Stratechery AI Integration and Modularization
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May 29, 2024 Discover the tension between vertical integration and modularization in product design, shedding light on modern tech practices. Explore how companies like Google and Microsoft shape their AI strategies, affecting consumer experiences and market dynamics. Delve into the rivalry between Google and Apple, focusing on product strategies and challenges in the smartphone arena. Finally, navigate the complexities of AI integration and the implications of using a shared model framework, setting the stage for the future of large language models.
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Integration vs. Modularization
- Integrated products win initially when performance is key.
- Modularization wins when standards emerge and markets mature.
Google's Integrated AI Strategy
- Google's integrated AI approach, controlling everything from chips to models, mirrors Apple's.
- This vertical integration contrasts with AWS's modular, model-agnostic platform.
Google's Integration Challenge
- Google's integrated approach may not be as advantageous in AI as it is with hardware like the iPhone.
- Consumer AI products are internet services, not devices, potentially diminishing the impact of vertical integration.