IBM CEO: open weight models now deliver 90% quality at 10% cost

IBM CEO Arvind Krishna said on the Q3 earnings call that open weight models now reach 90% of frontier model effectiveness at 10–25% of token cost. He argued most enterprise tasks can run on-prem in just two or three racks.

• Open models cost 10–25% of frontier models while hitting 90% effectiveness
• In 2024 the benchmark gap was 70 versus 20–30
• IBM quarterly revenue rose 5% to $17.1 billion
• Red Hat grew 11%; virtualization passed $800 million in deals