Baidu debuts cost-efficient Ernie AI models

On April 25, Baidu introduced its latest AI models, Ernie 4.5 Turbo and Ernie X1 Turbo, at Baidu Create 2025.

These models feature enhanced multimodal capabilities, improved reasoning, and reduced costs.

Ernie 4.5 Turbo provides faster response times and is priced at 20% of its predecessor, while Ernie X1 Turbo is available at half the cost of Ernie X1. Both models aim to tackle challenges such as high costs and slow response times.

Baidu also launched new applications, including Xinxiang, a collaboration app that manages over 200 task types.

It showcased realistic AI digital humans and the AI-powered Cangzhou OS, featuring tools like AI Note for educational content creation.

Additionally, Baidu announced an AI Open Initiative through its Baidu Search Open Platform and emphasized its commitment to the Model Context Protocol (MCP).

🔗 Source: Baidu

🧠 Food for thought

1️⃣ Aggressive pricing reflects the commoditization of foundation models

Baidu’s dramatic price cuts, reducing ERNIE 4.5 Turbo by 80% and ERNIE X1 Turbo by 50%, signal a shift toward commoditization in foundation models.

These reductions position ERNIE 4.5 Turbo at just 40% of the cost of DeepSeek’s V3 model, reflecting a competitive market where differentiation is increasingly challenging1.

This pricing strategy comes as Baidu faces pressure from both startups and established tech giants in China’s AI ecosystem, with companies like Alibaba and DeepSeek threatening its market position2.

The positive market response, with Baidu’s shares rising 3.85% following the announcement, suggests investors view aggressive pricing as a viable strategy for growth in the increasingly crowded AI market3.

This pricing trend is reminiscent of price competition in cloud computing, where AWS, Microsoft, and Google lowered prices to attract developers before shifting competition to higher-value features and services.

2️⃣ Multimodality is becoming table stakes in AI foundation models

Robin Li’s declaration that “multimodality will become a standard feature of future foundation models” represents the culmination of Baidu’s long-term development trajectory in diverse AI modalities.