This week Apple announced it was (finally) going all in on AI, adding a set of generative AI capabilities to all its operating systems. While not unexpected, Apple’s AI push is an interesting development for 2 reasons.
First, there are signs that some businesses are slowing AI investment because of the fee and a high rate of AI implementation failure. Second, Apple is pushing out AI for consumer use, something many consumers don’t appear to be excited about.
Let’s start with AI investment. Overall, businesses are still smitten by the impact of AI on customer experience, automation and business operations, but reality is replacing hype. Nearly two-thirds (63%) of global firms plan to extend AI spending in the following 12 months, in accordance with a recent study from Lucidworks. While that’s rather a lot, last yr it was 93%.
Not surprisingly, 36% of firms plan to maintain spending flat this yr, versus only 6% in last yr’s survey, in accordance with Lucidworks 2024 State Of Generative AI In Global Business report (registration required).
AI costs are concerning
Last yr only 3% of those surveyed were anxious about implementation costs — last on the list of concerns. This yr it’s in second place with 43%.
That is sensible, as AI is one of the costliest technologies ever. Silicon Valley enterprise capital firm Sequoia calculated that in 2023 the industry spent $50 billion on chips alone! Which explains why it costs OpenAI $700,000 a day to run ChatGPT.
“We pay for it not directly,” Krishna Tammana, CTO of conversational messaging platform Gupshup, told MarTech. “Now we don’t buy the chip directly, but for training some of our models and the fine-tuning we do, we get essentially the most sophisticated machines from one of the cloud vendors to do the training they usually’re very expensive. We use it for an hour a day, per week, a month — you pay rather a lot of money.”
It’s a giant cost to bear even when an AI implementation works. However, only 25% of them do, in accordance with Lucidworks. “The financial advantages of implemented projects have been dismal,” the report says. Some “42% of firms have yet to see a big profit from their generative AI initiatives.”
The tech sector has essentially the most deployments and half have already realized financial advantages. Retail is a detailed second with the best deployment of revenue and growth initiatives.
Using AI successfully
One company that’s had success with it’s Tricolor, a Texas-based company that provides responsible, inexpensive, credit-building loans to Hispanic consumers with no or limited credit history. Chief Strategy Officer Mauricio Delgado said using AI with Tricolor’s deep base of data on its target market pays off.
“Ultimately it comes down to what outcomes AI is allowing us to realize,” he told MarTech. And amongst those outcomes is a discount in customer acquisition costs. “We’ve seen customer acquisition costs drop dramatically for us. We’re below $150 per customer versus Carvana, that’s around $1000 per customer and CarMax is about $500.”
Chat, yes. Bots, no.
So far AI’s biggest business advantages are cost savings via automation and data evaluation. Why, then, accomplish that many firms think it may attract consumers? AI continues to be primarily used for chatbots designed to reply customer questions. While people just like the speed and availability bots provide, they’d slightly seek advice from an individual.
One study found that while 45% of all people prefer to speak with businesses through chat, only 5% like chatting with a bot.
Tricolor does what it may to make the bot interactions as temporary as possible. WhatsApp is incredibly popular with Hispanic consumers within the U.S., Delgado said.
“Within WhatsApp, we now have a bot that takes the primary pass at initial engagement for basic questions and scheduling appointments, things like that,” he said. “We have also seen that after the initial round of questions, a number of our leads wish to have interaction with a human. And we will transition them to an individual.”
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Chatbots are evolving quickly and it’s possible they are going to get to a level where people don’t mind them nearly as much. Indeed, as Dr. Maria Panagiotidi notes, they’re already preferred “in contexts where consumers’ self-presentation concerns are high, reminiscent of when searching for embarrassing products, clearly identified chatbots can actually result in more positive consumer responses.”
That said, it seems unlikely Apple’s suite of GenAI products will turn into a significant selling point. A Pew Research study found that 52% of Americans are concerned about AI and only 10% are excited to make use of it.
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