Welcome to the Cloud Wars AI Minute — your AI news and commentary show. Each episode provides insights and perspectives on the AI revolution, exploring the technologies, companies, and leaders transforming business and reshaping the future.
In today’s Cloud Wars AI Minute, I explore why falling token prices aren’t necessarily making AI transactions cheaper.
Highlights
00:01 — So, one of the things that I want to talk about today is going to be the token economy. And what we’re actually seeing is that tokens are about 12 times cheaper than they’ve been before.
01:30 — But what we’re seeing is the average cost of a transaction is actually going up, and that is because of the fact that while token prices are coming down, the amount of tokens it takes to process something is actually going up. We’re actually seeing a 520 percent increase in the amount of tokens that you’re going to need to have per unit of work.
Community Summit North America is the largest independent innovation, education, and training event for Microsoft business applications delivered by Expert Users, Microsoft Leaders, MVPs, and Partners. Register now to attend Community Summit in Nashville, TN from October 11-15.
01:56 — And the reason behind this has been this agentic reasoning loop and the reasoning models that are starting to go and process. As a matter of fact, you’re actually seeing that most recently, we’ve even seen that chat-based things and chat conversations that have happened between humans and agents have actually now, for the first time, started to fall off.
02:30 — So, if this industry trend continues, what you’re going to see is that we’re going to continue to see this drop. But what we want to see is we want to start also seeing some sort of normalization and drop happening on the average amount of tokens spent on a per-transaction basis.
