AI Alliance Led by IBM and Meta

By Patrick Moorhead - December 13, 2023

The Six Five team discusses the AI Alliance Led by IBM and Meta.

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Daniel Newman: There’s a lot of interpretation of what’s happening here.
IBM and Meta went out together and announced the formation of an alliance called the AI Alliance, promoting OpenAI, looking at everything from processing to governance to security to development. They’ve brought 50 plus founders into this group. This included academic institutions, national laboratories, SaaS companies, infrastructure companies, PC, compute and processing. What does it stand for, Pat? Look, I’ve got kind of a two-headed interpretation of what’s going on here. The first is that AI is moving incredibly fast. Incredibly fast. Two is that there’s problems with few companies having too much power.

And so it’s always interesting when a company like a Meta, who’s sort of descriptively known for data abuse… Again, Meta is an incredible company that does amazing things, but people that use the product, Facebook and Instagram, the ads are spooky. I don’t know why. But having said that, they’re also building really neat silicon. Nobody really talks about it, but Meta is doing some really neat things in silicon. They’re building the next generation of AR and VR. They’re changing the way people are connected around the world, and they’re using AI and have been for a very long time, recommender engines, filtering for data systems. And Pat, this group and IBM, by the way, has been a bellwether of this enterprise AI movement.

You’ve said this often. I’m going to quote you. Since I’m not going to let you talk, I’m just going to quote you. But you’ve said, “They do not get enough credit for being the first. They were the first company with a generally available AI, enterprise AI solution, and they were the first company to come out with an indemnification that says, ‘If you’re utilizing these technologies in your business, we will indemnify you from some of the legal risks that are being created by utilizing generative AI in your business.'” These two companies, coupled with AMD, coupled with ServiceNow, you’ve got some of, like I said, the biggest laboratories in the world. You’ve got, what, Sony in Japan? They’re all coming together, saying AI is a big, important thing.

There’s a lot of concerns with privacy, data, and risk. There’s a need to make sure not any one company has too much power or control over the proliferation of AI. I like seeing this type of consortium, Pat. I’m going to leave you on this note. My only concern with consortiums like this is, what is the ethos and then what is the mandate? Ethos I’m already pretty comfortable with, but the mandate is how much are you going to make sure that these founding members and the people that join this thing eventually are holding themselves and holding each other to accountability, to actually live the mission and meet the mission and drive the mission of having this open, secure AI environment that’s going to advance the human and economics of our world?

Patrick Moorhead: Wow, that was a big ending there, dude.

Daniel Newman: Thanks, man.

Patrick Moorhead: Can I just say out loud what nobody’s saying out loud? This is an alignment of companies that are very goal aligned to have solutions that aren’t locked into NVIDIA and that aren’t locked into closed models. That is what this is about. At AMD, we used to call this the virtual gorilla. We had 1/20th or 1/10th of the resources that Intel had, so we aligned across companies to be able to pull together solutions, because nobody liked any company having 100% market share. People aren’t comfortable, supply chain wise, that NVIDIA is such a big part. We’ve got a 52-week lead time here. They love the innovation from NVIDIA and they love the foresight and they love the investment. But the fact is that people are uncomfortable with that.

It’s not just the hardware. I’m reading through the lines that this is also a way to minimize reliance on CUDA as well. I’ve served on the boards of many of these alliances in my 20 years when I had a real job. The key here is you got to have to get some quick wins. You have to devote specific resources that are named for the group. You need to have somebody who is orchestrating this. I think that this is what IBM and Meta are going to do. Otherwise, stuff just gets stuck in committee. Dan, there was a theory 10 years ago that OpenCL would be able to, as an industry group, an industry standard, be able to be the proxy for CUDA. It was the Open version of this.

The thing was is that NVIDIA went 10x faster than OpenCL and then everybody basically gave up and here we are. Listen, hats off to NVIDIA. I’d be doing the same thing if I were there. Shrewd business people working 24 hours a day, investing multiple billions in R&D and throwing the 50-yard bomb every three years. I’m really interested to see where this goes. This is V1. I’d like to see networking vendors involved as well. We saw Broadcom, Arista and Cisco on stage at the AMD event talking about low latency ethernet. I read between the lines there and they didn’t say the whole thing. There’s obviously some lower level optimizations that are going on there because it’s not just about accelerators, it’s about connecting accelerators together and connecting all those GPU service together.

The second one, I’d like to see SaaS. You and I both talked about that and I view the Oracle announcement as OCI as opposed to Fusion or NetSuite or something like that. It was great to see the SaaS providers who were in there. ServiceNow, a big company, a big value add on the enterprise side, but we need to see more of that. So listen, hats off to IBM and Meta for the leadership and everybody who signed up first. If there’s not something that comes out in three months, I’m going to start asking questions.

Patrick Moorhead
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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.