Is Your Business Asking The Right Questions About AI?

As companies across the globe race 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 places to start with integrating AI, they may not be enough to survive the AI infection point. As with every technology inflection point, a few incumbents survive and thrive, new entrants emerge to disrupt the competitive landscape, and at least one leader falls into obscurity. To thrive in the AI era, companies should also be asking: 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 bring changes throughout organizations. In some cases, it will make staff more productive, and in others, it may replace functions altogether. Likewise, it will change the products and services we use and, in some cases, how we use them. AI even changes how we view technology. The internet gave rise to an entire world of data through personal computing devices, smartphones obscured the internet through mobile apps, and AI agents will further obscure the applications, the data, and possibly even the hardware platforms that enable it. So, too, will AI change business models in ways we have yet to comprehend.

Developers, particularly hyperscalers and AI startups, are rushing to develop advanced large 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 profit from offering these models, especially as open-source models, no one wants to be left behind. Technology companies are rushing to meet the tremendous computing demands of AI developers. And enterprises are trying to understand how to integrate AI into their business effectively. This mad rush is pushing companies to incorporate 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 tracks the technology industry from software and intellectual property through chips, systems, and services. So, we have been asking technology companies how they use AI and how AI will change their business model. The answers to how they use AI are common throughout the industry. Tech companies are integrating AI into their business operations for improved productivity and/or developing AI solutions to improve their products and services. Few, however, have an answer to how AI will change their business model. Most don’t view a change in their business model due to AI. This tends to separate the leaders from the followers.

As an example, Nvidia, the leader in AI technology, continues to pioneer not just hardware solutions but also software. As a company, Nvidia continues to evolve with the changes in AI. Since the introduction of GPGPU computing (General-Purpose computing on Graphics Processing Units) with its CUDA platform, Nvidia has evolved from a GPU chip company to a full-stack computing company providing boards, systems, software, and even services with an ever-increasing portfolio across all these segments. I liken Nvidia to Amazon from the mid-90s through the 2000s, when Amazon’s business model kept evolving with the internet. The company sought new opportunities and business models to become a leading retailer and cloud service provider. There were areas where Amazon failed, but that didn’t stop the company from investing in new technology and seeking 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 in the market and make Llama the de facto foundation model. According to Meta CEO Mark Zuckerberg, Meta wants anyone to be able to create custom agents. With this ability, it’s unclear where the new business models will lie, but they will emerge.

Microsoft is charging ahead with trying to change the computing paradigm using its Copilot technology, which will eventually evolve into custom agents. Likewise, technology companies throughout the value chain are trying to enable AI solutions in an ever-changing technology landscape. This will ultimately impact every industry and every aspect of society, including how we learn, work, and play. We already know that autonomous vehicle (AV) technology powered by AI will drastically change the traditional automotive value chain, and AI will reshape the healthcare profession.

Leadership through acknowledgement

While AI has become the mantra of most executives to remain competitive in their respective segments, the genuinely innovative ones are thinking beyond their traditional products and services, market segments, and business models. Companies that at least acknowledge that AI is likely to change their business model are one step ahead of the pack, and those who develop those new business models will be tomorrow’s leaders.