Several Companies Vying to Become King of the Cloud
The biggest cloud companies are increasingly competitors trying to put artificial intelligence into your daily life.
What Amazon.Com Inc. (NASDAQ:AMZN) Alexa, the Google Assistant from Alphabet Inc. (NASDAQ:GOOG, NASDAQ:GOOGL), Apple Inc. (NASDAQ:AAPL) Siri and Microsoft Corp. (NASDAQ:MSFT) Cortana have in common is that they’re cloud interfaces.
They take in imprecise commands and deliver specific actions.
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That takes enormous amounts of data and computing power, which is precisely their point. After spending most of $75 billion in 2017, and most of another $27 billion in the first quarter alone, the five “Cloud Czars” need to put that capacity to work.
Even Facebook Inc. (NASDAQ:FB) is working on a voice interface, and Chinese competitors have already put theirs to work in the form of mobile phone “chatbots”. It is this form of the technology that may wind up in wider use than any of the others.
Solving the GDPR Problem
Because they require vast amounts of user input to be useful, voice interfaces are the answer to the General Data Protection Regulation (GDPR) that took effect in the European Union on May 25. The GDPR demands that companies get explicit permission to use your data for advertising. Google and Facebook have already been sued for violating it.
But if permission to use data is inherent in the service, and voice interfaces are worthless if they’re not trained to understand users’ voices, then the new technology can’t proceed at all. If it’s a choice between progress and giving clouds’ data, GDPR will be as useful as Trump’s wall.
The Cloud Czars are also working to make their interfaces compliant with GDPR, as shown in this Microsoft document, and voice systems are being adapted to handle customer requests under the law.
GDPR thus becomes merely a barrier to entry, working to enforce the Cloud Czars’ monopoly over services.
The Prize
The ultimate prize is to sell products, like the Alexa Echo Dot, and subscription services that make each interface the default for automating your home, car and life. Within 5 years, most of your interaction with computers will be more like Star Trek and less like the scene in Star Trek IV where Scotty has to pick up a mouse.
So far, Amazon is winning. The company had sold over 20 million Echo devices by last year, 73% of the market, while Google had most of the rest. The Apple HomePod didn’t even come out until December.
Amazon has also shown the way in making voice interfaces useful in daily life, letting companies freely use the Alexa interface so that it was all over the Consumer Electronics Show floor over a year ago.
A device like the Echo, or the Google Assistant, acts as a “Trojan Horse,” in a good way, incentivizing you with free services to make products supporting it your standard in automating your home. One of the hottest new niches in many retail markets is the “home automation” company, usually focused on security or creation of “home theaters” that respond to a voice interface.
The Bottom Line on the Cloud
Clouds are hungry beasts. They must be continually fed data, and must be constantly delivering services, to be useful.
None of the Cloud Czars discusses the load factor on their current clouds — that is, how much of their current capacity is in use at any one time. It varies from moment to moment, but if it’s more than 10% I would frankly be surprised.
Keeping it even that high at a time of rising CapEx spending for more and more data centers, requires voice interfaces and the coming battle in the clouds.
Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance The Reluctant Detective Travels in Time, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AMZN and MSFT.
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