I've struggled with this. You definitely can have great cheap models. There are many of them open source and served profitably by neo-clouds. The big labs have basically given up on cheap models, and it is frustrating. It means applications are not likely to build as much on them anymore (we are shifting workloads from Haiku/Sonnet to Deepseek v4, for example).

I suspect the problem is that they need to charge a lot to keep revenue numbers up, and they are more worried about cannibalizing themselves than others cannibalizing them.