Why IBM might be a big winner in AI

ChatGPT, an AI-based chatbot from OpenAI, has gone viral. Based on the company’s large GPT-3.5 language model, ChatGPT is capable of some impressive feats. This is not always true, but this technology has incredible potential.

ChatGPT asked the following question about Universal Business Machines (IBM -0.04%): “In two sentences, explain why IBM is winning the AI ​​market.” Here is her response:

IBM has a long history in the AI ​​field and has developed a strong suite of AI products and services. The company also has a large and diversified customer base, which can provide it with a competitive advantage in the AI ​​market.

In fact, IBM pioneered the use of computers for natural language understanding. Back in 2011, IBM’s Watson computer won Risk! against former champions. The achievement came more than a decade after IBM’s 1997 victory over the world chess champion using the Deep Blue computer.

Advancements in AI that support ChatGPT will unlock new business models and forge new multi-billion dollar companies. tech giant Microsoft, already an investor in OpenAI, expanded its partnership with a multi-year, multi-billion dollar investment earlier this month. Microsoft views AI as the next computing platform, and is spending heavily to make sure it emerges as the leader.

Using artificial intelligence to increase productivity

IBM predicts that AI has the potential to add about $16 trillion to the global economy by 2030. The company’s focus is on helping its large base of enterprise customers use AI to improve productivity, boost efficiency and reduce costs.

As global economies head into recessions, this pitch should resonate with IBM’s customer base. While IBM does a wide variety of things with Artificial intelligence technologyEnterprise automation is the star of the show.

IBM Automation Solutions, part of the Software segment, grew revenue 9% year-over-year in constant currency terms in the fourth quarter. Revenue from data and artificial intelligence solutions, which focus more on analytics, customer service, and supply chain management, increased sales by 8%.

IBM CEO Arvind Krishna gave some examples of how IBM customers are currently using their AI capabilities during Fourth quarter earnings call. For example, the quick-service restaurant chain uses IBM’s proprietary artificial intelligence to partially automate the checkout and ordering system; The customer uses artificial intelligence to increase the rate of handling calls to its call centers without the need for human intervention; Another customer uses an AI-powered chatbot to help retirees with their pensions.

The large and diverse customer base mentioned by ChatGPT will be beneficial as IBM grows its AI business. The company has long-term relationships with the largest companies in addition to many governments. One example: 90% of the world’s 50 largest banks use IBM mainframe systems. When an IBM customer is looking for ways to improve productivity with AI, IBM will be the obvious choice.

A sleeper in the artificial intelligence market

IBM’s work on AI to improve customer productivity will not receive the same attention as ChatGPT. However, the company is well positioned to be one of the driving forces behind large corporations adopting AI technology to automate workflows, improve productivity, and reduce costs.

Being able to save your clients money is especially important in tough economic times. Big companies are placing a renewed focus on keeping costs in check, and layoffs are starting to pile up. New technology projects will not be very attractive, except when they promise to reduce costs. IBM will still feel some pain from the recession, just like almost every other company, but its focus on helping its customers cut costs should play well with its customer base.