{"id":154,"date":"2016-11-03T17:37:11","date_gmt":"2016-11-03T23:37:11","guid":{"rendered":"http:\/\/redmonk.com\/rstephens\/?p=154"},"modified":"2016-11-22T13:12:06","modified_gmt":"2016-11-22T20:12:06","slug":"artificial-intelligence-and-the-world-of-watson","status":"publish","type":"post","link":"https:\/\/redmonk.com\/rstephens\/2016\/11\/03\/artificial-intelligence-and-the-world-of-watson\/","title":{"rendered":"Artificial Intelligence and the World of Watson"},"content":{"rendered":"<p>Artificial intelligence (\u201cAI\u201d) can be a loaded term. It simultaneously carries the unfulfilled promises of <a href=\"https:\/\/en.wikipedia.org\/wiki\/AI_winter\">AI winters<\/a> past with the dreams of science fiction futures. There is undoubtedly hype, but there is also justified excitement about the underlying technological progress and promise. On top of all these seeming contradictions, there is ambiguity in the language we use to discuss AI; there are a bevy of related terms (e.g. AI, machine learning, deep learning, cognitive computing) that are frequently used inconsistently and\/or incorrectly.<\/p>\n<p>Frank Chen of <a href=\"https:\/\/a16z.com\/\">Andreessen Horowitz<\/a> views artificial intelligence \u2013 and in particular deep learning \u2013 to be a technological shift that will be \u201c<a href=\"http:\/\/a16z.com\/2016\/06\/10\/ai-deep-learning-machines\/\">as profound and maybe even bigger<\/a>\u201d than the recent platform shifts to mobile and cloud. Though AI has arguably existed for <a href=\"https:\/\/en.wikipedia.org\/wiki\/Dartmouth_Conferences\">60 years<\/a>, it is still early days in terms of using it in production\/commercial capacities. While companies are motivated to put their existing data to better use, many are still grappling with how and when to implement an AI solution.<\/p>\n<blockquote class=\"twitter-tweet\" data-lang=\"en\">\n<p dir=\"ltr\" lang=\"en\">The nominees for \u2018Most likely to be suggested as inappropriate solution to a complex problem\u2019 are:<\/p>\n<p>\ud83c\udfc5Blockchain<br \/>\n\ud83c\udfc5Chatbots<br \/>\n\ud83c\udfc5Machine learning<\/p>\n<p>\u2014 Cat Lady (@NatDudley) <a href=\"https:\/\/twitter.com\/NatDudley\/status\/792879742265331712\">October 31, 2016<\/a><\/p><\/blockquote>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<h1>The Expanding Reach of AI<\/h1>\n<p>Given that the AI market is both widely misunderstood and also strategically positioned for tremendous growth, the recently announced <a href=\"https:\/\/www.partnershiponai.org\/\">Partnership on AI<\/a> is an unsurprising development. <a href=\"https:\/\/developer.amazon.com\/alexa\">Amazon<\/a>, <a href=\"http:\/\/research.google.com\/pubs\/MachineIntelligence.html\">Google<\/a>, <a href=\"https:\/\/research.facebook.com\/ai\">Facebook<\/a>, <a href=\"http:\/\/www.ibm.com\/watson\/\">IBM<\/a>, and <a href=\"https:\/\/www.microsoft.com\/cognitive-services\">Microsoft<\/a> jointly established an organization to clarify AI best practices, engage relevant stakeholders, and facilitate a dialogue around the technology. The partnership offers the opportunity to build the market and shape perceptions.<\/p>\n<p>While collaboration can help grow the pie, companies are aggressively developing their own AI research capacity. Here\u2019s a small sample of the AI ambitions of companies both in and out of the partnership:<\/p>\n<ul>\n<li>Facebook is attempting to build \u201c<a href=\"https:\/\/research.facebook.com\/ai\">the best AI lab in the world<\/a>\u201d to improve content for its users. (Reminder: its <a href=\"http:\/\/newsroom.fb.com\/company-info\/\">monthly active user base<\/a> is more than 1\/5 of the global population.)<\/li>\n<li>To <a href=\"http:\/\/www.theatlantic.com\/technology\/archive\/2016\/03\/the-invisible-opponent\/475611\/\">wide acclaim<\/a>, Google\u2019s neural network-powered <a href=\"https:\/\/deepmind.com\/research\/alphago\/\">AlphaGo<\/a> beat the world\u2019s top Go player in March, a feat that was hitherto thought impossible.<\/li>\n<li>Amazon is now offering a <a href=\"https:\/\/twitter.com\/sogrady\/status\/781551487692447744\">$2.5M Alexa prize<\/a> to teams that can build a socialbot that can converse for 20 minutes.<\/li>\n<li>Despite their <a href=\"http:\/\/www.telegraph.co.uk\/technology\/2016\/03\/24\/microsofts-teen-girl-ai-turns-into-a-hitler-loving-sex-robot-wit\/\">chatbot missteps<\/a> earlier in the year, Microsoft CEO Satya Nadella states \u201c<a href=\"https:\/\/techcrunch.com\/2016\/09\/26\/microsoft-ceo-satya-nadella-on-how-ai-will-transform-his-company\/\">AI is at the intersection of our ambitions<\/a>\u201d and recently formed an \u201c<a href=\"https:\/\/news.microsoft.com\/2016\/09\/29\/microsoft-expands-artificial-intelligence-ai-efforts-with-creation-of-new-microsoft-ai-and-research-group\/#sm.0000kkwseqhe1etdvj01xdz8o3lcv\">AI and Research Group<\/a>\u201d to support these goals.<\/li>\n<li>Baidu has an <a href=\"http:\/\/research.baidu.com\/\">AI lab<\/a> that aims to \u201chave a significant impact on the lives of at least 100 million people.\u201d<\/li>\n<li>Apple\u2019s Siri is handling \u201c<a href=\"http:\/\/seekingalpha.com\/article\/4014922-apple-aapl-q4-2016-results-earnings-call-transcript?part=single\">2 billion requests a week<\/a>\u201d according their latest earnings call.<\/li>\n<li>Salesforce\u2019s Einstein is bringing the company\u2019s \u2019no software\u2019 mantra to AI with the goal of making CRM AI \u201c<a href=\"https:\/\/www.salesforce.com\/blog\/2016\/09\/introducing-salesforce-einstein.html\">available for everyone<\/a>.\u201d<\/li>\n<li>While Elon Musk has a decidedly <a href=\"https:\/\/www.youtube.com\/watch?v=tV8EOQNYC-8&amp;list=PLKof9YSAshgyPqlK-UUYrHfIQaOzFPSL4&amp;index=3\">more cautious position<\/a> on the direction of AI, in December 2015 he co-founded the non-profit <a href=\"https:\/\/openai.com\/about\/\">OpenAI<\/a> with the goal of democratizing the power of AI. The organization\u2019s intent is to ensure the power of AI is broadly distributed and not concentrated in the hands of any single corporation.<\/li>\n<\/ul>\n<p>This represents an immense amount of resources going towards AI, and the above is just a limited sample of development efforts at a limited selection of organizations.<\/p>\n<p>To give additional scope, it should also be noted that companies are tackling the process of building R&amp;D capacity with both \u2018make\u2019 and \u2018buy\u2019 solutions. CB Insights estimates that there have been <a href=\"https:\/\/www.cbinsights.com\/blog\/top-acquirers-ai-startups-ma-timeline\/\">over 40 acquisitions<\/a> of AI startups year-to-date, and the pace of these acquisitions has quickened in recent years.<\/p>\n<p>Finally, there is also grounds-up adoption of AI tools amongst developers. My colleague Fintan recently looked at the <a href=\"http:\/\/redmonk.com\/fryan\/2016\/06\/06\/a-look-at-popular-machine-learning-frameworks\/\">relative traction of machine learning open source frameworks<\/a> and found that \u201cat last check there were well over one hundred and twenty different machine learning\/deep learning frameworks available.\u201d Here are his findings about traction amongst the most popular.<\/p>\n<p><a href=\"http:\/\/redmonk.com\/rstephens\/files\/2016\/10\/ml-base-stars.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-155\" src=\"http:\/\/redmonk.com\/rstephens\/files\/2016\/10\/ml-base-stars.jpg\" alt=\"ml-base-stars\" width=\"500\" height=\"319\" \/><\/a><\/p>\n<p><a href=\"http:\/\/redmonk.com\/rstephens\/files\/2016\/10\/ml-base-so.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-156\" src=\"http:\/\/redmonk.com\/rstephens\/files\/2016\/10\/ml-base-so.jpg\" alt=\"ml-base-so\" width=\"500\" height=\"319\" \/><\/a><\/p>\n<p>If these are taken all together as indicators of market direction, then we should expect the potential scope and prevalence of AI to be vast.<\/p>\n<h2>IBM\u2019s World of Watson<\/h2>\n<p>Last week IBM hosted their World of Watson conference for 17,000 attendees from October 23 &#8211; 27, 2016. The show was <a href=\"http:\/\/www.ibmbigdatahub.com\/infographic\/history-world-watson-conference\">formerly coined<\/a> \u2018IBM Information on Demand\u2019 and more recently \u2018IBM Insight,\u2019 but this year the event was all about their AI tool Watson. Though IBM\u2019s Watson has been in the public eye since its <a href=\"https:\/\/www.youtube.com\/watch?v=P0Obm0DBvwI\">2011 Jeopardy victory<\/a>, cognitive solutions have been and will continue to be a <a href=\"http:\/\/seekingalpha.com\/article\/4012669-international-business-machines-ibm-q3-2016-results-earnings-call-transcript?part=single\">long-term ramp<\/a> for IBM. That said, some exciting developments were on display at World of Watson. Or more succinctly:<\/p>\n<blockquote class=\"twitter-tweet\" data-lang=\"en\">\n<p dir=\"ltr\" lang=\"en\">so we&#8217;re seeing bona fide swagger from both <a href=\"https:\/\/twitter.com\/IBM\">@IBM<\/a> and <a href=\"https:\/\/twitter.com\/Microsoft\">@microsoft<\/a> this week <a href=\"https:\/\/twitter.com\/hashtag\/ibmwow?src=hash\">#ibmwow<\/a> <a href=\"https:\/\/twitter.com\/hashtag\/MicrosoftEvent?src=hash\">#MicrosoftEvent<\/a> this is good for the industry.<\/p>\n<p>\u2014 Shaker Boy (@monkchips) <a href=\"https:\/\/twitter.com\/monkchips\/status\/791318057381756928\">October 26, 2016<\/a><\/p><\/blockquote>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>In both in their product and partnership announcements (including <a href=\"http:\/\/www-03.ibm.com\/press\/us\/en\/pressrelease\/50844.wss\">Slack<\/a>, <a href=\"https:\/\/www-03.ibm.com\/press\/us\/en\/pressrelease\/50838.wss\">GM<\/a>, and <a href=\"https:\/\/www.ibm.com\/blogs\/internet-of-things\/ricoh-cognitive-whiteboard\/\">Ricoh<\/a> amongst others) it is evident that IBM is focused on commercializing Watson\u2019s conversational APIs. This effort is particularly perceptible in IBM\u2019s new <a href=\"http:\/\/www.ibm.com\/watson\/work\/\">Watson Work<\/a> offering, a service designed to use AI to augment the office communication and workflows.<\/p>\n<p>Also of note, IBM announced their simplified cloud offering. They consolidated disparate brands and streamlined Bluemix\u2019s usability. While this may seem distinct from the Watson announcements, CEO Gini Rometty <a href=\"https:\/\/ibmgo.com\/wow16\">said in her keynote<\/a>, \u201ccognitive and cloud are two sides of the same coin.\u201d<\/p>\n<p>In aggregate, IBM\u2019s 2016 World of Watson announcements were a stride towards making AI both commercially available and interesting to the average enterprise.<\/p>\n<h2>Show Me the Money<\/h2>\n<p>While we believe that AI will be a dominant market segment, it\u2019s current financial impact is rather opaque. Of the public companies above, IBM comes closest to providing a view into AI\u2019s impact on the company\u2019s income statement. IBM changed their reporting segments to explicitly break out \u201cCognitive Solutions\u201d at the beginning of 2016. With the YTD figures from 2016 plus the restated figures provided for <a href=\"https:\/\/www.ibm.com\/investor\/article\/feb2016.html\">2014-2015<\/a>, we now have almost three years of trend data for the segment.<\/p>\n<p><a href=\"http:\/\/redmonk.com\/rstephens\/files\/2016\/10\/ibmsegmentrev.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-157\" src=\"http:\/\/redmonk.com\/rstephens\/files\/2016\/10\/ibmsegmentrev.png\" alt=\"ibmsegmentrev\" width=\"520\" height=\"347\" srcset=\"https:\/\/redmonk.com\/rstephens\/files\/2016\/10\/ibmsegmentrev.png 750w, https:\/\/redmonk.com\/rstephens\/files\/2016\/10\/ibmsegmentrev-520x347.png 520w\" sizes=\"auto, (max-width: 520px) 100vw, 520px\" \/><\/a><\/p>\n<p><a href=\"http:\/\/redmonk.com\/rstephens\/files\/2016\/10\/ibmcognitive.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-158\" src=\"http:\/\/redmonk.com\/rstephens\/files\/2016\/10\/ibmcognitive.png\" alt=\"ibmcognitive\" width=\"520\" height=\"347\" srcset=\"https:\/\/redmonk.com\/rstephens\/files\/2016\/10\/ibmcognitive.png 750w, https:\/\/redmonk.com\/rstephens\/files\/2016\/10\/ibmcognitive-520x347.png 520w\" sizes=\"auto, (max-width: 520px) 100vw, 520px\" \/><\/a><\/p>\n<p>Despite IBM\u2019s increased focus on becoming a \u201c<a href=\"http:\/\/www.ibm.com\/annualreport\/2015\/assets\/img\/2016\/02\/IBM-Annual-Report-2015.pdf\">cognitive solutions and cloud platform<\/a>\u201d company, it\u2019s interesting that so far cognitive revenue has remained relatively flat both in terms of absolute dollars and percentage of total revenue.<\/p>\n<p>While this is obviously reflective of IBM\u2019s performance, this is also in part a function of the nascent AI market. When asked about Watson\u2019s revenue in Q3 2016, <a href=\"http:\/\/seekingalpha.com\/article\/4012669-international-business-machines-ibm-q3-2016-results-earnings-call-transcript?part=single\">CFO Martin Schroeter said<\/a>, \u201ckeep in mind that we&#8217;re also building new markets here and it&#8217;s going to take some time.\u201d The creation of the AI market is well underway at IBM and elsewhere, and it will be interesting to watch how competitors in the space are able to both grow and monetize it.<\/p>\n<p><strong>Disclaimer:<\/strong> Amazon, IBM, Microsoft and Salesforce are current RedMonk clients. IBM comped my conference ticket and hotel for the World of Watson conference.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Artificial intelligence (\u201cAI\u201d) can be a loaded term. It simultaneously carries the unfulfilled promises of AI winters past with the dreams of science fiction futures. There is undoubtedly hype, but there is also justified excitement about the underlying technological progress and promise. On top of all these seeming contradictions, there is ambiguity in the language<\/p>\n","protected":false},"author":45,"featured_media":157,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false},"categories":[40,27,8,39,42,11,26,25,41,6,38],"tags":[],"class_list":["post-154","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ai","category-amazon","category-apple","category-baidu","category-conferences","category-facebook","category-google","category-ibm","category-machine-learning","category-microsoft","category-salesforce"],"jetpack_featured_media_url":"https:\/\/redmonk.com\/rstephens\/files\/2016\/10\/ibmsegmentrev.png","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/redmonk.com\/rstephens\/wp-json\/wp\/v2\/posts\/154","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/redmonk.com\/rstephens\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/redmonk.com\/rstephens\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/redmonk.com\/rstephens\/wp-json\/wp\/v2\/users\/45"}],"replies":[{"embeddable":true,"href":"https:\/\/redmonk.com\/rstephens\/wp-json\/wp\/v2\/comments?post=154"}],"version-history":[{"count":0,"href":"https:\/\/redmonk.com\/rstephens\/wp-json\/wp\/v2\/posts\/154\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/redmonk.com\/rstephens\/wp-json\/wp\/v2\/media\/157"}],"wp:attachment":[{"href":"https:\/\/redmonk.com\/rstephens\/wp-json\/wp\/v2\/media?parent=154"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/redmonk.com\/rstephens\/wp-json\/wp\/v2\/categories?post=154"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/redmonk.com\/rstephens\/wp-json\/wp\/v2\/tags?post=154"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}