Ben Horowitz recalls the experience of Loudcloud's bandwidth costs plummeting
Ben Horowitz recalled his experience founding Loudcloud in 1999: at the time bandwidth cost $1,500 per megabit and was hard to buy even with money, forcing the company to sign three-year high-priced long-term contracts; just two years later bandwidth prices fell to $50, and companies that borrowed money to stockpile bandwidth were crushed by the cycle. He uses this to contrast with the current AI application layer, where the price per million Token calls keeps plunging, while prices for GPUs, data center land, power quotas and skilled workers are rising across the board, arguing that the high rental premiums of compute cloud vendors are inherently fragile. He also judges that when on-device small models catch up with large models in performance, the blind worship of cloud-based thousand-GPU and ten-thousand-GPU clusters may cool down within a few months.
Ben Horowitz recalled his experience founding Loudcloud in 1999: at the time bandwidth cost $1,500 per megabit and was hard to buy even with money, forcing the company to sign three-year high-priced long-term contracts; just two years later bandwidth prices fell to $50, and companies that borrowed money to stockpile bandwidth were crushed by the cycle. He uses this to contrast with the current AI application layer, where the price per million Token calls keeps plunging, while prices for GPUs, da
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