The race to commercialize and monetize generative AI is stirring intense competition within the industry, with a looming question mark over whether hyperscale cloud providers or nimble startups will emerge victorious. Small-scale contenders possess an advantage, harnessing their ability to construct highly customizable Gen AI models. This prospect presents a potential threat to big tech companies, which risk being outwitted by their more agile competitors, says GlobalData, a leading data and analytics company.
Beatriz Valle, Senior Analyst at GlobalData, says: “Generative AI has entered the technology industry with such force that it is hard to believe that ChatGPT was released only six months ago, triggering a global competitive race that has seen all the big cloud computing providers tripping over themselves in their fight to commercialize new solutions powered by Gen AI technologies. However, it could be the smaller competitors with niche offerings that emerge victorious over the long-term, in a sort of David Vs Goliath stand-off.”
GlobalData’s Generative AI Watch: InFocus: Hyperscale Cloud Providersreport examines the market strategies of competitors including Microsoft, Google, Amazon, Meta, Baidu and Alibaba. The report finds that although large cloud computing providers appear to be best positioned to leverage their massive data center resources to run compute-hungry Generative AI workloads, it may be too early to call this race.
Valle observes: “At the moment, all the big cloud computing providers are heavily investing in smaller startups, notably Microsoft with OpenAI, but also Google with Anthropic, and Amazon with Stability AI,. sometimes are integrating smaller companies’ technologies with their own. These startups rely on hyperscale cloud providers for accessing processing capabilities to be able to run Generative AI models, which require truly massive, and very expensive, computing power. If these startups were not supported by the big cloud computing companies, they would not be able to develop their Gen AI technologies.
However, in the long-term, startups such as OpenAI and Anthropic may emerge victorious from this stand-off because they clearly have an innovation edge over their larger competitors. Some of them may of course be acquired, but in some cases, they may withstand the storm and decide to carve out a path by themselves. Possible acquisitions could follow established partnerships with many obvious examples of a nimble, smaller AI company being integrated into a large hyperscale provider. But this path is by no means a done deal.”
Valle concludes: “The Gen AI competitive landscape remains wide open at the moment. It is just too early to call this race. Some of the hyperscalers are releasing Gen AI offerings to market with a true sense of urgency, and even Meta commercialized AI Sandbox recently, in a move that blindsided many. However, it might well be that in the end smaller startups turn out to be more successful in commercializing these technologies, emerging victorious in the end.”
