Fine timing takes time and data, though. If smart enough models get cheap enough, then most people have lots of use cases that are cost insensitive enough that it's not worth the effort.

Of course, "smart enough" is a low enough threshold for most uses that this is still a problem for the frontier labs.

But at the same time, a truly smart enough closed model could also potentially command almost whatever they'd care to charge for it.

Whether they can actually get to that level remains to be seen, but I can definitely see a situation where most people are perfectly happy with cheap middle of the tree models while large corporations pay magnitudes more than current API pricing for access to models never even marketed as a mass market product and keep the labs afloat.

It's of course be a lot easier for them to find the path towards that of they didn't need to compete with open models in the meantime.