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Guest Post: AI Ecosystem – The Race Begins

While everyone is going to be focused on AI inference in 2024, the real action is going to be in the ecosystem where new players and old will slug it out to ensure that users and developers use their models.

Foundation model is to AI what OS is to smartphone

  • The players are all working to get their ducks in a row to be ready to launch two things in 2024:
    • First, software development kit (SDK): This is a piece of software or an interface that makes it easy for developers to retrain a foundation model in order to perform a certain service.
    • This is the AI equivalent of the SDKs that are used to write apps for iOS, Android, Windows and so on.
    • It turns out that the foundation model is becoming a control point in the AI ecosystem as they are difficult and expensive to create and difficult to change once one has based a service on one particular model.
    • Hence, it looks like the foundation model will have the same strategic importance as the operating system in consumer devices like smartphones and tablets.
    • Second, AI store: This is the equivalent of an app store on iOS or Android and provides a marketplace for developers to sell the services that they create on the foundation model of the store’s owner.
  • This is a precise repeat of the strategy that we saw in 2008 from Apple and in 2012 from Google. It allowed the smartphone ecosystem to grow into the behemoth that it is today.
  • It is also how the owners of the foundation models intend to grow and monetize the AI ecosystem. If a platform can become the go-to place to create, buy or sell a service then a lot of money can be made.
  • This is why during 2024 we will see a lot of launches of both SDKs and stores as the contenders for the AI ecosystem begin jostling for position.
  • The outcome of this battle will define who wins and who loses in the AI ecosystem. And there are vast amounts of money at stake, given how useful generative AI can be.
  • The early leader is OpenAI which seemed to have the race sown up but immediately after launching its SDK and GPT Store, a total self-immolation which is far from resolved has opened the door for everyone else.
  • Many developers who have already committed to using GPT are now much less certain about their choice. The corporate instability raises questions about the long-term viability of GPT as a development platform.
  • Most of the other players are simple, for-profit companies, which means that committing to use Gemini from Google as the foundation is immediately less risky.
  • Furthermore, I remain far from convinced that OpenAI is massively better than anyone else. It did come to market first but appears to have subsequently lost its lead.
  • Hence, I think that the AI ecosystem remains wide open and just like the smartphone ecosystem, I suspect that there will be 3 to 5 large players who take most of the market with a sprinkling of smaller niche players around the edge.
  • It is this battle to be one of the 3 to 5 that is likely to commence this year and we will see this played out at developer conferences and events where the AI ecosystem tools will be launched.
  • OpenAI’s competitors are much more attractive than they were a few months ago as their governance structures are much less flawed.
  • Hence, as a developer, I would have far more confidence that Google and Meta will not blow up in the same way that Open AI did, although they still make plenty of silly mistakes just like everyone else.
  • 2023 was the year of training but I think this will begin to give way to inference in 2024 as algorithms begin to be deployed and the battle for the AI ecosystem heats up.

(This guest post was written by Richard Windsor, our Research Director at Large. This is a version of a blog that first appeared on Radio Free Mobile. All views expressed are Richard’s own.)

Richard is our research director at large and also founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his recent tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector. He had covered Global Telecom Equipment covering companies such as Nokia, Motorola, Lucent, Qualcomm, Ericsson, Filtronic, Alcatel-Lucent amongst others. Later, Richard began looking at Handset software and became an industry leader in the space. He shifted from direct stock coverage to covering technology on a global scale, taking on responsibility of the complete technology ecosystem. His firm Radio Free Mobile is a partner firm of Counterpoint Research and covers the digital mobile ecosystem, accessing and comparing all of the global ecosystems.

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