Artificial Intelligence Digital Transformation

2018: The Year of Artificial Intelligence

21 March 2018

2018: The Year of Artificial Intelligence

A major concern for the last thirty years, artificial intelligence is getting a new lease of life this year. Thanks to the combined action of powerful machines, high-performance algorithms and the creation of exponential data, artificial intelligence can finally reach its full potential.

Which industries are concerned by artificial intelligence and who will turn a corner in 2018? To provide a few concrete answers to these questions, consulting agency McKinsey met with 3,000 decision makers moving through the world of AI. Read on.

How much money does artificial intelligence attract?

With investments increasing threefold since 2013, the spending linked to acquisitions or AI development reached $39bn in 2016. Whilst there are no surprises here, the biggest backers are Google, with $30bn, and Baidu with its $20bn investments. Research into and the roll-out of AI is currently claiming 90% of investments, with the remaining 10% linked to pure and simple tech acquisition.

Smaller players such as startups are investing hugely compared their funds, and McKinsey has estimated the global value to be somewhere between $6bn and $9bn. Depending on the configuration of small businesses, we can easily imagine a majority investment in the design, exploitation and sales of AI-based systems.

The top three most promising startups are Movidius, with its computer vision, Vicarious, through its understanding of the computational principles of the human brain, as well as H20.AI, thanks to the development of machine learning. These three startups alone weigh in at $191.1m worth of investments. Notably, Movidius was bought out by Intel in 2016.

Who is investing in artificial intelligence?

Although artificial intelligence is peaking interest, conversion rates are still low. Amongst the companies developing in a world potentially affected by this new technology, only 20% of them want to adopt AI. On the contrary, 41% of respondents were skeptical.   

How do early adopters work? These are digitally mature, large companies, focused on growth rather than savings. They tend to allocate a skilled position specifically for managing and integrating AI, which will then be deployed across all services in coordination with other technologies.

High technology, telecoms, automobile and financial services are amongst the most active sectors in the acquisition of artificial intelligence and, therefore, the ones that benefit from it the most. As an example, Toyota has set aside a $1bn donation to fund the creation of its AI robotics Research Institute.

Retail, media and consumer goods are starting to show interest in artificial intelligence through moderate investments. Some of these companies are really playing their cards right. Netflix, for example, has developed an algorithm for personalising recommendations, avoiding potential annual losses of $1bn.  

The sectors showing the least interest in artificial intelligence are education, health and tourism based organisations. Although these stakeholders may be the least ambitious, the healthcare organisations taking a gamble on AI are the ones publishing the best financial results, showing 16% higher profits compared to non-investors.

Who will be next to benefit from AI? McKinsey predicts that high-tech and financial services, historically ahead of the game in the adoption of new technologies, will be first in line, followed by the communications sector. Such accelerated growth can be explained by the patent and IP race imposed by the exponential growth of tools and their uptake.

Financial services, for example, will use artificial intelligence to respond to their security issues. McKinsey has estimated the market at a value of $3bn, representing one of the highest stakes in AI.

Which technologies are they looking for?

Companies are predominantly investing in machine learning. This process alone is drawing in between $5-7bn of investment, primarily attracting funds for its robotics and voice recognition activities. Next is computer vision, such as video or camera image analysis, that currently accounts for $2.5-3.5bn of spending. Anecdotally, natural language is taking between $0.6-0.9bn of investments, whereas less than $0.5bn is going towards smart robots and driverless cars. Lastly, virtual advisors are receiving a max of $0.2bn investment.

How can the success of machine learning be accounted for? Above all, the sector is cheaper than robotic machines, quicker to set up and is delivered by startups that have already worked on the most complex part making it user friendly.

McKinsey’s all-American study may highlight the growing interest in artificial intelligence but France still represents an excellent zone for creativity with, for example, Station F and investments made by Google in the country.

Microsoft in particular has put the emphasis on artificial intelligence at its Parisian incubator via its Microsoft AI Factory programme, which currently mentors seven startups. The tech giant is currently waging its bets on personalised configurations, computer vision, predictive tools and language understanding. As for Facebook, at the end of January the social media giant announced a €10m investment to develop their AI in France.

I've been an AI professional since the 80’s, at the confluence of business, IT and R&D. Business processes will recover efficiency with Decision Support Systems based on AI. Assess, understand, predict and act !
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