OpenAI’s Windsurf deal is off, and Windsurf’s CEO is going to Google

IMO other than the Microsoft IP issue, I think the biggest thing that has shifted since this acquisition was first in the works is Claude Code has absolutely exploded. Forking an IDE and all the expense that comes with that feels like a waste of effort, considering the number of free/open source CLI agentic tools that are out there.

Let's review the current state of things:

- Terminal CLI agents are several orders of magnitude less $$$ to develop than forking an entire IDE.

- CC is dead simple to onboard (use whatever IDE you're using now, with a simple extension for some UX improvements).

- Anthropic is free to aggressively undercut their own API margins (and middlemen like Cursor) in exchange for more predictable subscription revenue + training data access.

What does Cursor/Windsurf offer over VS Code + CC?

- Tab completion model (Cursor's remaining moat)

- Some UI niceties like "add selection to chat", and etc.

Personally I think this is a harbinger of where things are going. Cursor was fastest to $900M ARR and IMO will be fastest back down again.

Agreed on everything. Just to add, not only anthropic is offering CC at like a 500% loss, they restricted sonnet/opus 4 access to windsurf, and jacked up their enterprise deal to Cursor. The increase in price was so big that it forced cursor to make that disastrous downgrade to their plans.

I think only way Cursor and other UX wrappers still win is if on device models or at least open source models catch up in the next 2 years. Then i can see a big push for UX if models are truly a commodity. But as long as claude is much better then yes they hold all the cards. (And don't have a bigger company to have a civil war with like openai)

> CC at like a 500% loss

Do you have a citation for this?

It might be at a loss, but I don’t think it is that extravagant.

I'm also curious about this. Claude Code feels very expensive to me, but at the same time I don't have much perspective (nothing to compare it to, really, other than Codex or other agent editors I guess. And CC is way better so likely worth the extra money anyway)

I think GP is talking about Claude Code Max 100 & 200 plans. They are very reasonable compared to anything else that has per-use token usage.

I am on Max and I can work 5 hrs+ a day easily. It does fall back to Sonnet pretty fast, but I don't seem to notice any big differece.

Yes, my CC usage is regularly $50-$100 per day, so their Max plan is absolutely great value that I don’t expect to last.

Pretty easy to hit $100 an hour using Opus on API credits. The model providers are heavily subsidized, the datacenters appear to be too. If you look at the Coreweave stuff and the private datacenters it starts looking like the telecom bubble. Even Meta is looking to finance datacenter expansion - https://www.reuters.com/business/meta-seeks-29-billion-priva...

The reason they are talking about building new nuclear power plants in the US isn't just for a few training runs, its for inference. At scale the AI tools are going to be extremely expensive.

Also note China produces twice as much electricity as the United States. Software development and agent demand is going to be competitive across industries. You may think, oh I can just use a few hours of this a day and I got a week of work done (happens to me some days), but you are going to end up needing to match what your competitors are doing - not what you got comfortable with. This is the recurring trap of new technology (no capitalism required.)

There is a danger to independent developers becoming reliant on models. $100-$200 is a customer acquisition cost giveaway. The state of the art models probably will end up costing hourly what a human developer costs. There is also the speed and batching part. How willing is the developer to, for example, get 50% off but maybe wait twice as long for the output. Hopefully the good dev models end up only costing $1000-$2000 a month in a year. At least that will be more accessible.

Somewhere in the future these good models will run on device and just cost the price of your hardware. Will it be the AGI models? We will find out.

I wonder how this comment will age, will look back at it in 5 or 10 years.

Why “no capitalism required”? Competition of this kind is only possible with capitalism.

Not really, it's possible with any market economy, even a hypothetical socialist one (that is, one where all market actors are worker-owned co-ops).

And, since there is no global super-state, the world economy is a market economy, so even if every state were a state-owned planned economy, North Korea style, still there would exist this type of competition between states.

I mean, if you wanna get technical, many companies in Silicon Valley are worker-owned (equity compensation)