#Day2/30 #30daysofGenerativeAI
What does the tech stack look like and where will value accrue?
3 points.
#1What is exciting vs valuable: Today most of the posts on our feed talks about the models and the apps – ie. the customer facing layer.
Why? because it is exciting right now. But that is the most undifferentiated part of it – and potentially not the one where most value would accrue.
But like most things, understanding the tech stack helps us understand why companies like Microsoft are looking at this from a end to end strategic perspective.
#2The end to end tech stack
I quite love this a16z article that shares this view – “The stack can be divided into three layers:
Applications that integrate generative AI models into a user-facing product, either running their own model pipelines (“end-to-end apps”) or relying on a third-party API
Models that power AI products, made available either as proprietary APIs or as open-source checkpoints (which, in turn, require a hosting solution)
Infrastructure vendors (i.e. cloud platforms and hardware manufacturers) that run training and inference workloads for generative AI models”
#3Where is the current value?
As the article states, ‘infrastructure vendors are likely the biggest winners in this market so far, capturing the majority of dollars flowing through the stack.
Application companies are growing top-line revenues very quickly but often struggle with retention, product differentiation, and gross margins.
And most model providers, though responsible for the very existence of this market, haven’t yet achieved large commercial scale”
As one might imagine, the differentiation and retention is more likely where one has depth.
Does them imply more of a verticalized market thereby giving a structural advantage to incumbents?
But both strategies – vertical and horizontal market expansions come with its own pros/cons – example, agility vs differentiation.
It sometimes feels like with Generative AI, the tech sector behaves like a kid in a candy shop
Or in my case, a librarian with endless supply of books and time.
Stay tuned to follow along the #30daysofGenerativeAI to understand not just the tech but the strategic outlook to the GenerativeAI market.
Have an interesting article you have read around generative AI market? Drop me a message or comment!
Read more details here : https://a16z.com/2023/01/19/who-owns-the-generative-ai-platform/
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#reviewswithranjani
#Technology | #Books | #BeingBetter
