All businesses are being disrupted by the application of artificial intelligence, or at least they will be in the next few years. But what happens if this technology is combined with Cloud Computing?
We are now witnessing an ongoing paradigm shift in web data services, where AI tools are provided as “Cloud AI services”. No one can exactly anticipate all the implications of such a change, but it is definitely going to transform the way in which firms will make use of data.
What Are Cloud AI Services?
Google, Microsoft and Amazon are among those firms that are leading the competition in this field, with huge investments that only big high-tech firms can afford. What they provide on cloud are suites of software able to execute all of AI’s abilities such as reading text, voice commands, image recognition, automatic learning and patterns identification in datasets.
In fact, developers can basically start using AI tool models and personalise the services tailored to their own tasks, without having to code the algorithm from scratch. The challenge is to take advantage of that without losing control on their own business.
Opportunities
Since improvements in artificial intelligence performance rely mainly on processing massive data streaming, these suites give to firms the tools to scale the application of already reliable and well-designed AI software. This means that the high-tech giants are socializing valuable core competencies in artificial intelligence with external developers.
Moreover, this move is obviously a big deal for those firms that already use the same technology internally. As Amazon’s $12 billion in revenues from its cloud division indicates, once the critical mass is reached, these kinds of web services become flourish cash cows even if sold at relatively low cost. In addition, external firms and developers increasingly use their services. This because the more the providers gain expertise in the field, the more they are able to build upon their capabilities. Therefore, In order to master artificial intelligence, it is important keep testing and refining its applications, as well as getting feedback on their strengths and lacks.
On the Horizon
The battle among Cloud AI Suites providers is fierce and competitive advantage is pursued both through acquisitions and critical partnerships. In early 2017, TenCent struck a deal with NVIDIA to boost its growth in the field, while Microsoft is challenging Amazon’s leadership in key regions ,like India, by teaming up with local partners. On the other hand, Google is proceeding through one of the most important M&A strategies focused on AI to recover lost ground on competitors.Any high-tech company knows that it cannot lose ground both on the AI and Cloud Computing fields.
As Andrew Ng said before leaving Baidu, “AI is the electricity”, it is what is going to determine a company’s position in the market regardless of the business.” What emerges from this trend is the apparent and low concentration of AI capabilities in few cloud-based AI service providers who are able to invest money and efforts in this competition. At the same time, all the firms will eventually become dependent on the application of Artificial Intelligence in their business. This match can either create unique opportunities or become the worst kind of threat to a firms’ independence. It is likely that their early involvement in the field, has granted tech giants the ability to gather progressively more power over time, while the other firms might turn into indirect subsidiaries.
Takeaway
Until now, access to AI’s potential was limited to big high-tech companies and a few start-ups, who are typically acquired as they develop a potential threat to the big giants. The Cloud-based AI services spread their use by leveraging the specialization and socialization of rare core competences in this technology. As a consequence, this will trigger many opportunities in any business that were unthinkable up to now.
Namely, if “AI is the new mobile”, the Cloud AI might be its Internet Connection. This new perspective opens an entirely different dilemma regarding how firms can avoid the abuse of power of network providers.
Pietro Tansini
Build Sustainable Innovation 