Why AI is the ‘new electricity’
The U.S. and China lead the world in investments in AI, according to James Manyika, chairman and director of the McKinsey Global Institute. Last year, AI investment in North America ranged from $15 billion to $23 billion, Asia (mainly China) was $8 billion to $12 billion, and Europe lagged at $3 billion to $4 billion. Tech giants are the primary investors in AI, pouring in between $20 billion and $30 billion, with another $6 billion to $9 billion from others, such as venture capitalists and private equity firms.
Where did they put their money? Machine learning took 56% of the investments with computer vision second at 28%. Natural language garnered 7%, autonomous vehicles was at 6% and virtual assistants made up the rest. But despite the level of investment, actual business adoption of AI remains limited, even among firms that know its capabilities, Manyika said. Around 40% of firms are thinking about it, 40% experiment with it and only 20% actually adopt AI in a few areas.
The reason for such reticence is that 41% of companies surveyed are not convinced they can see a return on their investment, 30% said the business case isn’t quite there and the rest said they don’t have the skills to handle AI. However, McKinsey believes that AI can more than double the impact of other analytics and has the potential to materially raise corporate performance.
Why multi-cloud is the next big thing in technology
Why has cloud become so indispensable to so many companies? Because pretty much every company has become a software company, and they all need to deliver their software faster and to more people than ever before.
Avoiding lock-in and saving cost; Differentiation; responding to cloud vendor pressure; resiliency, redundancy, performance and data sovereignty; M&A and consolidation; access to resources.
A recent survey by RightScale found that 85% of enterprises now have a multi-cloud strategy, up from 82% in 2016. This creates immense opportunities for startups that can help companies work seamlessly across various different cloud providers. Startups that promise cloud neutrality – not being locked into one particular vendor – will have significant advantage in this new battlefield.
A decade after DARPA: Our view on the state of the art in self-driving cars
Developing a system that can be manufactured and deployed at scale with cost-effective, maintainable hardware is even more challenging. We are innovating across the sensing hardware and software stack to lower costs, reduce sensor count, and improve range and resolution. There remains significant work to be done to accomplish these conflicting objectives and get the technology to reliably scale.
Testing stochastic systems requires a significant number of repetitions generated by real-world data for it to be representative. That means we must gather millions of miles of road experience to teach the software to drive with confidence. (Imagine needing to drive millions of miles to get your driver’s license!) But not all miles are created equal, so “accumulated miles” is not an expressive enough metric to track progress. Think of it this way: The skills you acquired learning to drive in a quiet Midwestern town will not translate should you find yourself driving in the heart of Manhattan.
We’re still very much in the early days of making self-driving cars a reality. Those who think fully self-driving vehicles will be ubiquitous on city streets months from now or even in a few years are not well connected to the state of the art or committed to the safe deployment of the technology. For those of us who have been working on the technology for a long time, we’re going to tell you the issue is still really hard, as the systems are as complex as ever.
How many robots does it take to fill a grocery order?
The U.K.’s biggest online grocer hit a milestone this year: Ocado Group Plc put together an order of 50 items, including produce, meat and dairy, in five minutes. Fulfilling a similar order at one of the company’s older facilities takes an average of about two hours. The secret: a fleet of 1,000 robots that scurry about a warehouse snatching up products and delivering them to human packers.
Thanks to Wall St., there may be too many restaurants
There are now more than 620,000 eating and drinking places in the United States, according to the Bureau of Labor Statistics, and the number of restaurants is growing at about twice the rate of the population.
“Everybody thinks their brand has what it takes to succeed in the marketplace. You look at a location that looks good, but everybody is looking at the same place and they all come in, and the result is you get oversaturation.”
Sales at individual chain restaurants, compared with a year earlier, began dropping in early 2016, analysts reported. A majority of restaurants reported sales growth in just four of the last 22 monthly surveys from the National Restaurant Association. Before that, most restaurants had reported growth for 20 consecutive months, from March 2014 through October 2015, the survey found. As Americans work longer hours and confront an ever-growing array of food options, they are spending a growing share of their food budget — about 44 cents per dollar — on restaurants.
The shuttering of restaurants could have a major impact on the labor market. Since 2010, restaurants have accounted for one out of every seven new jobs, and many restaurateurs complain that it has become increasingly difficult to hire and retain workers.
Menu prices will tell the future of inflation
Take a company like the Cheesecake Factory. In its third-quarter earnings report back in 2013, when the labor market was looser, labor costs represented 32.1 percent of revenue. Operating margins were 8.2 percent. Fast forward to the third-quarter earnings report this year. Labor costs had risen to 34.9 percent of revenue, and operating margins had shrunk to 6.2 percent. In its conference call, the company guided wage growth in 2018 to 5 percent, in line with many of its peers. As labor pressures have eaten into margins and profits, perhaps not surprisingly, the company’s stock is flat over the past four years.
Lucky for the restaurant industry, even while labor costs have been rising, food costs have been falling. Cheesecake Factory’s cost of sales as a percentage of revenue has fallen to 22.9 percent, from 24.0 percent in the third quarter of 2013. Without this, margins would be even lower.
The cost of eating out has been going up at a rate of only 2.4 percent per year, less than wage growth in the industry.