The best case for frontier labs is the smartphone outcome

Best case for frontier labs is the smartphone outcome. SOTA is the iPhone: 1/5 of the tokens, 4/5 of the profits.

Everything below prices near cost of compute and goes to whoever owns the cheapest FLOPs on Earth (or in orbit). x.com

But the better comparable is couture: no patents, knocked off in a season, a premium you keep only by outrunning the copies.

Distillation is fast fashion for intelligence.

Apple’s premium is the cost of leaving. Tying harness to model, expanding memory, diving into your Slack: @AnthropicAI and @OpenAI have to manufacture switching costs to curb multi-homing.

But customers increasingly want to control costs + IP.

Originally published as a thread on X.