AI Global Race: Infrastructure Becoming a Game-Changer in Competitive AI landscape
In the ever-evolving world of artificial intelligence (AI), it's not just about having clever algorithms. The real race is about infrastructure control and the management of compute, data, and distribution.
This competitive landscape naturally organizes itself into a Microsoft 365 value capture hierarchy. At the top, infrastructure providers hold the most power, followed by platforms in the middle, and application developers at the bottom.
Google, with its combination of Google Cloud and TPU (Tensor Processing Units), enjoys a significant advantage due to its vast data resources and unparalleled AI research talent. This advantage is further bolstered by Google's proprietary hardware.
Most AI applications are customers, not competitors, to these infrastructure companies. They must purchase compute, storage, and distribution from the likes of Amazon, Microsoft, or Google.
Algorithms may diffuse quickly, but infrastructure compounds slowly due to the capital intensity and long-term nature of infrastructure buildouts. This slowness makes infrastructure control more valuable than algorithm innovation.
Amazon, as the global leader in compute capacity, data center footprint, and machine learning services, holds a strong position, particularly in the area of distribution.
Microsoft, on the other hand, leverages its partnership with OpenAI to assert dominance in the enterprise sector. By integrating AI into Office, Teams, and its hybrid cloud, Microsoft ensures it controls the enterprise gateway.
The control these companies have over the compute backbone of the digital economy means they dominate the conversation about AI's future.
Infrastructure companies scale power, while application companies scale revenue, creating a natural asymmetry. The founding of a new company focused on building a global distribution network for AI computing power, data, and distribution is a clear indication of a business focused on building infrastructure to efficiently deliver AI resources and services worldwide.
In this landscape, infrastructure providers enjoy the highest margins and deepest control, while platforms and application developers remain customers. The AI race is indeed a complex one, but understanding this value chain provides valuable insights into its workings.
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