robots will have to be local. You can't solve 6+DOF,
| dance routines, cutting food, etc. with 500ms latency.
|
| - The RIAA is going door to door taking down each major
| music AI service. Suno just recently had two Billboard
| chart-topping songs? Congrats - now the RIAA lawyers have
| sued them and reached a settlement. Suno now won't let you
| download the music you create. They're going to remove the
| existing models and replace them with "officially licensed"
| musicians like Katy Perry(r) and Travis Scott(tm). You
| won't retain rights to anything you mix. This totally sucks
| and music models need to be 100% local and outside of their
| reach.
|
| [1] Also, you have to see this mind-blowing interactive
| browser demo from 2022. It still makes my jaw drop:
| https://madebyoll.in/posts/game_emulation_via_dnn/
| foobarian wrote:
| > You can't solve 6+DOF, dance routines, cutting food,
| etc. with 500ms latency.
|
| Hopefully it's just network propagation that creates that
| latency, otherwise local models will never beat the
| fanout in a massive datacenter.
| mike50 wrote:
| They were selling software as a service in the IBM 360 days.
| Relabeling a concept and buying Redhat don't count as
| investments.
| hollerith wrote:
| What is your reason for believing that IBM was selling
| software as a service in the IBM 360 days?
|
| What hardware did the users of this service use to connect
| to the service?
| baq wrote:
| Hardware was part of the service, obviously.
| hollerith wrote:
| It is very misleading or outright perverse to write "they
| were selling software as a service in the IBM 360 days"
| when there was no public network that could be used to
| the deliver the service. (There were wide-area networks,
| but each one was used by a single organization and
| possibly a few of its most important customers and
| suppliers, hence the qualifier "public" above.)
|
| But anyways, my question to you is, was there _any_
| software that IBM charged money for as opposed to
| providing the software at no additional cost with the
| purchase or rental of a computer?
|
| I do know that no one sold software software (i.e.,
| commercial off-the-shelf software) in the 1960s: the
| legal framework that allowed software owners to bring
| lawsuits for copyright violations appeared in the early
| 1980s.
|
| There was an organization named SHARE composed of
| customers of IBM whereby one customer could obtain
| software written by other other customers (much like the
| open-source ecosystem) but I don't recall money ever
| changing hands for any of this software except a very
| minimal fee (orders of magnitude lower than the rental or
| purchase price of a System/360, which started at about
| $660,000 in 2025 dollars).
|
| Also, IIUC most owners or renters of a System/360 had to
| employ programmers to adapt the software IBM provided.
| There is software with that quality these days, too
| (.e.g, ERP software for large enterprises) but no one
| calls that a software as a service.
| hollerith wrote:
| Replying to myself:
|
| >except a very minimal fee
|
| the fee would be for membership SHARE. The fee (if it
| even existed) would not have been passed on to the entity
| that paid to create the software.
| eru wrote:
| What you are saying is true. But IBM failing to see a way to
| make money off a new technology isn't actually news worth
| updating on in this case?
| internet_points wrote:
| The original statistical machine translation models of the
| 90's, which were still used well into the 2010's, were
| famously called the "IBM models"
| https://en.wikipedia.org/wiki/IBM_alignment_models These were
| not just cool tech demos, they were the state of the art for
| decades. (They just didn't make IBM any money.)
| stingraycharles wrote:
| I still have PTSD from how much Watson was being pushed by
| external consultants to C levels despite it being absolutely
| useless and incredibly expensive. A/B testing? Watson. Search
| engine? Watson. Analytics? Watson. No code? Watson.
|
| I spent days, weeks arguing against it and ended up having to
| dedicate resources to build a PoC just to show it didn't work,
| which could have been used elsewhere.
| ares623 wrote:
| It's like poetry, it rhymes
| 7thaccount wrote:
| This is going on all over again.
| bitwize wrote:
| Agentic AI really is changing things. I've had a complete
| change of heart about it. It's good enough now to boost
| productivity MASSIVELY for devs.
| edm0nd wrote:
| Honestly I'm not even sure what IBM does these days. Seems like
| one company that has slowly been dying for decades.
|
| but when I look at their stock, its at all time highs lol
|
| no idea
| broodbucket wrote:
| IBM is probably involved somewhere in the majority of things
| you interact with day to day
| whoisthemachine wrote:
| Yep. When a brand has tarnished itself enough, it makes
| sense for the brand to step back. Nowadays, we interact
| with their more popular properties, such as Redhat.
| darth_avocado wrote:
| They make business machines, internationally.
| nickpeterson wrote:
| Pretty sure they made all their money fighting the
| paperwork explosion.
| fuzztester wrote:
| They are in the business of international machinations.
| Sl1mb0 wrote:
| They manage a lot of old, big mainframes for banks. At least
| that is one thing I know of.
| mike50 wrote:
| Basic research and mainframe support contracts. Also they
| bought RedHat.
| 7thaccount wrote:
| My limited understanding (please take with a big grain of
| salt) is that they 1.) sell mainframes, 2.) sell mainframe
| compute time, 3.) sell mainframe support contracts, 4.) sell
| Red hat and Redhat support contracts, and 5.) buy out a lot
| of smaller software and hardware companies in a manner
| similar to private equity.
| nunez wrote:
| Mainframe for sure, but IBM has TONS of products in their
| portfolio that get bought. They also have IBM Cloud which is
| popular. Then there is the Quantum stuff they've been sinking
| money into for the last 20 years or so.
| crystal_revenge wrote:
| I can think of nothing more peak HN than criticizing a
| company worth $282 Billion with $6 billion in _profit_ (for
| startup kids that means they have _infinite runway_ and then
| some) that has existed for over 100 years with "I'm not even
| sure what they do these days". I mean the problem _could_ be
| with IBM... what a loser company!
| lanyard-textile wrote:
| :) As much I love ragging on ridiculous HN comments, I
| think this one is rooted in some sensibility.
|
| IBM doesn't majorly market themselves to consumers. The
| overwhelming majority of devs just aren't part of the
| demographic IBM intends to capture.
|
| It's no surprise people don't know what they do. To be
| honest it does surprise me they're such a strongly
| successful company, as little as I've _knowingly_
| encountered them over my career.
| CyberDildonics wrote:
| I think you're hallucinating this scenario. There is no
| contradiction with a company making money and someone not
| understanding what they do.
| broodbucket wrote:
| IBM ostensibly failing with Watson (before Krishna was CEO for
| what it's worth) doesn't inherently invalidate his assessment
| here
| johncolanduoni wrote:
| It makes it suspect when combined with the obvious incentive
| to make the fact that IBM is basically non-existent in the AI
| space look like an intentional, sagacious choice to
| investors. It very may well be, but CEOs are fantastically
| unreliable narrators.
| jayd16 wrote:
| You expect somebody to be heavily invested currently and
| also completely openly pessimistic about it?
| Forgeties79 wrote:
| Yeah I was going to say the same thing ha. I get what
| they're (the commenter) saying, but one could also argue
| IBM is putting their money where their mouth is by not
| investing.
| johncolanduoni wrote:
| I suspect the reality is that they missed the boat, as
| they have missed tens of other boats since the mainframe
| market dried up. I guess you could argue they came to the
| boat too early with their pants on backwards (i.e.
| Watson), and then left before it showed up. But it's hard
| to tell from the outside.
|
| Maybe that will turn out to be a good decision and
| Microsoft/Google/etc. will be crushed under the weight of
| hundreds of billions of dollars in write-offs in a few
| years. But that doesn't mean they did it intentionally,
| or for the right reasons.
| Forgeties79 wrote:
| Totally. Just sort of mulling over possibilities. But I
| think you're right it's likely they just got it wrong
| johncolanduoni wrote:
| No, I don't trust a word Sundar or Satya say about AI
| either. CEOs should be hyping anything they're invested
| in, it's literally their job. But convincing investors
| that every thing they don't invest in heavily is
| worthless garbage is effectively part of their job too.
|
| What is more convincing is when someone invests heavily
| (and is involved heavily) and then decides to stop
| sending good money after bad (in their estimation). Not
| that they're automatically right, but is at least pay
| attention to their rationales. You learn very little
| about the real world by listening to the most motivated
| reasoner's nearly fact-free bloviation.
| jayd16 wrote:
| > What is more convincing is when someone invests heavily
| (and is involved heavily) and then decides to stop
| sending good money after bad (in their estimation).
|
| But Watson doesn't count?
| johncolanduoni wrote:
| Commercially, Watson was a joke from beginning to end. If
| their argument is that Watson's failure indicates a
| machine that can at the very least convincingly lie to
| you will definitely fail to make money, that's an insipid
| argument.
| stego-tech wrote:
| If anything, the fact they built such tooling might be why
| they're so sure it won't work. Don't get me wrong, I am
| incredibly not a fan of their entire product portfolio or
| business model (only Oracle really beats them out for "most
| hated enterprise technology company" for me), but these guys
| have tentacles just as deep into enterprises as Oracle and are
| coming up dry on the AI front. Their perspective shouldn't be
| ignored, though it should be considered in the wider context of
| their position in the marketplace.
| getnormality wrote:
| Millions of people like ChatGPT. No one liked Watson.
| stego-tech wrote:
| Apples and Oranges from an enterprise perspective, with the
| additional wrinkle that consumer tech is generally ad-
| supported ( _ugh_ ) while Enterprise stuff is super-high
| margin and paid for in actual currency.
|
| If you assume the napkin math is correct on the $800bn
| yearly needed to service interest rates on these CAPEX
| loans, then you'd need the collective revenue of the major
| players (OpenAI, Google, Anthropic, etc) to pull in as much
| revenue in a year as Apple, Alphabet, and Samsung
| _combined_.
|
| Let's assume OpenAI is responsible for much of this bill,
| say, $400bn. They'd need a _very_ generous conversion rate
| of 24% for their monthly users (700m) to the Pro plan for
| an _entire year_ to cover that bill, for _one year_. That's
| a conversion rate better than anyone else in the XaaS world
| who markets to consumers and enterprises alike, and paints
| a picture of just how huge the spend from enterprises would
| need to be to subsidize consumer free usage.
|
| And all of this is just for existing infrastructure. As a
| number of CEBros have pointed out recently (and us
| detractors have screamed about from the beginning), the
| current CAPEX on hardware is really only good for three to
| five years before it has to be replaced with newer kit at a
| larger cost. Nevermind the realities of shifting datacenter
| designs to capitalize on better power and cooling
| technologies to increase density that would require
| substantial facility refurbishment to support them in a
| potential future.
|
| The math just doesn't make sense if you're the least bit
| skeptical.
| MangoToupe wrote:
| > Are they bitter that someone else has actually made the AI
| hype take off?
|
| Does it matter? It's still a scam.
| jimbo808 wrote:
| Has it really taken off? Where's the economic impact that isn't
| investor money being burned or data center capex?
| bncndn0956 wrote:
| It's good we are building all this excess capacity which will
| be used for applications in other fields or research or open
| up new fields.
|
| I think the dilemma I see with building so much data centers
| so fast is exactly like whether I should buy latest iPhone
| now or should wait few years when the specs or form factor
| improves later on. The thing is we have proven tech with
| current AI models so waiting for better tech to develop on
| small scale before scaling up is a bad strategy.
| Den_VR wrote:
| Watson X is still a product line sold today to qualified
| customers :)
| firesteelrain wrote:
| IBM makes WatsonX for corporate who want airgapped AI
| throw0101a wrote:
| > _Are they bitter that someone else has actually made the AI
| hype take off?_
|
| Or they recognize that you may get an ROI on a (e.g.) $10M
| CapEx expenditure but not on a $100M or $1000M/$1B expenditure.
| al_borland wrote:
| I see Watson stuff at work. It's not a direct to consumer
| product, like ChatGPT, but I see it being used in the
| enterprise, at least where I'm at. IBM gave up on consumer
| products a long time ago.
| CrI0gen wrote:
| Just did some brief Wikipedia browsing and I'm assuming it's
| WatsonX and not Watson? It seems Watson has been pretty much
| discontinued and WatsonX is LLM based. If it is the old
| Watson, I'm curious what your impressions of it is. It was
| pretty cool and ahead of its time, but what it could actually
| do was way over promised and overhyped.
| al_borland wrote:
| I'm not close enough to it to make any meaningful comments.
| I just see the name pop up fairly regularly. It is possible
| that some of it is WatsonX and everyone just says Watson
| for brevity.
|
| One big ones used heavily is Watson AIOps. I think we
| started moving to it before the big LLM boom. My usage is
| very tangential, to the point where I don't even know what
| the AI features are.
| nunez wrote:
| IBM has been "quietly" churning out their Granite models, with
| the latest of which performing quite well against LLaMa and
| DeepSeek. So not Anthropic-level hype but not sitting it out
| completely either. They also provide IP indemnification for
| their models, which is interesting (Google Cloud does the
| same).
| matt-p wrote:
| Unless we get AGI.
| BoorishBears wrote:
| Consumer will eat it all. AI is very good at engaging content,
| and getting better by the day: it won't be the AGI we wanted,
| but maybe the AGI we've earned
| rmoriz wrote:
| The second buyer will make truckloads of money, remember the data
| center and fiber network liquidation of 2001+ - smart investors
| collected the overcapacity and after a couple of years the money
| printer worked. This time it will be the same, only the single
| purpose hardware (LLM specific GPUs) will probably end on a
| landfill.
| singpolyma3 wrote:
| Are they LLM specific?
| rmoriz wrote:
| Deep down technically probably not, but they are optimized
| for this workload and business model. I doubt that once the
| AI bubble busts, another business model is viable. While
| datacenters can be downsized or partially shut down until
| demand picks up again, high end hardware is just losing money
| by the second.
| nialse wrote:
| The game is getting OpenAI to owe you as much money as you can.
| When they fail to pay back, you own OpenAI.
| rmoriz wrote:
| You are talking about the circular investments in the
| segment? Yes, but assume NVIDIA can get cheap access to IP
| and products of failing AI unicorns through contracts, this
| does not mean the LLM business can be operated profitably by
| them. Models are like fresh food, they start to rot by the
| training cut off date and lose value. The process of re-
| training a model will always be very expensive.
| djdjsjejb wrote:
| thats like boeing telling us we shouldnt build rockets
| bytesandbits wrote:
| Mind you IBM makes +7B from keeping old school enterprise hooked
| up on 30 plus year old tech like z/OS and Cobol and their own
| super outdated stack. their AI division is frankly embarrassing.
| of course they would say that. IBM is one of the most
| conservative, anti-progress leaches in the entire tech industry.
| I am glad they are missing out big time on the AI gold rush. to
| me if anything this is a green signal.
| zobzu wrote:
| Also IBM: we are fully out of the AI race, btw. Also IBM: we're
| just an offshoring company now anyway.
|
| So yeah.
| kitd wrote:
| https://www.ibm.com/granite
| pezgrande wrote:
| "now". They've been doing it since forever.
| SamDc73 wrote:
| Coming from the company that missed on consumer hardware,
| operating systems, and cloud. He might be right but IBM isn't
| where I'd look for guidance on what will pay off.
| m3kw9 wrote:
| Says the guy missing out on it
| boxedemp wrote:
| Nobody really knows the future. What were originally consumer
| graphics expansion cards turned out useful in delivering more
| compute than traditional CPUs.
|
| Now that compute is being used for transformers and machine
| learning, but we really don't know what it'll be used for in 10
| years.
|
| It might all be for naught, or maybe transformers will become
| more useful, or maybe something else.
|
| 'no way' is very absolute. Unlikely, perhaps.
| cheema33 wrote:
| > What were originally consumer graphics expansion cards turned
| out useful in delivering more compute than traditional CPUs.
|
| Graphics cards were relatively inexpensive. When one got old,
| you tossed it out and move on to the new hotness.
|
| Here when you have spent $1 trillion on AI graphics cards and a
| new hotness comes around that renders your current hardware
| obsolete, what do you do?
|
| Either people are failing to do simple math here or are
| expecting, nay hoping, that trillions of $$$ in value can be
| extracted out of the current hardware, before the new hotness
| comes along.
|
| This would be a bad bet even if the likes of OpenAI were
| actually making money today. It is an exceptionally bad bet
| when they are losing money on everything they sell, by a lot.
| And the state of competition is such that they cannot raise
| prices. Nobody has a real moat. AI has become a commodity. And
| competition is only getting stronger with each passing day.
| randomNumber7 wrote:
| You can likely still play the hottest games with the best
| graphics on an H200 in 5 years.
| cmrdporcupine wrote:
| The investors in these companies and all this infrastructure are
| not so much concerned with whether any specific companies pays
| off with profits, necessarily.
|
| They are gambling instead that these investments pay out it in a
| different way: by shattering high labour costs for intellectual
| labour and de-skilling our profession (and others like it) --
| "proletarianising" in the 19th century sense.
|
| Thereby increasing profits across the _whole sector_ and breaking
| the bargaining power (and outsized political power, as well) of
| upper middle class technology workers.
|
| Put another way this is an economy wide investment in a manner
| similar to early 20th century mass factory industrialization.
| It's not expected that today's big investments are tomorrow's
| winners, but nobody wants to be left behind in the
| transformation, and lots of political and economic power is
| highly interested in the idea of automating away the remnants of
| the Alvin Toffler "Information Economy" fantasy.
| RobRivera wrote:
| What kind of reporte does the CEO of IBM expect the general
| technology workforce to hold for them?
| winddude wrote:
| 8T is the high-end of the McKinsey estimate that is 4-8T, by
| 20230. That includes non-AI data-centre IT, AI data-centre, and
| power infrastructure build out, also including real estate for
| data centres.
|
| Not all of it would be debt. Google, Meta, Microsoft and AWS have
| massive profit to fund their build outs. Power infrastructure
| will be funded by govts and tax dollars.
| oblio wrote:
| There is mounting evidence that even places like Meta are
| increasing their leverage (debt load) to fund this scale out.
| They're also starting to do accounting tricks like longer
| depreciation for assets which degrade quickly, such as GPUs
| (all the big clouds increasing their hardware depreciation from
| 2-3-4 years to 6), which makes their financial numbers look
| better but might not mean that all that hardware is still
| usable at production levels 6 years from now.
|
| They're all starting to strain under all this AI pressure, even
| with their mega profits.
| BenFranklin100 wrote:
| A lot of you guys in the AI industry are going to lose your jobs.
| LLM and prompt 'engineering' experts won't be able to score an AI
| job paying as well as a barista.
| westurner wrote:
| Ctrl-F this thread for terms like: cost, margin
|
| Is transistor density cost still the limit?
|
| Cost model, Pricing model
|
| What about more recyclable chips made out of carbon?
|
| What else would solve for e.g. energy efficiency, thermal
| inefficiency, depreciation, and ewaste costs?
| Archelaos wrote:
| Gartner estimates that worldwide AI spending will total 1.5
| Trillion US$ in 2025.[1] As of 2024, global GDP per year is
| 111.25 Trillion US$.[2] The question is how much this can be
| increased by AI. This describes the market volumn for AI. Todays
| investments have a certain lifespan, until they become obsolet.
| For custom software I would estiamte that it is 6-8 years. AI
| investments should be somewhere in this range.
|
| Taking all this into consideration, the investment volumn does
| not look oversized to me -- unless one is quite pessimistic about
| the impact of AI on global GDP.
|
| [1] https://www.gartner.com/en/newsroom/press-
| releases/2025-09-1...
|
| [2] https://data.worldbank.org/indicator/NY.GDP.MKTP.CD
| i000 wrote:
| What makes you think that this 'surplus' GDP will be captured
| by those who do the investments?
| mh8h wrote:
| except that a big chunk of the AI investments is going into
| buying GPUs that go obsolete much earlier than the 6-8 year
| time frame.
| andruby wrote:
| To increase the GDP you also need people to spend money. With
| the general population earning relatively less, I'm not sure
| the GDP increase will be that substantial.
|
| It's all going to cause more inflation and associated reduction
| in purchasing power due to stale wages.
| ojr wrote:
| As long as the dollar remains the reserve currency of the world
| and US retains its hegemony, a lot of the finances will work
| itself out, the only threat to the US empire crumbling is by
| losing a major war or extreme civil unrest and that threat is
| astronomically low. The US is orders of magnitude stronger than
| the Roman Empire, I don't think people realize the scale or
| control.
| rootnod3 wrote:
| Famous last words of empires. I doubt that if current
| situations continue that the US will in any sense be still
| thought of as the reserve currency.
| 7222aafdcf68cfe wrote:
| Gradually, then suddenly. Best not to underestimate the extent
| to which the USA has lost trust in the rest of the world, and
| how actively people and organisations are working to derisk by
| disengaging. Of course that will neither be easy nor
| particularly fast, but I'm not certain it can be stopped at
| this point.
| LunaSea wrote:
| You should look at the depreciation of the value of the dollar
| this year.
| randomNumber7 wrote:
| Pride comes before a fall.
| dragonwriter wrote:
| > The US is orders of magnitude stronger than the Roman Empire
|
| This would be trivially true even if the US was currently in
| its death throes (which there is plenty of evidence that the
| US-as-empire might be, even if the US-as-polity is not), as the
| Roman Empire fell quite a while ago.
| zahlman wrote:
| I'm pretty sure
|
| > The US is orders of magnitude stronger than the Roman
| Empire [was]
|
| was the intended reading.
| nnurmanov wrote:
| I agree. Here is my thinking. What if LLM providers will make
| short answers the default (for example, up to 200 tokens, unless
| the user explicitly enables "verbose mode"). Add prompt caching
| and route simple queries to smaller models. Result: a 70%+
| reduction in energy consumption without loss of quality. Current
| cost: 3-5 Wh per request. At ChatGPT scale, this is $50-100
| million per year in electricity (at U.S. rates).
|
| In short mode: 0.3-0.5 Wh per request. That is $5-10 million per
| year -- savings of up to 90%, or 10-15 TWh globally with mass
| adoption. This is equivalent to the power supply of an entire
| country -- without the risk of blackouts.
|
| This is not rocket science -- just a toggle in the interface and
| I believe, minor changes in the system prompt. It increases
| margins, reduces emissions, and frees up network resources for
| real innovation.
|
| And what if EU/California enforces such mode? This will greatly
| impact DC economy.
| cryptophreak wrote:
| Can you explain why a low-hanging optimization that would
| reduce costs by 90% without reducing perceived value hasn't
| been implemented?
| lmm wrote:
| > Can you explain why a low-hanging optimization that would
| reduce costs by 90% without reducing perceived value hasn't
| been implemented?
|
| Because the industry is running on VC funny-money where there
| is nothing to be gained by reducing costs.
|
| (A similar feature was included in GPT-5 a couple of weeks
| ago actually, which probably says something about where we
| are in the cycle)
| balder1991 wrote:
| Not sure that's even possible with ChatGPT embedding your
| chat history in the prompts to try to give more personal
| answers.
| randomNumber7 wrote:
| Dunning Krueger
| nrhrjrjrjtntbt wrote:
| Context Tokens want a word...
| EagnaIonat wrote:
| Good enough models can already run on laptops.
| thenthenthen wrote:
| _the mining industry enters the chat_
| m00dy wrote:
| He will get assasinated or fired.
| wtcactus wrote:
| The same IBM that lost all races in the last 40 years? That IBM?
| simianwords wrote:
| If it is so obvious that it won't pay off, why is every company
| investing in it? What alpha do you have that they don't?
| jacquesm wrote:
| That's a good question. During the .com boom _everybody_ was
| investing in 'the internet' or at least in 'the web'. And lots
| of those companies went bust, quite a few spectacularly so.
| Since then everything that was promised and a lot more has been
| realized. Even so, a lot of those initial schemes were
| harebrained at best at the time and there is a fair chance that
| we will look in a similar way at the current AI offerings in 30
| years time.
|
| Short term is always disappointing, long term usually
| overperforms. Think back to the first person making a working
| transistor and what came of that.
| simianwords wrote:
| I still don't get it. What at a personal level is making Sam
| Altman make a suboptimal choice for himself if it is so
| obvious it won't work out for him?
| jacquesm wrote:
| On a personal level it will work out for him just fine. All
| he has to do is siphon off a fraction of that money to
| himself and/or an entity that he controls.
|
| He's like Elon Musk in that respect: always doubling the
| bet on the next round, it is a real life Martingale these
| guys are playing with society on the hook for the downside.
|
| https://en.wikipedia.org/wiki/Martingale_(betting_system)
| simianwords wrote:
| How would he siphon off? He has no stake in OpenAI. And
| any other stake must be public. Or are you suggesting
| something more shady?
|
| Elon is the complete opposite of martingale. He has
| helped produce value beyond just bets. Spacex, Tesla and
| so on.
| jacquesm wrote:
| Sorry, I didn't realize that was a rhetorical question.
| simianwords wrote:
| it is not rhetorical. you have not provided a mechanism
| through which Sam can make money out of this whereas I'm
| describing ways in which this bubble popping is not
| something he would prefer.
| jacquesm wrote:
| Your lack of understanding can not be remedied with
| information.
|
| You have a habit of 'just asking questions' when in fact
| you are trying to steer the conversation in the direction
| of the conclusion that you prefer. This is not
| productive. If you have something to say then you can
| just say it without the question marks. That way people
| know that you are making a statement instead of
| pretending to be asking a question.
| simianwords wrote:
| I'm asking a specific question
|
| >On a personal level it will work out for him just fine.
| All he has to do is siphon off a fraction of that money
| to himself and/or an entity that he controls.
|
| How would he achieve this?
| Ekaros wrote:
| Marketing and name recognition? Used in other areas to
| generate wealth. Even steering OpenAI or partners of it to
| acquire right companies could be profitable for him.
| SideburnsOfDoom wrote:
| > And lots of those companies went bust, quite a few
| spectacularly so.
|
| pets.com "selling dogfood on the internet" is the major
| example of the web boom then bust. (1)
|
| But today, I can get dog food, cat food, other pet supplies
| with my weekly "online order" grocery delivery. Or I can get
| them from the big river megaretailer. I have a weekly
| delivery of coffee beans from a niche online supplier, and it
| usually comes with flyers for products like a beer or wine
| subscription or artisanal high-meat cat or dog foods.
|
| So the idea of "selling dogfood on the internet" is now
| pervasive not extinct, the inflated expectation that went
| bust was that this niche was a billion-dollar idea and not a
| commodity where brand, efficiencies of scale and execution
| matter more.
|
| 1) https://en.wikipedia.org/wiki/Pets.com#History
| PeterStuer wrote:
| If AI is a highlander market, then the survivor will be able to
| eventually aquire all those assets on the cheap from the failing
| competitors that flush their debt in bankruptcy.
|
| Meanwhile, highlander hopefuls are spending other peoples money
| to compete. Some of them with dreams of not just building a tech
| empire, but to truly own the machine that will rule the world in
| every aspect.
|
| Investors are keen on backing the winner. They just do not know
| yet who it will be.
| SirHumphrey wrote:
| Until China sees it valuable to fund open weights SOTA-ish
| models, even the winner might struggle. There is very little
| capture - protocols are mostly standard so models are mostly
| interchangeable and if you are trying to raise prices enough to
| break even on the whole operation, somebody else can probably
| profitably run inference cheaper.
| glaslong wrote:
| "commoditize your complements" and all that.
|
| "oh look, with open weights now everyone can run this
| quadrillion param 'superintelligent' model. but what's that?
| only we have the power capacity and cheap $/W to actually
| serve it? funny thing...!"
| dghf wrote:
| What's a highlander market, or a highlander hopeful? Google
| wasn't helpful.
| kowbell wrote:
| I interpreted it as "there can only be one" which I believe
| is a quote from the Highlander movie; it's a "winner takes
| all" and that winner gets the title of "highlander."
|
| In this situation then everyone who _isn't_ the winner will
| go broke -> sell off all their stuff on the cheap because
| they're desperate -> the winner gets all their hardware for a
| great deal and becomes even more powerful.
| Aperocky wrote:
| LLMs at current utility do not justify this spending, but the
| offside chance that someone will hit AGI is likely worth the
| expectation.
| ta9000 wrote:
| "It doesn't even have a keyboard!" energy.
| blablabla123 wrote:
| Despite the flashy title that's the first "sober" analysis from a
| CEO I read about the technology. While not even really news, it's
| also worth mentioning that the energy requirements are impossible
| to fulfill
|
| Also now using ChatGPT intensely since months for all kinds of
| tasks and having tried Claude etc. None of this is on par with a
| human. The code snippets are straight out of Stackoverflow...
| delaminator wrote:
| Your assessment of Claude simply isn't true.
|
| Or Stackoverflow is really good.
|
| I'm producing multiple projects _per week_ that are weeks of
| work each.
| written-beyond wrote:
| I'm just as much of an avid llm code generator fan as you may
| be but I do wonder about the practicality of spending time
| making projects anymore.
|
| Why build them if other can just generate them too, where is
| the value of making so many projects?
|
| If the value is in who can sell it the best to people who
| can't generate it, isn't it just a matter of time before
| someone else will generate one and they may become better
| than you at selling it?
| jstummbillig wrote:
| The value is that we need a lot more software and now,
| because building software has gotten so much less time
| consuming, you can sell software to people that could/would
| not have paid for it previously at a different price point.
| eschaton wrote:
| We don't need more software, we need the right software
| implemented better. That's not something LLMs can
| possibly give us because they're fucking pachinko
| machines.
|
| Here's a hint: Nobody should ever write a CRUD app,
| because nobody should _ever have to_ write a CRUD app;
| that's something that can be generated fully _and
| deterministically_ (i.e. by a set of locally-executable
| heuristics, not a goddamn ocean-boiling LLM) from a
| sufficiently detailed model of the data involved.
|
| In the 1970s you could wire up an OS-level forms library
| to your database schema and then serve literally
| thousands of users from a system less powerful than the
| CPU in modern peripheral or storage controller. And in
| less RAM too.
|
| People need to take a look at what was done before in
| order to truly have a proper degree of shame about how
| things are being done now.
| steve_adams_86 wrote:
| > That's not something LLMs can possibly give us because
| they're fucking pachinko machines.
|
| I mostly agree, but I do find them useful for fuzzing out
| tests and finding issues with implementations. I have
| moved away from larger architectural sketches using LLMs
| because over larger time scales I no longer find they
| actually save time, but I do think they're useful for
| finding ways to improve correctness and safety in code.
|
| It isn't the exciting and magical thing AI platforms want
| people to think it is, and it isn't indispensable, but I
| like having it handy sometimes.
|
| The key is that it still requires an operator who knows
| something is missing, or that there are still
| improvements to be made, and how to suss them out. This
| is far less likely to occur in the hands of people who
| don't know, in which case I agree that it's essentially a
| pachinko machine.
| skydhash wrote:
| Most CRUD software development is not really about the
| CRUD part. And for most framework, you can find packages
| that generate the UI and the glue code that ties it to
| the database.
|
| When you're doing CRUD, you're spending most of the time
| with the extra constraints designed by product. It's
| dealing with the CRUD events, the IAM system, the
| Notification system,...
| brookst wrote:
| I'm with you. Anyone writing in anything higher level
| than assembly, with anything less than the optimization
| work done by the demo scene, should feel great same.
|
| Down with force-multiplying abstractions! Down with
| intermediate languages and CPU agnostic binaries! Down
| with libraries!
| eschaton wrote:
| You have clearly entirely understood exactly what I was
| saying and don't look like a fool at all with this reply.
| fainpul wrote:
| But what we're getting is a flood of buggy, unoriginal
| crap.
| brookst wrote:
| Remind me when exactly it was that most software was bug-
| free and original? 1990? 1975?
| Clent wrote:
| It global warming exists, why is there snow?
|
| Same thing here. You're dismissing a flood because it
| rains.
| sph wrote:
| > Why build them if other can just generate them too, where
| is the value of making so many projects?
|
| No offence to anyone but these generated projects are
| nothing ground-breaking. As soon as you venture outside the
| usual CRUD apps where novelty and serious engineering is
| necessary, the value proposition of LLMs drops
| considerably.
|
| For example, I'm exploring a novel design for a
| microkernel, and I have no need for machine generated
| boilerplate, as most of the hard work is not implementing
| yet another JSON API boilerplate, but it's thinking very
| hard with pen and paper about something few have thought
| before, and even fewer LLMs have been trained on, and have
| no intelligence to ponder upon the material.
|
| To be fair, even for the most dumb side-projects, like the
| notes app I wrote for myself, there is still a joy in doing
| things by hand, because I do not care about shipping early
| and getting VC money.
| delaminator wrote:
| Weird, because I've created a webcam app that does
| segmentation so they can delete the background and put a
| new background in I mean, I suppose that's not
| groundbreaking. But it's not just reading and writing to
| a database.
|
| I've just added a ATA over Ethernet server in Rust, I
| thought of doing it in the car on the way home and an
| hour later I've got a working version.
|
| I type this comment using a voice to text system I built,
| admittedly it uses Whisper as the transcriber but I've
| turned it into a personal assistant.
|
| I make stuff every day I just wouldn't bother to make if
| I had to do it myself. and on top of that it does
| configuration. So I've had it build full wireguard
| configs that is taking on our pay addresses so that
| different destinations cause different routing. I don't
| know how to do that off the top of my head. I'm not going
| to spend weeks trying to find out how it works. It took
| me an evening of prompting.
| blablabla123 wrote:
| Sure but these are likely just variations of existing things.
| And yet the quality is still behind the original
| bloppe wrote:
| Would you mind sharing some of these projects?
|
| I've found Claude's usefulness is highly variable, though
| somewhat predictable. It can write `jq` filters flawlessly
| every time, whereas I would normally spend 30 minutes
| scanning docs because nobody memorizes `jq` syntax. And it
| can comb through server logs in every pod of my k8s clusters
| extremely fast. But it often struggles making quality code
| changes in a large codebase, or writing good documentation
| that isn't just an English translation of the code it's
| documenting.
| steve_adams_86 wrote:
| Claude has taught me so much about how to use jq better.
| And really, way more efficient ways of using the command
| line in general. It's great. Ironically, the more I learn
| the less I want to ask it to do things.
| datameta wrote:
| In an ideal world we function in exactly this way - using
| LLMs to bootstrap our skill/knowledge improvement
| journeys.
| JamesSwift wrote:
| Yeah, if you pay attention to its output you can pick up
| little tips and tricks all over the place.
| gloosx wrote:
| It is always "I'm producing 300 projects in a nanosecond"
| but it's almost never about sharing or actually deploying
| these ;)
| DoctorOW wrote:
| The problem I had that the larger your project gets, the
| more mistakes Claude makes. I (not a parent commenter)
| started with a basic CRUD web app and was blown away by
| how detailed it was, new CSS, good error handling, good
| selection and use of libraries, it could even write the
| terminal commands for package management and building. As
| the project grew to something larger Claude started
| forgetting that some code already existed in the project
| and started repeating itself, and worse still when I
| asked for new features it would pick a copy at random
| leaving them out of sync with eachother. Moving forward
| I've been alternating between writing stuff with AI, then
| rewriting it myself.
| cpursley wrote:
| So, just like a human on a growing codebase?
| HarHarVeryFunny wrote:
| > The problem I had that the larger your project gets,
| the more mistakes Claude makes
|
| I think the reason for this is because these systems get
| all their coding and design expertise from training, and
| while there is lots of training data available for small
| scale software (individual functions, small projects),
| there is much less for large projects (mostly commercial
| and private, aside from a few large open source
| projects).
|
| Designing large software systems, both to meet initial
| requirements, and to be maintainable and extensible over
| time, is a different skill than writing small software
| projects, which is why design of these systems is done by
| senior developers and systems architects. It's perhaps a
| bit like the difference between designing a city and
| designing a single building - there are different
| considerations and decisions being made. A city is not
| just a big building, or a collection of buildings, and
| large software system is not just a large function or
| collection of functions.
| chrisweekly wrote:
| Well said, and good analogy.
| commakozzi wrote:
| Yeah, great analogy. Thanks!
| delaminator wrote:
| I've got Claude on 10k loc projects, which is probably
| mid range.
|
| But I also have it document and summarise its own work.
| adastra22 wrote:
| Have it produce CLAUDE.md files in every directory giving
| a summary of what code is where, and a system directive
| to keep these updated.
| freehorse wrote:
| At this point my prior is that all these 300/ns projects
| are some kind of internal tools, with very narrow scope
| and many just for a one-off use.
|
| Which is also fine and great and very useful and I am
| also making those, but it probably does not generalize to
| projects that require higher quality standards and actual
| maintenance.
| delaminator wrote:
| Sure, but 80% of software is probably internal and short
| lived like that, if not more.
|
| Solving the problems of the business that isn't a
| software business.
| blazingbanana wrote:
| I also see a lot of this so I can't blame you for
| thinking it! See my other post about some projects build
| _only_ using LLMs.
|
| https://news.ycombinator.com/item?id=46133458
| sahn44 wrote:
| Here's mine fully deployed,
| https://hackernewsanalyzer.com/. I use it daily and have
| some users. ~99.7% LLM code. About 1 hour to first
| working prototype then another 40 hours to get it
| polished and complete to current state.
| beepbooptheory wrote:
| To be clear, roughly 39.8 hours of _just_ prompting and
| output to make this website?
| sahn44 wrote:
| 41 hours total of prompting, looking at code diffs,
| reverting, reprompting, and occasional direct code
| commits. I do review the full code changes nearly every
| step of the way and often iterate numerous times until
| I'm satisfied with the resulting code approach.
| beepbooptheory wrote:
| Have you tried to go back to the old way, maybe just as
| an experiment, to see how much time you are actually
| saving? You might be a little surprised! Significant
| "reprompting" time to me indicates maybe a little too
| much relying on it rather than leading by example. Things
| are much faster in general if you find the right loop of
| maybe using Claude for like 15%-20% of stuff instead of
| 99.7%. You wouldn't give your junior 99.7% ownership of
| the app unless they were your only person, right? I find
| spending time thinking through certain things by hand
| will make you so much more productive, and the code will
| generally be much better quality.
|
| I get that like 3 years ago we were all just essentially
| proving points building apps completely with prompts, and
| they make good blog subjects maybe, but in practice they
| end up being either fragile novelties or bloated rat's
| nests that end up taking _more_ time not less.
| adastra22 wrote:
| I've done things in days that in the before times would
| have took me months. I don't see how you can make that
| time difference up.
|
| I have at least one project where I can make that direct
| comparison - I spent three months writing something in
| the language I've done most of my professional career in,
| then as a weekend project I got ChatGPT to write it from
| scratch in a different language I had never used before.
| That was pre-agentic tools - it could probably be done in
| an afternoon now.
| sahn44 wrote:
| I'm not a fulltime developer, but manage a large dev team
| now. So, this project is basically beyond my abilities to
| code myself by hand. Pre llm, I would expect in
| neighborhood of 1.5-2 months for a capable dev on my team
| to produce this and replicate all the features.
| gloosx wrote:
| It shows, quite an interesting wrapper over GPT with
| unauthorized access to prompting it you assembled there
| ;) Very much liked the part where it makes 1000 requests
| pulling 1000 comments from the firebase to the client and
| then shoots them back to GPT via supabase
|
| take care
| staticassertion wrote:
| There's a massive incentive _not_ to share them. If I
| wrote a project using AI I 'd be reluctant to publish it
| at all because of the backlash I've seen people get for
| it.
| aenis wrote:
| People are and always were reluctant to share their own
| code just the same. There is nothing to be gained, the
| chances of getting positive reviews from fellow engineers
| are slim to none. We are a critical and somewhat
| hypocritical bunch on average.
| __MatrixMan__ wrote:
| If you haunt the pull requests of projects you use I bet
| you'll find there's a new species of PR:
|
| > I'm not an expert in this language or this project but
| I used AI to add a feature and I think its pretty good.
| Do you want to use it?
|
| I find myself writing these and bumping into others doing
| the same thing. It's exciting, projects that were
| stagnant are getting new attention.
|
| I understand that a maintainer may not want to take
| responsibility for new features of this sort, but its
| easier than ever to fork the project and merge them
| yourself.
|
| I noticed this most recently in
| https://github.com/andyk/ht/pulls which has two open (one
| draft) PRs of that sort, plus several closed ones.
|
| Issues that have been stale for years are getting
| traction, and if you look at the commit messages, it's AI
| tooling doing the work.
|
| People feel more capable to attempt contributions which
| they'd otherwise have to wait for a specialist for. We do
| need to be careful not to overwhelm the specialists with
| such things, as some of them are of low quality, but on
| the whole it's a really good thing.
|
| If you're not noticing it, I suggests hanging out in
| places where people actually share code, rather than here
| where we often instead brag about unshared code.
| filoeleven wrote:
| > People feel more capable to attempt contributions
|
| That does not mean that they _are_ more capable, and that
| 's the problem.
|
| > We do need to be careful not to overwhelm the
| specialists with such things, as some of them are of low
| quality, but on the whole it's a really good thing.
|
| That's not what the specialists who have to deal with
| this slop say. There have been articles about this
| discussed here already.
| wartywhoa23 wrote:
| They really should have been supplying at least a week
| worth of readymade "projects" to every freelance AI
| promoter out there to demonstrate x9000 AI productivity
| gains for the skeptics.
|
| Because vibing the air about those gains without any
| evidence looks too shilly.
| brookst wrote:
| As opposed to ad hominems and handwave dismissals, which
| are highly credible?
| knollimar wrote:
| I handwave dismiss bigfoot, too
| exe34 wrote:
| Pointing out the where the burden of proof lies is not an
| ad hominem. Calling it such is in fact a good example of
| poisoning the well. all the fan girls have to do is post
| links to code they have vibe coded. some people have even
| done that in this thread. it's not an unreasonable
| standard.
| blazingbanana wrote:
| Not the OP you're replying to, but I've put together quite
| a few projects using only LLMs, no hand crafted code
| anywhere (I couldn't do it!)
|
| https://dnbfamily.com
|
| https://eventme.app
|
| https://blazingbanana.com
|
| https://play.google.com/store/apps/details?id=com.blazingba
| n...
|
| https://play.google.com/store/apps/details?id=com.blazingba
| n...
|
| https://play.google.com/store/apps/details?id=com.blazingba
| n...
|
| Are they perfect? No probably not, but I wouldn't have been
| able to make any of these without LLMs. The last app was
| originally built with GPT-3.5.
|
| There is a whole host of other non-public projects I've
| built with LLMs, these are just a few of the public ones.
| forty wrote:
| Maybe the most depressing part of all this is if people
| start thinking they would not have been able to do things
| without the LLM. Of course they would have, it's not like
| LLMs can do anything that you cannot. Maybe it would have
| taken more time at least the first time and you would
| have learned a few things in the process.
| carefulfungi wrote:
| It would be more depressing if our imagination didn't
| exceed the finite time we have to learn and master new
| skills.
| boringg wrote:
| Or if we stopped imagining.
| chrisweekly wrote:
| But reducing friction, eliminating the barrier to entry,
| is of fundamental importance. It's human psychology;
| putting running socks next to your bed at night makes it
| like 95% more likely you'll actually go for a run in the
| morning.
| forty wrote:
| Yes, "I couldn't have bothered..." is different from " I
| wouldn't have been able to make...".
|
| You might not go for a run when the socks are not there,
| but I don't think you would start questioning your
| ability to run.
| delaminator wrote:
| Sure, I can write all of it. But I simply won't. I have
| Claude generated Avalonia C# applications and there is no
| way I would have written the thousands of lines of xaml
| they needed for the layouts. I would just have done it as
| a console app with flags.
| blazingbanana wrote:
| I understand the point, and to some degree agree. For
| myself, I really couldn't (not to say it wouldn't have
| been possible). I tried many many times over so many
| years and just didn't have the mental stamina for it, it
| would never "click" like infra/networking/hardware does
| etc and I would always end up frustrated.
|
| I have learnt so much in this process, nowhere near as
| much as someone that wrote every line (which is why I
| think being a good developer will be a hot commodity) but
| I have had so much fun and enjoyment, alongside actually
| seeing tangible stuff get created, at the end of the day,
| that's what it's all about.
|
| I have a finite amount of time to do things, I already
| want to do more than I can fit into that time, LLMs help
| me achieve some of them.
| artursapek wrote:
| It's not just good for small code bases. In the last six
| months I've built a collaborative word processor with its
| own editor engine and canvas renderer using Claude, mostly
| Opus. It's practically a mini Google Docs, but with better
| document history and an AI agent built in. I could never
| have built this in 6 months by myself without Claude Code.
|
| https://revise.io
|
| I think if you stick with a project for a while, keep code
| organized well, and most importantly prioritize having an
| excellent test suite, you can go very far with these tools.
| I am still developing this at a high pace every single day
| using these tools. It's night and day to me, and I say that
| as someone who solo founded and was acquired once before,
| 10 years ago.
| ramoz wrote:
| At the end of this week we are releasing
| https://github.com/eqtylab/cupcake
|
| You can see all of Claude's commits.
|
| I've shipped so much with ai.
|
| Favorite has been metrics dashboards of various kinds -
| across life and business.
| vablings wrote:
| Something about restricting an AI agent by using another
| AI to write code to restrict it is quite funny
| ramoz wrote:
| It'll be a common paradigm. Some agents support the
| coding agent discover relevant context for a plan, others
| will help the agent stay on track and ensure no rules
| break.
| miohtama wrote:
| The former tasks are directly from the training material,
| directly embedded into the model. For the latter task, it
| needs a context window and intelligence.
| JamesSwift wrote:
| This is a "scratch an itch" project I initially started to
| write manually in the past, but never finishing. I then
| used claude to do it basically on the side while watching
| the world series http://nixpkgs-pr-explorer.s3-website-us-
| west-2.amazonaws.co...
| delaminator wrote:
| https://github.com/lawless-m
|
| You can see by Contributors which ones Claude has done.
|
| I have no idea if the code is any good, I've never looked
| at it and I have no idea how to code in Rust or Racket or
| Erlang anyway.
| eschaton wrote:
| I produce a lot of shit every week too, but I don't brag
| about my digestive system on "Hacker" "News."
| baobabKoodaa wrote:
| I'll do one better: I poop _every day_ in the water closet!
| will4274 wrote:
| > While not even really news, it's also worth mentioning that
| the energy requirements are impossible to fulfill
|
| If you believe this, you must also believe that global warming
| is unstoppable. OpenAI's energy costs are large compared to the
| current electricity market, but not so large compared to the
| current energy market. Environmentalists usually suggest that
| electrification - converting non-electrical energy to
| electrical energy - and then making that electrical energy
| clean - is the solution to global warming. OpenAI's energy
| needs are something like 10% of the current worldwide
| electricity market but less than 1% of the current worldwide
| energy market.
| rvnx wrote:
| Imagine how big pile of trash as the current generation of
| graphics cards used for LLM training will get outdated. It
| will crash the hardware market (which is a good news for
| gamers)
| brookst wrote:
| A100's are not suitable for gaming.
| rvnx wrote:
| https://www.youtube.com/watch?v=Vw699ZbUKqg
|
| Looks very playable to me.
|
| It's just an expensive card, but if the market is flooded
| with them, they can be used in gaming AND in local LLMs.
|
| So it can push the fall of server-side AI even further.
|
| These cards are 400 USD for reference, so if more and
| more are sold, we can imagine them getting down to 100
| USD or so.
|
| (and then similar for A100, H100, etc)
|
| My main concern is the noise because I have seen
| datacenter hardware and it is crazy. Of course it's not
| ideal but there is something to do with it.
| blablabla123 wrote:
| Google recently announced to double AI data center capacity
| every 6 month. While both unfortunately deal with exponential
| growth, we are talking about 1% growth CO2 which is bad
| enough vs 300% effectively per year according to Google
| infecto wrote:
| Constraints breed innovation. Humans will continue to
| innovate and demand for resources will grow. it is fairly
| well baked into most of civilization. Will that change in
| the future? Perhaps but it's not changing now.
| tikotus wrote:
| I'd rather phrase it as "code is straight out of GitHub, but
| tailored to match your data structures"
|
| That's at least how I use it. If I know there's a library that
| can solve the issue, I know an LLM can implement the same thing
| for me. Often much faster than integrating the library. And
| hey, now it's my code. Ethical? Probably not. Useful?
| Sometimes.
|
| If I know there isn't a library available, and I'm not doing
| the most trivial UI or data processing, well, then it can be
| very tough to get anything usable out of an LLM.
| infecto wrote:
| I am a senior engineer, I use cursor a lot in my day to day. I
| find I can code longer and typically faster than without. Is it
| on par with human? It's getting pretty darn close to be honest,
| I am sure the "10x" engineers of the world would disagree but
| it definitely has surpassed a junior engineer. We all have our
| anecdotes but I am inclined to believe on average there is net
| value.
| boringg wrote:
| I think surpassed is not the right word because it doesn't
| create/ideate. However it is incredibly resourceful. Maybe
| like having a jr engineer to do your bidding without thinking
| or growing.
| infecto wrote:
| Surpassed is probably the wrong word but the intent is more
| that it can comprehend quite complicated algorithms and
| patterns and apply them to your problem space. So yea it's
| not a human but I don't think saying subpar to a human is
| the right comparison either. In many ways it's much better,
| I can run N parallel revisions and have the best
| implementation picked for review. This all happens in
| seconds.
| chrisweekly wrote:
| Yes, this. Creating multiple iterations in parallel
| allows much more meaningful exploration of the solution
| space. Create a branch for each framework and try them
| all, compare them directly in praxis not just in theory.
| My brother is doing this to great effect as a
| solopreneur, and having the time of his life.
| adastra22 wrote:
| I use AI tools extensively. I have seen it come up with
| truly novel solutions.
| trgn wrote:
| i think less. not sure if that's a good thing. but small
| little bugs and improvements get cleared so quickly now.
| enraged_camel wrote:
| Senior engineer here as well. I would say Opus 4.5 is easily
| a mid-level engineer. It's a substantial improvement over
| Sonnet 4.5, which required a lot more hand-holding and
| interventions.
| lordnacho wrote:
| Largely agree. Anything that is just a multi-file edit, like
| an interface change, it can do. Maybe not immediately, but
| you can have it iterate, and it doesn't eat up your
| attention.
|
| It is without a doubt worth more than the 200 bucks a month I
| spend on it.
|
| I will go as far as to say it has decent ideas. Vanilla
| ideas, but it has them. I've actually gotten it to come up
| with algorithms that I thought were industry secrets. Minor
| secrets, sure. But things that you don't just come across.
| I'm in the trading business, so you don't really expect a lot
| of public information to be in the dataset.
| cpursley wrote:
| A lot of time vanilla ideas and established, well proven
| patterns are just what the customer ordered. And AI code
| tools are great at this now.
| ratelimitsteve wrote:
| i'm also a senior engineer and I use codex a lot. It has
| reduced many of the typical coding tasks to simply writing
| really good AC. I still have to write good AC, but I'm
| starting to see the velocity change from using good AI in a
| smart way.
| fvv wrote:
| it surpassed 30 junior engineers
| mark_l_watson wrote:
| I agree. re: energy and other resource use: the analogy I like
| is with driving cars: we use cars for transportation knowing
| the environmental costs so we don't usually just go on two hour
| drives for the fun of it, rather we drive to get to work, go
| shopping. I use Gemini 3 but only in specific high value use
| cases. When I use commercial models I think a little about the
| societal costs.
|
| In the USA we have lost the thread here: we don't maximize the
| use of small tuned models throughout society and industry,
| instead we use the pursuit of advanced AI as a distraction to
| the reality that our economy and competitiveness are failing.
| spider-mario wrote:
| Most of the energy for AI does not go into chatbots. Using
| Gemini is not remotely close to driving a car for 2 hours. If
| a prompt is 0.3 Wh (https://cloud.google.com/blog/products/in
| frastructure/measur...,
| https://andymasley.substack.com/p/a-cheat-sheet-for-
| conversa...), each prompt is closer to using an e-bike for 50
| metres.
|
| You could have your morning shower 1degC less hot and save
| enough energy for about 200 prompts (assuming 50 litres per
| shower). (Or skip the shower altogether and save thousands of
| prompts.)
| mark_l_watson wrote:
| +1 interesting
| mattlondon wrote:
| Take this "sober" analysis with a big pinch of salt.
|
| IBM have totally missed the AI boat, and a large chunk of their
| revenue comes from selling expensive consultants to clients who
| do not have the expertise to do IT work themselves - this
| business model is at a high risk of being disrupted by those
| clients just using AI agents instead of paying $2-5000/day for
| a team of 20 barely-qualified new-grads in some far-off
| country.
|
| IBM have an incentive to try and pour water on the AI fire to
| try and sustain their business.
| evanjrowley wrote:
| Is this true in 2025?
|
| Asking because the biggest IT consulting branch of IBM,
| Global Technology Services (GTS), was spun off into Kyndryl
| back in 2021[0]. Same goes for some premier software products
| (including one I consulted for) back in 2019[1]. Anecdotal
| evidence suggests the consulting part of IBM was already
| significantly smaller than in the past.
|
| It's worth noting that IBM may view these AI companies as
| competitors to it's Watson AI tech[2]. It already existed
| before the GPU crunch and hyperscaler boom - runs on
| proprietary IBM hardware.
|
| [0] https://en.wikipedia.org/wiki/Kyndryl
|
| [1] https://www.prnewswire.com/news-releases/hcl-
| technologies-to...
|
| [2] https://en.wikipedia.org/wiki/IBM_Watson
| mattlondon wrote:
| I know people who still work there and are doing
| consultancy work for clients.
|
| I am a former IBMer myself but my memory is hazy. IIRC
| there was 2 arms of the consultants - one was the boring
| day to day stuff, and the other was "innovation services"
| or something. Maybe the spun out the drudgery GTS and kept
| the "innovation" service? No idea.
| vmh1928 wrote:
| The part that was spun off was "Infrastructure Services"
| (from the Wiki article.) Outsourcing and operations, not
| the business consulting organization that provides high
| level strategy to coding services.
|
| https://www.ibm.com/consulting
| DebtDeflation wrote:
| Yes. GTS was infrastructure services and was spun off.
| What's left is the old GBS - business services and systems
| implementation services.
| tw04 wrote:
| Missed the boat? Have you been living under a rock? Watson AI
| advertising has been everywhere for years.
|
| It's not that they aren't in the AI space, it's that the CEO
| has a shockingly sober take on it. Probably because they've
| been doing AI for 30+ years combined with the fact they don't
| have endless money with nowhere to invest it like Google.
| dspillett wrote:
| _> Missed the boat? [...] Watson AI advertising has been
| everywhere for years._
|
| They were ahead of the game with their original Watson
| tech, but pretty slow to join and try get up to speed with
| the current GenAI families of tech.
|
| The meaning of "AI" has shifted to mean "generative AI like
| what ChatGPT does" in the eyes of most so you need to
| account for this. When people talk about AI, even though it
| is a fairly wide field, they are generally referring to a
| limited subset of it.
| Lapsa wrote:
| "GenAI families of tech" lulz
| theYipster wrote:
| The death of IBM's vision to own AI with Watson was never
| due to an inability to transition to the right tech. In
| fact, it was never about tech at all. As an entirely B2B
| company with a large revenue stream to defend, IBM was
| never going to go and scrape the entirety of the
| Internet. Especially not after the huge backlash they
| ignited with their customers over data rights and data
| ownership in trying to pitch the Watson they had.
| CamouflagedKiwi wrote:
| Advertising for it has been everywhere, but it's never
| seemed like it's at the forefront of anything. It certainly
| wasn't competitive with ChatGPT and they haven't managed to
| catch back up in the way Google have.
| adastra22 wrote:
| The only similarity of Watson-style "AI" and generative
| "AI" is the name.
| diggyhole wrote:
| Right. Just like Intel completely shitting the bed on GPUs
| then their CEO tweeted a prayer. Old tech companies are going
| to be left behind.
| pulse7 wrote:
| IBM was founded in 1911 and it survived many things...
| CursedSilicon wrote:
| Yeah but this time it's different!
|
| Hey have you seen my tulip collection?
| N19PEDL2 wrote:
| So did GE...
| belter wrote:
| > IBM have an incentive to try and pour water on the AI fire
| to try and sustain their business.
|
| IBM has faced multiple lawsuits over the years. From age
| discrimination cases to various tactics allegedly used to
| push employees out, such as requiring them to relocate to
| states with more employer friendly laws only to terminate
| them afterward.
|
| IBM is one of the clearest examples of a company that, if
| given the opportunity to replace human workers with AI, would
| not hesitate to do so. Assume therefore, the AI does not work
| for such a purpose...
| deepGem wrote:
| I would any day take chatGPT/Claude over an IBM consultant. I
| worked at IBM.
| QuercusMax wrote:
| I'd rather be slapped in the face than kicked by a horse,
| but that doesn't mean either is a good thing
| deepGem wrote:
| Precisely.
| KronisLV wrote:
| You could have both worlds: an LLM model by IBM
| https://huggingface.co/ibm-granite/granite-4.0-h-small
|
| It wasn't very promising when it came to benchmarks though,
| go figure:
| https://artificialanalysis.ai/leaderboards/models
| TheCondor wrote:
| How do you see the math working out?
|
| The numbers are staggering.
| whiplash451 wrote:
| The fair answer is that nobody knows. Even Ilya answered he
| does not know on his latest podcast with Dwarkesh.
|
| Both top line and bottom line numbers are staggering.
| Nobody knows. Let's not try to convince people otherwise.
| Ragnarork wrote:
| > a high risk of being disrupted by those clients just using
| AI agents instead of paying $2-5000/day for a team of 20
| barely-qualified new-grads in some far-off country
|
| Is there any concrete evidence of that risk being high? That
| doesn't come from people whose job is to sell AI?
| MDGeist wrote:
| IBM was ahead of the boat! They had Watson on Jeopardy years
| ago! /s
|
| I think you make a fair point about the potential disruption
| for their consulting business but didn't they try to de-risk
| a bit with the Kyndryl spinout?
| ratelimitsteve wrote:
| they have incentive but what's the sustainable, actually-
| pays-for-itself-and-generates-profit cost of AI? We have no
| idea. Everything is so heavily subsidized by burning investor
| capital for heat with the hope that they'll pull an amazon
| and make it impossible to do business on the internet without
| paying an AI firm. Maybe the 20 juniors will turn out to be
| cheaper. Maybe they'll turn out to be slightly better. Maybe
| they'll be loosely equivalent and the ability to automate
| mediocrity will drive down the cost of human mediocrity. We
| don't know and everyone seems to be betting heavily on the
| most optimistic case, so it makes an awful lot of sense to
| take the other side of that bet.
| vultour wrote:
| Do you expect Sam Altman to come on stage and tell you the
| whole thing is a giant house of cards when the entire western
| economy seems to be propped up by AI? I wonder whose "sober"
| analysis you would accept, because surely the people that are
| making money hand over fist will never admit it.
|
| Seems to me like any criticism of AI is always handwaved away
| with the same arguments. Either it's companies who missed the
| AI wave, or the models are improving incredibly quickly so if
| it's shit today you just have to wait one more year, or if
| you're not seeing 100x improvements in productivity you must
| be using it wrong.
| OhMeadhbh wrote:
| Are you suggesting IBM made up the numbers? Or that CAPEX is
| a pre-GAI measure and is useless in guiding decision making?
|
| IBM may have a vested interest in calming (or even
| extinguishing) the AI fire, but they're not the first to
| point out the numbers look a little wobbly.
|
| And why should I believe OpenAI or Alphabet/Gemini when they
| say AI will be the royal road to future value? Don't they
| have a vested interest in making AI investments look
| attractive?
| trgn wrote:
| > Also now using ChatGPT intensely since months for all kinds
| of tasks and having tried Claude etc.
|
| the facts though, read like an endorsement not a criticism
| diggyhole wrote:
| I've had decent results hackin', wackin' and smashin'.
| MisterTea wrote:
| Yesterday I was talking to coworkers about AI I mentioned that
| a friend of mine used ChatGPT to help him move. So a coworker
| said I have to test this and asked ChatGPT if he could fit a
| set of the largest Magnepan speakers (the wide folding older
| room divider style) in his Infinity QX80. The results were
| hilarious. It had some of the dimensions right but it then
| decided the QX80 is as wide as a box truck (~8-8.5 feet/2.5 m)
| and to align the nearly 7 foot long speakers sideways between
| the wheel wells. It also posted hilariously incomprehensible
| ASCII diagrams.
| spogbiper wrote:
| Here's what Gemini 3 says (don't know if correct but seems
| reasonable):
|
| "Can my friend fit a set of the largest Magnepan speakers
| (the wide folding older room divider style) in his Infinity
| QX80?"
|
| Yes, your friend can very likely fit them, but they will need
| to prepare the vehicle specifically for a tight fit.
|
| Based on the "folding room divider" description, you are
| looking at the vintage Magnepan Tympani series (likely the
| Tympani I, III, or IV). These are famous for being massive,
| hinged panels that measure 72 inches (6 feet) tall.
|
| Here is the breakdown of the fit and the strategy for moving
| them safely:
|
| 1. The Math: It fits, but use the "Captain's" space The
| Speaker Size: When folded, a Tympani speaker stack is roughly
| 72" Long x 18" Wide x 4" Thick. You have two of these stacks
| (one for left, one for right).
|
| The QX80 Cargo Space: With the 2nd and 3rd rows folded flat,
| the Infinity QX80 offers about 86-87 inches of length from
| the liftgate to the back of the front seats.
|
| The Verdict: You have roughly 14 inches of clearance
| lengthwise. They will fit lying flat.
|
| 2. Critical "Must-Dos" Before Loading Even though they fit on
| paper, these speakers are fragile and awkward. Do not skip
| these steps:
|
| Remove the Feet: The speakers have metal feet (T-shaped or
| U-shaped) screwed into the bottom to make them stand up. You
| must bring a screwdriver/Allen wrench to remove these. If you
| leave them on, the speakers will not stack flat, they will
| slide around, and the feet could tear the QX80's leather or
| carpet.
|
| Bring Moving Blankets (Lots of them): Magnepans are
| essentially mylar stretched over magnets. If something pokes
| the grille cloth, it can ruin the diaphragm. Lay a thick
| blanket on the cargo floor, place the first speaker stack,
| add a layer of blankets, and then the second stack.
|
| Slide the Front Seats Forward: Just to be safe, move the
| driver and passenger seats forward a couple of inches before
| loading. This ensures you don't accidentally crush the top of
| the speaker frame when closing the liftgate.
|
| 3. A Warning on "Folding" Check the Hinges: These speakers
| are 30-40 years old. The fabric hinges that connect the
| panels often rot. When you go to fold them, they might
| separate completely. This is actually good for moving
| (smaller pieces are easier to handle), but be prepared for
| them to come apart.
|
| Do NOT stack anything on top of them: These are heavy
| (approx. 90-100 lbs per speaker). Do not put boxes or amps on
| top of the planar surfaces during the drive.
|
| Summary for your friend: Tell him to clear the car
| completely, bring tools to take the feet off, and treating
| them like panes of glass. They will slide right in.
| filoeleven wrote:
| Please don't pollute the comments with noise. This adds
| nothing to the conversation.
| tim333 wrote:
| An issue with the doom forecasts is most of the hypothetical
| $8tn hasn't happened yet. Current big tech capex is about
| $315bn this year, $250bn last against a pre AI level ~$100bn so
| ~$400bn has been spent so far on AI boom data centers.
| https://sherwood.news/business/amazon-plans-100-billion-spen...
|
| The future spend is optional - AGI takeoff, you spend loads,
| not happening not so much.
|
| Say it levels of at $800bn. The world's population is ~8bn so
| $100 a head so you'd need to be making $10 or $20 per head per
| year. Quite possibly doable.
| tempfile wrote:
| Lol. If you ballpark numbers like that probably anything is
| doable!
| tim333 wrote:
| $10/head x $8bn people is easier said than done - only your
| major enterprises like Google or Amazon can. But AI even if
| just LLMs may be there.
| trueismywork wrote:
| 65% of people in the world earn less than 3000 euros/year.
| golol wrote:
| Getting 65% of the population to spend 1% of their income
| on some new digital toy forever does not seem so far
| fetched.
| gfaster wrote:
| That seems super far fetched given that 37%[1] of the
| world's population does not have internet access. You
| could reasonably restrict further to populations that
| speak languages that are even passably represented in
| LLMs.
|
| Even disregarding that, if you're making <3000 euros a
| year, I really don't think you'd be willing or able to
| spend that much money to let your computer gaslight you.
|
| [1]: https://ourworldindata.org/internet
| adastra22 wrote:
| The power distribution goes the other way too. There are
| outliers that will spend much more per capita.
| TheOccasionalWr wrote:
| I'm not sure what you mean with the "code snippets are straight
| out of Stackoverflow". That is factually incorrect just by how
| LLM works. By now there has been so much code ingested from all
| kinds of sources, including Stackoverflow LLM is able to help
| generate quite good code in many occasions. My point being it
| is extremly useful for super popular languages and many
| languages where resources are more scarce for developer but
| because they got the code from who knows where, it can
| definitely give you many useful ideas.
|
| It's not human, which I'm not sure what is supposed to actually
| mean. Humans make mistakes, humans make good code. AI does also
| both. What it definitely needs is a good programmer still on
| top to know what he is getting and how to improve it.
|
| I find AI (LLM) very useful as a very good code completion and
| light coder where you know exactly what to do because you did
| it a thousand times but it's wasteful to be typing it again.
| Especially a lot of boilerplate code or tests.
|
| It's also useful for agentic use cases because some things you
| just couldn't do before because there was nothing to understand
| a human voice/text input and translate that to an actual
| command.
|
| But that is all far from some AGI and it all costs a lot today
| an average company to say that this actually provided return on
| the money but it definitely speeds things up.
| prewett wrote:
| > I'm not sure what you mean with the "code snippets are
| straight out of Stackoverflow". That is factually incorrect
| just by how LLM works.
|
| I'm not an AI lover, but I did try Gemini for a small, well-
| contained algorithm for a personal project that I didn't want
| to spend the time looking up, and it was straight-up a
| StackOverflow solution. I found out because I said "hm, there
| has to be a more elegant solution", and quickly found the
| StackOverflow solution that the AI regurgitated. Another 10
| or 20 minutes of hunting uncovered another StackOverflow
| solution with the requisite elegance.
| guywithahat wrote:
| > it's also worth mentioning that the energy requirements are
| impossible to fulfill
|
| Maybe I'm misunderstanding you but they're definitely not
| impossible to fulfill, in fact I'd argue the energy
| requirements are some of the most straightforward to fulfill.
| Bringing a natural gas power plant online is not the hardest
| part in creating AGI
| jstummbillig wrote:
| Well, at least it tells us something about the sentiment on hn
| that a lame insight around self admitted "napkin math" and
| obvious conflict of interest garners 400 points.
| koliber wrote:
| NOTE: People pointed out that it's $800 billion to cover
| interest, not $8 billion, as I wrote below. My mistake. That adds
| 2 more zeroes to all figures, which makes it a lot more crazy.
| Original comment below...
|
| $8 billion / US adult adult population of of 270 million comes
| out to about $3000 per adult per year. That's only to cover cost
| of interest, let alone other costs and profits.
|
| That sounds crazy, but let's think about it...
|
| - How much does an average American spend on a car and car-
| related expenses? If AI becomes as big as "cars", then this
| number is not as nuts.
|
| - These firms will target the global market, not US only, so
| number of adults is 20x, and the average required spend per adult
| per year becomes $150.
|
| - Let's say only about 1/3 of the world's adult population is
| poised to take advantage of paid tools enabled by AI. The total
| spend per targetable adult per year becomes closer to $500.
|
| - The $8 billion in interest is on the total investment by all AI
| firms. All companies will not succeed. Let's say that the one
| that will succeed will spend 1/4 of that. So that's $2 billion
| dollar per year, and roughly $125 per adult per year.
|
| - Triple that number to factor in other costs and profits and
| that company needs to get $500 in sales per targetable adult per
| year.
|
| People spend more than that on each of these: smoking, booze,
| cars, TV. If AI can penetrate as deep as the above things did,
| it's not as crazy of an investment as it looks. It's one hell of
| a bet though.
| writebetterc wrote:
| You're saying $8 billion to cover interest, another commenter
| said 80, but the actual article says ""$8 trillion of CapEx
| means you need roughly $800 billion of profit just to pay for
| the interest". Eight HUNDRED billion. Where does the eight come
| from, from 90% of these companies failing to make a return? If
| a few AI companies survive and thrive (which tbh, sure, why
| not?) then we're still gonna fall face down into concrete.
| koliber wrote:
| right. My goof. That adds two more zeroes across all the
| math. More crazy, but I think in the realm of "maybe, if we
| squint hard."
| writebetterc wrote:
| I think it's the realm of maybe in Silicon Valley. That's
| 5000 dollars. Look at this statement:
|
| > Let's say only about 1/3 of the world's adult population
| is poised to take advantage of paid tools enabled by AI
|
| 2/3 of the world's adult population is between 15 and 65
| (roughly: 'working age'), so that's 50% of the working
| world that is capable of using AI with those numbers.
| India's GDP per capita is 2750USD, and now the price tag is
| even higher than 5k.
|
| I don't know how to say this well, so I'll just blurt it
| out: I feel like I'm being quite aggressive, but I don't
| blame you or expect you to defend your statements or
| anything, though of course I'll read what you've got to
| say.
| rc1 wrote:
| Nit: its $800 billion in interest, your comment starts with $8
| billion
| koliber wrote:
| right. My goof. That adds two more zeroes across all the
| math. More crazy, but I think in the realm of "maybe, if we
| squint hard." But my eyes are hurting from squinting that
| hard, so I agree that it's just crazy.
| littlecranky67 wrote:
| There are so many CEOs, tech experts, financial analysts and
| famous investors who say we are in an AI bubble - even AI-
| invested companies say that about themselves. My latest favorite
| "We are in an AI bubble" comment comes from Linus Torvalds
| himself in the video with Linus from Linus Tech Tipps [0]
|
| [0]: https://www.youtube.com/watch?v=mfv0V1SxbNA&t=2063s
| turtleyacht wrote:
| Data centers house hardware, and it's a land grab for compute.
| What actually runs post-AI depends on its owners. A glut of
| processing might be spent reverse-engineering efficient
| heuristics versus the "magic box."
|
| A bitter summer.
| liampulles wrote:
| Hypothetically speaking, if the AI hype bubble pops (or just
| returns to normalcy), would it be profitable to retarget the
| compute towards some kind of crypto mining? If so, could we
| expect the cryptocurrency supply to soar and the price to tank in
| short succession?
| kopirgan wrote:
| Its also strange that while solar systems built wait years for
| grid capacity, this much extra energy is being planned..
| kopirgan wrote:
| What's the legal status of all this AI code?! Will it be likely
| that someone whose code was lifted as part of "learning" can
| sue?!
| brookst wrote:
| Anyone can sue for anything.
|
| I'm not sure we want a world where anyone who learns from
| existing code is committing a tort.
| xgulfie wrote:
| GenAI isn't a person
| weerfeegleem wrote:
| One more data center and we will reach AGI, we promise, just give
| us more money.
| 6thbit wrote:
| "I think there is a world market for maybe five computers."
|
| Let's hope IBM keeps their streak of bad predictions.
| m101 wrote:
| To all those people that think IBM don't know anything. Calculate
| this number:
|
| # companies 100+ years old / # companies ever existed in 100+
| years
|
| Then you will see why IBM is pretty special and probably knows
| what they are doing.
| mattlondon wrote:
| Pretty special? They were making guns and selling computation
| tools to the Nazis for a bunch of those years.
|
| I think they trade now mostly on legacy maintenance contracts
| (e.g. for mainframes) for e.g. banks who are terrified of
| rocking their technology-stack-boat, and selling off-shore
| consultants (which is at SIGNIFICANT risk of disruption - why
| would you pay IBM squillions to do some contract IT work, when
| we have AI code agents? Probably why the CEO is out doing
| interviews saying you cant trust AI to be around forever)
|
| I have not really seen anything from IBM that signals they are
| anything other than just milking their legacy - what have they
| done that is new or innovative in the past say 10 or 20 years?
|
| I was a former IBMer 15 odd years ago and it was obvious then
| that it was a total dinosaur on a downward spiral, and a place
| where innovation happened somewhere else.
| LtWorf wrote:
| I don't think selling things to nazis was worse than selling
| things to israel today.
| mattlondon wrote:
| Yep, both equally as bad and morally repugnant.
| michaelbuckbee wrote:
| It's not going to pay off for everybody, this is a land grab for
| who will control this sort of central aspect of AI inference.
| fnord77 wrote:
| > this is a land grab
|
| is it though? Unlike fiber, current GPUs will be obsolete in
| 5-10 years.
| vcryan wrote:
| Okay, that is what IBM has to say. Are there any credible
| opinions we should know about?
| mistercheph wrote:
| Please, can we get more analysis from the geniuses at
| International Business Machines in 2025?
| stevetron wrote:
| From the company that said the world market size for computers
| was about 50. And the company that gave us OS2.
| AlexandrB wrote:
| I see a lot of people attacking the messenger but very few
| addressing the basic logic that you need 800B+ in profit just
| to pay the interest on some of these investments.
|
| Pointing out IBM's mixed history would be valid if they were
| making some complex, intricate, hard to verify case for why AI
| won't be profitable. But the case being made seems like really
| simple math. A lot of the counterarguments to these economic
| problems have the form "this time it's different" - something
| you hear every bubble from .com to 2008.
| jonfw wrote:
| "Company that has been left in the dust claims it was a good
| business decision"
| atleastoptimal wrote:
| >IBM CEO
|
| might as well ask a magic 8 ball for more prescient tech takes
| IAmBroom wrote:
| It honestly reminds me of the opinion pieces put out by
| encyclopedia companies about the many ways Wikipedia was
| inferior.
|
| I read an article that pretended to objectively compare them.
| It noted that Wikipedia ( _at that time_ ) had more articles,
| but not way more... A brief "sampling test" suggested EB was
| marginally more accurate than Wikipedia - marginally!
|
| The article concluded that EB was superior. Which is what the
| author was paid to conclude, obviously. "This free tool is
| marginally better in some ways, and slightly worse in others,
| than this expensive tool - so fork over your cash!"
| accra4rx wrote:
| I mean why not , they have to put something down to make their
| quantum show as better ROIs
| Jimmc414 wrote:
| "It is difficult to get a man to understand something when his
| salary depends on his not understanding it." - Upton Sinclair
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