AI can impact every aspect of business
As businesses around the world strive to integrate AI, two questions come to mind: how can we use AI to increase operational efficiency, and how can we use AI to improve our products and services? While these are natural questions and a starting point for integrating AI, they may not be enough to survive the point of AI infection. As with every technological inflection point, a few incumbents survive and thrive, new entrants emerge to disrupt the competitive landscape, and at least one leader fades into obscurity. To thrive in the AI era, businesses should also ask themselves: How will AI change our business model?
The impact of AI
AI is rapidly evolving from essential tools to assistants to agents. This evolution will lead to changes in all organizations. In some cases it will make staff more productive and in others it may completely replace certain functions. Likewise, it will change the products and services we use and, in some cases, how we use them. AI is even changing the way we view technology. The Internet has spawned a world of data through personal computing devices, smartphones have obscured the Internet through mobile apps, and AI agents are further obscuring applications, data, and perhaps even platforms. material forms that allow it. Likewise, will AI change business models in ways we have yet to understand.
Developers, especially hyperscalers and AI startups, are rushing to develop advanced extended language models (LLMs) and introduce them to the world to establish a market position in the AI era . While business models are still being explored to maximize profits from offering these models, particularly as open source models, no one wants to be left behind. Tech companies are racing to meet the enormous computing demands of AI developers. And companies are trying to figure out how to effectively integrate AI into their business. This rat race pushes companies to integrate technology into their existing business models instead of asking how AI will, or should, change their business model. The real question is what will these companies and industries look like in ten years and how will they monetize their efforts?
How will AI change business models?
Tirias Research follows the technology industry from software and intellectual property to chips, systems and services. So we asked tech companies how they are using AI and how AI will change their business model. The answers to how they use AI are common across the industry. Technology companies are integrating AI into their business operations to improve productivity and/or developing AI solutions to improve their products and services. However, few have the answer to how AI will change their business model. Most do not see a change in their business model thanks to AI. This tends to separate leaders from followers.
As an example, Nvidia, a leader in AI technology, continues to pioneer not only hardware solutions, but also software. As a company, Nvidia continues to evolve with changes in AI. Since introducing General-Purpose computing on Graphics Processing Units (GPGPU) with its CUDA platform, Nvidia has evolved from a GPU chip company to a full-stack computing company providing cards, systems, software and even services with a growing portfolio across all these segments. I compare Nvidia to Amazon from the mid-90s until the 2000s, when Amazon’s business model continued to evolve with the Internet. The company has been seeking new opportunities and business models to become a leading retailer and cloud service provider. There have been areas where Amazon has failed, but that hasn’t stopped the company from investing in new technologies and pursuing new opportunities. Earlier this year, I asked Nvidia CEO Jensen Huang what Nvidia would look like in 10 years, and in an honest answer, he said, “I wish I knew.”
Meta is rushing to develop and distribute Llama in various sizes to any developer who wants to use it as an alternative to other solutions on the market and make Llama the de facto base model. According to Meta CEO Mark Zuckerberg, Meta wants everyone to be able to create custom agents. With this capacity, it is not clear where the new business models will lie, but they will emerge.
Microsoft is working to change the computing paradigm using its Copilot technology, which will eventually evolve into personalized agents. Likewise, technology companies across the value chain are attempting to implement AI solutions in an ever-changing technology landscape. Ultimately, this will impact every industry and every aspect of society, including how we learn, work and play. We already know that AI-powered autonomous vehicle (AV) technology will radically change the traditional automotive value chain and that AI will reshape the healthcare profession.
Leadership through recognition
While AI has become the mantra of most executives to stay competitive in their respective segments, the most innovative are thinking beyond their traditional products and services, market segments and business models. Companies that at least recognize that AI has the potential to change their business model have a head start, and those that develop these new business models will be the leaders of tomorrow.