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"Exploring Ownership and Rental in the Computing Landscape"

Dec 4, 2023 - 12:01pmSummary: The writer discusses the contrast between ownership and rental, noting that ownership usually represents a capital asset while renting is just an expense. The consideration of owning versus renting becomes relevant when ownership is cost-effective compared to renting. The writer questions the economic implications of owning technology, such as gaming PCs, and how certain technologies may not qualify as capital assets due to depreciation. The discussion then shifts to the potential development of a dedicated chip, such as a GPT-4 ASIC, and the feasibility of widespread adoption and cost-efficiency compared to cloud services. Ultimately, the writer expresses a preference for ownership over renting, as it provides leverage in the world, particularly in relation to valuable tech companies that own the IP and computational resources for large language models. The text reflects on the potential commoditization of computing resources and its impact on the industry. The speaker believes that compute resources will inevitably become commoditized, presenting challenges and opportunities for those involved. The discussion also touches on the shift from cloud-based subscriptions to hardware ownership as a response to commoditization. Additionally, there are considerations about the storage and computing landscape, particularly regarding the efficiency of capital allocation. The passage raises significant questions about the impact of commoditization on both personal and large-scale computing, emphasizing the need for further analysis and collaboration to address these complex issues.

Transcript: One thing that strikes me about ownership versus rental, though, is ownership tends to be some kind of capital asset, where renting is not. It's just always an expense. And that is maybe what I'm considering here. And if rental can be avoided because ownership is cheaper, then there is an obvious reason to own. And when speaking about local GPT, why pay for it, even if it is extremely cheap, on someone else's dime, when you can own it? I guess it depends on how ubiquitous it becomes and how economies of scale work. It's a strange thing, because even within the landscape of consumer technology, you don't need to own a gaming PC anymore, because Nvidia's server racks have them. So we may rent a gaming computer in a room versus having one ourselves. And that actually may be more efficient allocation of resource in some way. But it also does make me wonder about the pure economics of that situation, where a gaming PC is not a capital asset. I guess it can be used as a capital asset, but in the sense of gaming, it is not. If you were using it as a Bitcoin miner, it becomes a capital asset. But for the most part, computing technology depreciates. So a lot of it is not a capital asset to begin with. I'm still curious, though, about the thought experiment of a GPT-4 SOC. Or ASIC, rather. That is, a chip itself which implements GPT. That's all it does. It's nothing else. It just does GPT things. That's all this chip does. How widespread can that be? How little power can it use? And if it can do both of those things effectively, why do we need to reach out to a cloud service so you can get that chip for $1? $1 maybe is a bit too little, realistically. Maybe let's call it $50. But likely that cost will come down quite rapidly. Anyway, it's a strange thing, ownership versus renting. That's the main point I think I'm trying to make is I would prefer to own things than rent them. Because it gives me leverage in the world. But it is worthwhile to think about what are the kinds of things that give you leverage in the world. Obviously, the tech companies who own the IP to these large language models and the compute resources to compute them are extraordinarily valuable. I'm going to wait a few moments here. Given that the compute resources that these companies have are extremely valuable, how much less valuable do they become when that compute is commoditized? Will that compute become commoditized? Those are harder questions to answer. The bet that I have still is that that compute will become commoditized. I think it must be inevitable that that compute becomes commoditized. It may take a while, but I think it's certainly going to become commoditized. So where does that put those guys and where does that put people who bet on the commoditization of that? And how do you use that commoditization effectively? And I wonder, in some sense, if the product now is saying, Actually, you don't need to buy a subscription. Buy this piece of hardware that does this. Because this piece of hardware means that you don't have to pay the subscription. It can do all those things that paying the subscription does, but you own it. There are some bigger notions and questions about the storage and computing landscape here that I think are worthwhile to think about and try to answer. Notably, what I mentioned about the cloud earlier, that I'm not deluded into thinking I have all of the files on my local machine. I certainly do not. Most of the files do not exist on my computer. They exist on GitHub and iCloud. That's pretty much where all of my files reside. And things that used to be files, say movies and music, that used to be on my machine are also not there. I think there is a question to be asked if they should be there. And not should in the sense of, you know, whatever. Should in the sense, is it more efficient capital-wise to do so? That's a question I'm unsure about. But I believe is worthwhile to think about. So... Yeah, I... I wonder... I wonder... I wonder... I wonder... Um... It's interesting. The commoditization of personal computers allowed an entire industry to flourish. Will the commoditization... Well, there's two questions. The commoditization of large language models is happening. And then the question that I have is, well, that's happening. And also eventually they will be commoditized down to the chip level. How will this impact things? How will this impact things? These are pretty big questions that I think I need more brains to help answer.

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