Artificial intelligence: Disruption era begins

This analysis is by Bloomberg Intelligence analysts Jitendra Waral, Anurag Rana and Sean Handrahan. It appeared first on the Bloomberg Terminal. 

Artificial intelligence ushers in technology disruption: AI era
Artificial intelligence software solutions will likely be the top disruptor in technology in the next decade, like smartphones and the cloud. Software’s ability to self-learn by processing data may spur consumer and enterprise applications. Companies embracing AI may get a competitive edge; ones that don’t run the risk of being disrupted and phased out. AI is nascent, but the pace of innovation and disruptive potential of startups will accelerate as compute costs shrink and machine-learning algorithms advance.

Data explosion, cloud computing, algorithms spark surge of AI
Cloud computing and machine-learning algorithms have fueled the jump in artificial-intelligence solutions. These technologies help AI applications interpret exponentially rising data volume at manageable costs. Interest in artificial-intelligence technology has accelerated since last year, in tandem with rising investments. These tools can ingest enormous amounts of data, run self-learning algorithms and suggest implications that allow companies to better understand their customers and boost return on investment.

Wall Street’s data dependence makes it ripe for AI disruption
Data-intensive industries such as financial services and those using the internet may be among the first disrupted by artificial intelligence. Tools such as machine learning and deep reinforcement learning to identify patterns are easier to apply in data-rich verticals. Half of the time spent by workers in finance and insurance is allocated to processing and collecting data, based on a McKinsey study, the highest among various industries. Among all sectors, at least 18% of work time is spent on data tasks.

Software makers may depend on AI to survive as smart apps mature
Over the next few years, all software applications could feature embedded artificial intelligence. Early examples include Google Photos, messaging chatbots, Google Assistant, Amazon Alexa and IBM Watson. As AI gains traction, survival of regular apps will become difficult due to the productivity differential of AI-integrated software. Gartner’s hype cycle predicts that smart apps have a two- to five-year window of maturing.

Artificial intelligence to turbocharge uber-like disruptions
The pace of disruption to legacy business models by companies such as Uber, Airbnb and Netflix will accelerate with greater adoption of artificial intelligence. The first set of disruptions was driven by greater use of smartphones and cloud, and the next will likely be caused by AI. Cloud-based companies will be at the forefront of this change. The agility provided by cloud allows these companies to change their products and services much more quickly than legacy companies, hastening the pace of disruption.

Google, Facebook, Amazon show Artificial Intelligence advances
The ways Amazon, Google and Facebook use artificial intelligence show the potential competitive edge the technology can provide. Most advancements are behind the scenes, making it difficult to gauge the pace of innovation. Early AI advances may heighten the urgency with which companies adopt the technology, as fears of being outflanked are sparked. AI-driven recommendations are stoking user engagement on YouTube, while computer vision tools have helped boost Google photos to garner a user base of 200 million.

Request a demo.