There is a lot of dreaming taking place right now in the technology industry. AI has captured all of its ambitions. It has become not quite a cult, but definitely an object in which the industry has placed an immense amount of faith. And while we see the importance and utility of neural network-based machine learning, we think it is important to recognize the chain of dreams upon which rest so many companies’ ambitions.
For starters, the PC and mobile phone chip makers are all seeing a major opportunity in the realm of “Edge AI“. The idea that consumers will engage in a major upgrade cycle, buying new phones and PCs that have the latest AI capabilities. We long ago pointed out that this is just a modulation of the upgrade cycle, pulling in future demand. This may happen, but for it to amount to anything like a secular upgrade then we need to see more compelling consumer uses for AI, and frankly there is no sign of those currently. In PCs, there is considerable focus on Microsoft’s upcoming announcements – new Windows and AI features. That is a lot of weight put on a company that, to put it diplomatically, does not have a great track record of wowing consumers with their user experiences. Put less diplomatically, does anyone remember Clippy? Similarly for smartphones, there the focus is in on Apple and their upcoming WWDC conference. Everyone assumes that AI will be a major focus of the event. And if any company can redefine an industry with incredible human experiences it is Apple. Maybe they can wow us all, but again, this is a lot of weight to put on a single company.
Then there is the data center. Every major chip company is trying to claw out some piece of the AI pie. Every company except Nvidia, they have even bigger dreams. They seem to be hinting at a future in which they can transcend the tangible world of silicon to the nirvana of software and the cloud. All of this depends on a tremendous expansion in the use of AI systems. So far, we are seeing many small but important gains from this form of compute, but for all these companies to achieve their dreams we need something larger and more exciting. Can OpenAI or Anthropic deliver this? Can some tiny start-up? Maybe, but once again we are taking all of that on faith.
For their part, the hyperscalers are little different. They are driven by nightmares as much as happier dreams – losing their search business, or falling under the dominance of a single semiconductor vendor. But they have bigger ambitions as well. Both Google GCP and Microsoft Azure see AI as a way to gain share from long-time leader AWS. For their part, Amazon likely has ambitions to move further up the software value chain.
And then there are the AI ambitions of China, Inc., a topic for a whole other post.
At heart, all of the companies see AI as a chance to meaningfully change their fortunes. We are not saying that won’t happen, we just think it is important to discern between plans and dreams. In heady times like these, it is easy to lose sight of the difference.
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