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IBM CEO says open-weight models now rival closed AI at lower cost
The Register reported that IBM CEO Arvind Krishna told investors open-weight models now approach frontier quality at a fraction of token cost, boosting on-prem demand.
- The Register is now reporting this
- New headline Was: “IBM CEO says open weight models are now irresistibly good and cheap on-prem”
- Our desk filed its story
- theregister.com is now reporting this
IBM chief executive Arvind Krishna told investors on the company's third-quarter earnings call that open-weight AI models have become strong enough, and cheap enough, to justify on-premises use for most enterprise work, The Register reported1.
Krishna said that in 2024 a broad benchmark might give a top closed model a score of about 70 and an open model 20 or 30, according to the outlet1. By late 2025 he said that gap had narrowed to roughly 70 versus 501.
He now puts open-weight models at about 90 percent as effective as frontier models, at 10 percent to 25 percent of the token cost, The Register said1. Krishna asked whether an enterprise would pay 10 times more for the remaining quality, and said most would not1.
Tasks that still need the costlier models exist, he said, but email summaries, contract review, customer calls, and composing mail can be done with the cheaper option, according to the report1.
Those economics are driving interest in on-prem AI infrastructure, Krishna said, often in two or three racks1. He said many companies lack kernel engineers, network specialists, and staff who can cluster GPUs and cache results, The Register reported1.
He did not detail a staffing fix, the outlet said, other than that IBM will ship software to ease deployments and that on-prem demand should help sales of IBM's Spyre mainframe accelerator cards1.
On the same call, Krishna said current-generation z17 mainframes have delivered $1 billion more revenue than any previous model, and that new rackable models had the strongest midrange IBM Z launch in nearly two decades, The Register reported1. Mainframe revenue still fell 20 percent, which IBM said is expected 18 months after the z17 launch1.
Infrastructure revenue rose 5 percent year over year to $3.7 billion, slower than Dell, HPE, and Lenovo, the report said1. Software rose 9 percent to $7.8 billion, with Red Hat up 11 percent1. Total quarterly revenue was $17.1 billion, up 5 percent1.
The Register also described a separate IBM Cloud severity-one incident from emergency maintenance that blocked new resource and VPC provisioning for 90 minutes, with Classic Cloud restoration targeted for 08:00 UTC Thursday1. The outlet said it had asked IBM whether the work related to critical PHP bugs and had not yet received a reply1.