The biggest bet in tech right now isn’t a deliberate decision, but rather the result of company cultures that were a benefit until they weren’t. The result? Apple and Amazon will miss AI like Intel missed mobile.
Tim Cook and Andy Jassy “CEOs of Apple and Amazon” both agree that AI is a paradigm shift, “as big or bigger than the internet.”
But the strategies their companies are betting on (which they both doubled down on in their latest earnings calls!) imply that AI will be a commodity rather than a paradigm shift.
For example, Amazon’s strategy is predicated on the assumption that AI will be a commoditized market like cloud and they’ll build their moat through other means, like data gravity (e.g. companies having everything at AWS).
Apple has similar assumptions, which is why they’ve invested relatively little in AI. Apple reminds me of 2000s Microsoft here when they believed Windows would remain at the center of everything, which killed them in mobile. Apple believes the phone will remain at the center of everything.
The speed AI is moving is unprecedented, which is anathema to Apple’s culture and doubly bad for Amazon because they actually are fast, but speeding in the wrong direction.
Why follow such an obviously bad strategy?
Well, they kind of have to. Textbook innovator’s dilemma.
Amazon & AWS
Amazon’s AWS is predicated on the idea of commoditized infrastructure at scale where price is the priority. But with AI, quality/performance is the priority. That’s why we see so many new AI startups and use cases lighting up as AI improves and finally becomes ‘good enough’ for new use cases. It bends the curve and price becomes secondary until quality stops improving (not any time soon, if ever).
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