Okay, but what if you're not Microsofts size and don't have and R&D budget large enough to fund development of your own models and tools?

This is a warning to any company, not building their own AI, that AI assisted development could become really expensive really fast and most likely won't pay off. What Microsoft is suggesting is that the current price is to high, but it's still not high enough for e.g. Anthropic to be profitable, or AI coding tools are only as good as the developers using them. So you can't meaningfully do layoffs by replacing the developers with AIs, because the cost is to high.

How does Microsoft plan to fix CoPilot, so that the cost will be so much lower than Claude, that budget overruns won't be a problem for their own customer?

MSFT and Apple are taking the same approach.

The frontier model space costs 1000x as much to develop as the small language models, and is only 1.5 years ahead.

Factually, the frontier models have not paid for themselves. So, if you're MSFT and Apple, you don't need to run in a race where even the winner loses massively.

You can try to train models 1.5 years behind that are highly likely to be profitable, given your market position.

The average person is lagging behind what AI is capable of by 3+ years anyway...

So you can save 1000x on training and 10x on inference and just use SOTA small models.

Why spend $5B training a model that's for sure not going to make $5B (after inference costs) when you can spend $5M building one that WILL make far more than that after inference costs?

> attempting to build their own models.

At one point there were rumours that they'd do that. They also have the rigts to oAI models for a few more years still, so they could always use that but apparently they're also compute starved (like anyone else).

Curb Your Enthusiasm theme starts playing.