Big Tech’s Tryst with AI: A Balanced View
The terrain of technology has morphed drastically since the advent of AI models such as ChatGPT. Massive tech companies are pouring billions into AI, striving to get a leg up in the competition. However, a question arises: does investment assure success? History and statistics reflect the contrary. Major tech factions such as Facebook, Google, and Apple, despite substantial financial backing and deep-rooted prowess, have launched products outside of their main offerings, which have ended up backfiring.
While AI inarguably remains a futuristic avenue pursuing growth and expansion, one cannot overlook the flip side of the coin: the potential risks and failures. Learning from these stalwart institutions’ experiments and understanding the reasons behind their unsuccessful ventures is important. It helps in forming a more informed view of the present AI landscape and predicting what the future holds.
Here are some of the latest research findings:
- Big Tech giants shed a combined market value of around $2.5 trillion in 2022 1.
- Key headwinds include macro pressures such as inflation and currency volatility, stiff competition from rival products and services, supply chain woes and bloated cost structures.
- Increased competition, supply chain woes and bloated cost structures.
- The most popular big tech default email programs are old and vulnerable, posing a risk for attacks and cyber insurance.
- BigTechs also defy the fragmented international regulatory framework applicable to data governance, operational resilience, and group-wide risks. There is plenty of room for regulatory arbitrage, policy gaps and a build-up of financial stability risks across borders.
- Opportunities for Big Tech companies in 2023 include cost-cutting measures and leaning into long-term growth drivers.
- Rightsizing cost structures through headcount reduction and greater operating discipline, increasing focus on profits and cash flow, leaning responsibly into new growth drivers.
- BigTechs can use their knowledge of consumer preferences obtained through their other business areas, such as consumer spending habits and credit worthiness, to offer financial services to customers who may be underserved by traditional lenders 2.
Understanding Past Failures: Lessons from Failed Tech Products
Dissecting the failures and understanding the underlying causes can provide a valuable perspective. Consider Google Glass for example. Positioned as a ground-breaking technology, it was received with enthusiasm by tech enthusiasts. It was not long, however, before people realized the many inconveniences associated with wearing a computer on one’s head. The gadget failed to gain popularity among the masses and was discontinued in 2015. The same applies to Google+ – an ambitious project designed to be a competitor to Facebook, which turned out to be a debacle due to poor user reception and privacy issues. Facebook also had its share of unsuccessful products, like Facebook Home and M – its poorly received AI assistant.
The Shift in Strategy: From Creating to Supporting
Over the years, a pattern appears to emerge. It may be observed that Microsoft, for instance, has shifted its focus from creating new tech to providing support for existing tech and has experienced significant growth in the process. With AI being such a vast field with several nuances, creating the ‘next big thing’ may not always be feasible. Oftentimes, the key to financial stability may lie in supporting the AI ecosystem rather than creating it.
Google has also recognized the value of supporting solutions and is expanding its cloud business. It seems to be a more lucrative strategy. By providing the infrastructural and foundational backbone to budding tech entrepreneurs, these firms can not only create a revenue stream but also foster an environment of innovation and healthy competition. The success of these companies also directly benefits those that have invested in the underlying tools and technologies.
Molding Public Perception: Overcoming Challenges of Image and Influence
However, these companies face a daunting challenge. The public image of big tech companies is often tainted with concerns about power monopoly, privacy breaches, and market control. Tech giants such as Facebook, Google, and Amazon have all grappled with this negative perception. Regulation has become a real concern, with tech firms seemingly under constant scrutiny from governments around the world. Going forward, how these companies manage public perception while continuing to innovate will be a tightrope act.
The Win-win Scenario : Selling Foundational Tools
Amidst all the complexities that surround AI development, a rather unconventional strategy seems to be emerging. The selling of foundational tools, like Nvidia selling GPUs, and aiding the growth of AI technologies seems to be a reliable and profitable avenue. Instead of trying to create the next AI wonder, these companies could capitalize on the successes of others by providing indispensable tools and support. Even Facebook and other tech companies are recognizing the benefits of such an approach.
Wrapping up things
In summary, the journey of AI is both exciting and fraught with risks. While the big tech companies continue to gamble with new technologies and investments, the actual success may lie in selling foundational tools that are indispensable to AI growth. Thus, the mantra for the future of AI may not be ‘creation’ but ‘facilitation’. As we progress further into the age of AI, only time will tell which strategies will triumph and which ones will fail. Till then, we can only watch, learn, and adapt.
Gangtokian Web Team, 06/09/23