There’s a lot of AI news this week - but much of it kept bringing me back to the reality that ultimately models aren’t going to be defensible. That’s not to say that aren’t incredibly valuable and hard to design. But while models may ultimately create a lot of value, I think it will be hard to rely on creating a model to capture that value?
Why? Mostly because models have turned out to be somewhat undifferentiated. Every time a new model comes out with remarkable new capabilities, another matches it within a few weeks - often a more efficient model. Moreover, most models are now more than capable enough for the vast majority of every day use cases. User may prefer one model over another - but likely not enough to pay a premium for it.
So, who will be able to capture the value. I see a few potential winners.
Workflow Systems. Most LLMs are going to end up being utilized in context of a workflow. The systems that own those workflows (think EHRs in medicine or CRMs in sales) wil be able to capture a lot of value by orchestrating the right models and the the right prompts and their data. This could be existing players or new entrants.
Data Systems. For a personal agent to be useful, it needs access to your personal data. Companies with access to that data will be able to capture more of the value of enabling AI on top of it than those with just a model. Think Microsoft and Google.
User-Facing Winner(s). There is likely to be one big winner in the consumer-facing brand of AI. Just as Google became synonymous with search. Once that user habit is engrainged, you don’t need to be the best to maintain it. Right now, this looks like ChatGPT - though never count at Google (especailly given their existing search distribution). To win this war it’s likely you will need to build your own foundational model - but having a great model won’t be enough.
So, where does that leave the players in the space?
OpenAI is winning on 3 right now. It’s trying to tackle 2 through integrations. This framework would suggest they should lean into that hard and move fast.
Anthropic isn’t winning any of these right now either. This framework indicates they are not in a great position.
Microsoft has real advantages in 2 and to some extent 1. That may be enough to win large deals in the enterprise space. I don’t see much of a path for them on the consumer side (though they will try to leverage Windows for 2).
Grok isn’t winning on any of these at the moment. Neither is Meta.
There is a case to make that Google is doing well on all 3. GCP is a solid contender in enterprise data and workflows. Gmail / Docs has a lot of consumer data. And more people likely interact with Gemini through Google search than use ChatGPT. It does seem like Google has the most paths to success at this point - including their own model.