 |
| By Jon Markman |
It's happening. One of the largest tech companies in the world is bringing generative artificial intelligence to its massive installed base.
On Tuesday, executives at Alphabet’s (GOOGL) Google previewed that generative AI is coming to the Google Assistant, the ubiquitous digital assistant that underlies Google's home, auto and mobile software.
This is a big deal. It's the first shot fired in the true digital assistant wars.
Most people are aware of digital assistants. Siri from Apple (AAPL) and Google Assistant, for better or worse, are a big part of the mobile experience.
Wake these digital assistants with a simple voice prompt, then ask questions or direct the DA to perform a task. Success rates have been middling.
These have been around for a few years. We’ve gotten used to them.
ChatGPT, on the other hand, has taken the world by storm. Reuters reported in February that the platform was the fastest to reach 100 million users, upending Facebook, Instagram and even TikTok.
Eight months after its launch, ChatGPT is part of the Zeitgeist.
The appeal of the large language model chatbot is its conversational quality. ChatGPT seems like it's having a conversation with users.
Google Takes on ChatGPT
Google is perfectly capable of replicating this parlor trick.
To be sure, the current state of generative AI does not permit actual conversations. AI is not sentient. Chatbots, including ChatGPT, are merely faking conversation.
At Google I/O in 2018, CEO Sundar Pichai revealed Google Duplex. This short YouTube video clip shows that the impressive software algorithm was able to mimic a true personal assistant, including voice inflection and human-like linguistic cues.
Developers gasped in amazement as Duplex called a local hair salon and proceeded to make a reservation with an unsuspecting employee.
These features have since migrated to Google Pixel phones as proprietary software.
Google is also experimenting with Duplex at call centers. Duplex lives in the real world.
According to an email sent Monday to employees, Peeyush Ranjan, vice president of engineering at Google Assistant, the company will push large language model technology into Assistant.
“We’ve also seen the profound potential of generative AI to transform people’s lives and see a huge opportunity to explore what a supercharged Assistant, powered by the LLM technology, would look like,” Ranyan wrote.
Bringing Google's AI prowess to assistant at large is a much bigger deal.
Assistant lives in all of Google's products, from Maps and Chrome to Google Docs and Search. More importantly, Google assistant is the voice prompt for Google Home, Android Auto, and Android. This software is living in the background on billions of devices.
If Google can bring an assistant comparable to Duplex to all of those devices, it is a game-changer. It's the killer app of generative AI because it is accessible.
Sure, this is going to be disruptive to Google's native digital advertising model. The company is transitioning from its successful “10 blue links” strategy to software that provides answers.
Investors should think longer term.
Google knows a lot about its users. The company is also the gatekeeper of choice to most of the world's information through Google Search.
A reliable digital assistant marries those elements. It is powerful and valuable.
Members would likely pay for a subscription to upgraded features. That’s a big business that could supplant the advertising model over time.
I‘m not recommending you buy Alphabet based on this news just yet. Though, at $129.35, its shares aren’t that expensive. They trade at only 19.6 times earnings and 5.5 times sales.
I’d still like to be cautious when investing in a $1.6 trillion company. If this is an investment you are considering, I’d recommend using any significant decline to buy shares.
That’s all for today. I’ll be back with more soon.
All the best,
Jon D. Markman
P.S. If the idea of a company as large as Alphabet completely supplanting its own revenue model appeals to you, you’ll love what my colleague Sean Brodrick recently discovered. Click here to find out what he calls “The $2 Trillion China Exodus.”
