AI is the latest new shiny thing in everybody’s sightline.
It seems to me that AI has two faces, a bit like the Roman God Janus.
On one hand we have the large language models or Generatively Pre-trained Transformers, and on the other we have the tools that can be built by just about anyone to do a specific task, or range of tasks, using the GPT’s.
The former requires huge ongoing capital investments in the technology, and infrastructure necessary for operations. There are only a few companies in the position to make those investments: Microsoft, Amazon, Meta, Apple, and perhaps a few others should they choose to do so. (in former days, Governments might consider investing in such fundamental infrastructure, as they did in roads, power generation, water infrastructure)
At the other end of the scale are the tools which anybody could build using the technology provided by the owners of the core technology and infrastructure.
These are entirely different.
Imagine if Thomas Edison and Nikola Tesla between them had managed to be the only ones in a position to generate electricity. They sold that energy to anybody who had a use for it from powering factories, to powering the Internet, to home appliances.
That is the situation we now have with those few who own access to the technology and anybody else who chooses to build on top of it.
The business models that enabled both to grow and prosper are as yet unclear, but becoming clearer every day.
For example, Apple has spent billions developing the technology behind Siri and Vision Pro, neither of which has evolved into a winning position. In early June (2024) Apple and OpenAI did a deal to incorporate ChatGPT into the Apple operating system.
It is a strategic master stroke.
Apple will build a giant toll booth into the hyper-loyal and generally cashed up user base of Apple. Going one step further, they have branded it ‘Apple Intelligence’. In effect, they have created an ‘AI house-brand.’ Others commit to the investment, and Apple charges for access to their user base, with almost no marginal cost.
Down the track, Apple will conduct an auction amongst the few suppliers of AI technology and infrastructure for that access to their user base. To wrangle an old metaphor, they stopped digging for gold, and started selling shovels.
Masterstroke.
It means they can move their focus from the core GPT technology, to providing elegant tools to users of the Apple ecosystem, and charge for the access.
What will be important in the future is not just the foundation technology, which will be in a few hands, but the task specific tools that are built on top of the technology, leveraging its power.
