On the eve of the 2024 618 shopping festival, a price war triggered by big model vendors quietly started, breaking the routine of traditional e-commerce festivals. Volcano Engine took the lead in announcing that its main model, Beanbag, was priced at $0.0008/thousand tokens in the enterprise market, a staggering 99.3% cheaper than the industry price. Subsequently, Baidu, Aliyun, KDDI and other mainstream domestic big model vendors followed suit, announcing that their main models were completely free. This price war quickly formed an irreversible trend, which had a profound impact on the big model industry.
Reviewing the development history of the Internet industry, it is not difficult to find that this price war strategy is not the first time. In many industry segments, by reducing prices or even free to attract users, expand market share, and then in the ecological maturity of the price to achieve profitability, has become a common business model. The large model industry is currently in such a stage of development, from the first year of emergence and compliance, to today’s price reduction competition, signaling that the industry is gradually maturing.
However, unlike in the past, the price-cutting strategy of the big model industry is mainly oriented to enterprise-level users and application-level developers. For individual users, most big models are still completely free, except for some vendors whose upgraded services require a membership subscription. This means that although big model technology has made significant progress, its commercialization process for C-support users has not yet really started.
For developers, this price war is certainly a boon. As the cost of model calling decreases, so will their product development costs. However, this also brings a potential problem: once developers form a dependency on a certain vendor and that vendor raises prices in the future, they may face extremely high exit costs and the risk of ROI (input-output ratio) not being able to return to normal.
In this big model industry competition dominated by Internet vendors, the commercialization decision has shifted. It is no longer the developers or technology providers who have the final say, but the Internet vendors with powerful cloud resources and computing power reserves to decide when to “kill the chicken”, when to “take the egg”. This business logic has brought about rapid expansion of the market and rapid technological progress, but also allows developers to face greater uncertainty and risk.
In the long run, how this price war will affect the future direction of the large model industry is still an unknown. However, it is foreseeable that the big model industry will usher in more challenges and opportunities as technology continues to advance and the market continues to change. For developers, how to enjoy the convenience of low prices while maintaining the independence and diversity of technology will be a question worth pondering.
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