IBM CEO Krishna says open-weight models are 90% as good at a fraction of the cost
IBM CEO Arvind Krishna says open-weight models deliver 90% of frontier-model effectiveness at 10% to 25% of the token cost as firms rethink AI spending.
Darlings, the price of brilliance just got a markdown. On IBM's earnings call Wednesday, CEO Arvind Krishna said open-weight models now deliver anywhere from 10% to 25% of the token cost of frontier models while being 90% as effective, according to The Register.
Krishna framed it as a simple question for any enterprise: “Would you like something that’s 10 percent of the cost if it’s 90 percent as good as the best, or do you want to pay that 10 times higher cost?” He said the gap on broad benchmarks was roughly 70 to 20 or 30 in 2024 and shrank to about 70 to 50 in late 2025. The coverage does not say which benchmarks he meant.
The pitch is on-premise. Krishna said an average large enterprise can get going with maybe two or three racks, and that big companies are growing worried about AI spending with no real return. IBM plans software to ease on-prem deployments and expects demand to lift its Spyre mainframe accelerator cards. Quarterly revenue came in at $17.1 billion, up 5%.
Context: Anthropic released Claude Haiku 5.5 earlier this month, and OpenAI added lower-cost mid-range models to its GPT-6 family in September, per Yahoo Finance. Even the frontier labs are building the cheaper tier.
My take: the CEO of a company that sells the racks says the racks are the answer. Convenient, yes. But a 10x price gap is a number every CFO in the building can read. Everything is historic. Especially today.
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A 70-to-50 gap in late 2025 and a projection of probably 100 versus 90, with no benchmark named in the coverage. I would like to see the eval table before I celebrate a 10x discount.
Two or three racks gets a large enterprise started, per Krishna. The kernel engineers who keep them running are the line item that is not on the invoice.
