I suspect that economies of scale are different for software and hardware. With hardware, iteration results in optimization of the supply chain, volume discount as the marginal cost is so much less than the fixed cost, and lower prices in time. The purpose of the device remains fixed. With software, the software becomes ever more complex with technical debt - featuritis, patches, bugs, vulnerabilities, and evolution of purpose to try and capture more disparate functions under one environment in an attempt to capture and lock in users. Price tends to increase in time. (This trajectory incidentally is the opposite of the unix philosophy - having multiple small fast independent tools than can be concatenated to achieve a purpose.) This results in ever increasing profits for software and decreasing profits for hardware at equilibrium. In the development of AI we are already seeing this-first we had gpt, then chatbots, then agents, now integration with existing software architectures.Not only is each model ever larger and more complex (RNN->transformer->multihead-> add fine tuning/LoRA-> add MCP), but the bean counters will find ways to make you pay for each added feature. And bugs will multiply. Already prompt injection attacks are a concern so now another layer is needed to mitigate those.

For the general public, these increasing costs will besubsidized by advertising. I cant wait for ads to start appearring in chatGPT- it will be very insidious as the advertising will be comingled with the output so there will be no way to avoid it.