Midway through the Christmas holidays I heard my daughter scream “Alexa, go back to school” at Amazon's domestic Trojan horse of machine learning and artificial intelligence. As you can imagine, Alexa’s response missed the mark, even for my nine-year-old, and the initial hype has long since turned to disillusionment. So is it time we cut our losses when it comes to new technology?
Having arrived in our household eight months ago, the hit rate of Alexa responses being useful versus useless has been disappointingly low, and Alexa is now a much-derided dunce in the Hartley house. As with many technology investments I find myself asking whether now is the time to double down and patiently re-invest, whether to cut my losses and remove Alexa from its central slot on our kitchen island, or whether to switch out of Alexa and give Google Home a try instead.
Perhaps Alexa’s main role has been to unwittingly articulate Gartner's hype cycle of emerging technology to my nine-year-old daughter:
So why is it that Alexa, attached to the amazing knowledge base of the internet and backed by the enormous scale of Amazon Web Services, has so far been pretty rubbish?
The terrifying/exciting thing about technology in the 21st century: it never drops out of school, and never has a holiday
Well presumably because a) understanding speech and context is actually very difficult and b) as with anything, practice makes perfect, so patience and persistence are important.
When you tell Alexa to go back to school, she politely responds by stating “all of my learning is virtual, which saves a fortune on back to school supplies”. Putting aside the weak attempt at humour, this response is actually quite enlightening: unlike my daughter, Alexa never stops being ‘in school’, and educating Alexa is far cheaper than educating my nine-year-old.
That’s the terrifying/exciting thing about technology in the 21st century. It never drops out of school, and it never has a holiday. It keeps on improving backed by the resources of some of the best capitalised and most cash generative firms on the planet.
All this depends however on us (the consumers) providing her (the cylindrical machine learning thing in our homes) with billions of questions from which to learn and improve. That’s not a given at the moment.
There are only a few large cap tech companies with the scale and capability to do [keep developing and improving AI] well
When I quoted Amara’s law to my daughter, that “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run”, the response I got was “I don’t care, she’s rubbish”.
Much like Alexa, Artificial Intelligence and machine learning are potentially overhyped in the short term – that’s actually where Gartner place them on their hype cycle. I often hear the allegation that the large cap tech companies throwing their resources behind developing and improving AI are overhyped too. But as with Alexa, artificial intelligence will keep on improving, the applicability will keep broadening, and there are only a few large cap tech companies with the scale and capability to do it well .
So despite the short-term risk of a ‘trough of disillusionment’, the longer-term earnings potential of some of the large cap tTech companies are hard to ignore for investors.
I have a confession to make: I’ve never been the biggest fan of the British takeaway. I realise, however, that based on industry data I’m clearly in the minority. In the era of platform economies, global food aggregators such as Just Eat and Deliveroo have risen to meet the demands of the great British appetite. This is driving considerable change in consumer behaviour and potentially offers tasty returns for investors in the process.
It will come as no surprise that the food retail industry is rapidly evolving, especially in the area of automation. A few months ago, I attended Redburn’s “The Incumbents’ Response” food retail conference, which provided a fascinating insight on the threat of disruption. It was evident that access to advanced technology and logistics platforms are key to shaping future success. One company driving this move is Ocado.