Artificial intelligence has made its way into businesses by bringing innovative and smart solutions. It is adding value to by changing work processes and bringing in more and more automation. While there has been a drastic increase in the use of AI in companies, there has often been a confusion between these two types of companies:
- Startups/companies making AI solutions
- Startups/companies using AI to better their offerings
Most companies like the tag of “AI startups” even when they are only using AI as a part of their functions. In this article, we try to take a look into AI startups and AI-enabled startups that are often used interchangeably for startups developing it and the ones using it.
AI Startup Vs AI-Enabled Startup
This is one of the most crucial differences between the two. While AI startup is all about providing AI services where they make and sell AI products, AI-enabled startups integrate these services to better their offerings. AI startups are essentially product companies that develop AI solutions and services such as chatbot platforms, building recommendation engines, machine learning solutions, GPU infrastructure and more. For instance, DeepMind, Open AI and similar companies are AI companies as they are building AI systems to solve problems. In short, they provide AI tools and infrastructure.
AI-enabled startups, on the other hand, are the companies that simply integrate the products by AI startups or companies to bring better and improved offerings such as bringing personalisation, enriching customer experience or speeding up their day-to-day processes. These companies work on products that are traditionally software-based and AI is used for improving performance, getting insights and other activities.
For instance, Netflix using it to recommend the movie you should watch or Dunzo using it to increase the number of transactions. The end product of these two companies is OTT entertainment platform and food & grocery delivery. Therefore they can be called AI-enabled startups as AI is not an end product but a part of it.
AI startups are all about machine learning-based products and services, therefore, their revenue largely depends on selling subscriptions of AI software which can be packaged as AI services. Whereas AI-enabled startups make money from their core business and experience where AI is just a helping hand.
Time Required For Development & Deployment
It might take pure AI startups months and years to get even a prototype of their product or AI service ready. Since it requires research from scratch, there is a lot of planning, detailing, execution and investment that goes into it. Given the time and effort required for AI startups, there are often chances of them succumbing to the pressures of costs and energy required as we saw with Deepmind.
It is definitely a longer process than companies implementing AI solutions to speed up their process. AI-enabled startups may also need time in terms of deployment but it is usually not as much as developing a product.
The challenges that AI startups and AI-enabled startups face are drastically different. Scaling up an AI startup is challenging as it requires different research just to scale the intelligence to a level where it can serve many customers at once.
AI-enabled companies do rely on the scaling of AI, but the major component for them is the AI free software that they are building which ensures the core transaction.
Most of the customer engagement companies such as e-commerce, digital entertainment and similar companies are looking to adopt AI in some form or the other. They all fall under AI-enabled startups and companies. Bringing a level of personalisation boosts customer experience where they often resort to technologies such as IoT, speech recognition, virtual reality, chatbots and more.
The end goal of these two categories differs significantly. While AI startups aim at developing AI and ML solutions, AI-enabled startups aim to integrate it into their existing services.
AI-Enabled Startups & AI Startups Are Co-Dependent
With the need for companies to be smart and at par with the competition, companies are enabling themselves with AI experience. Integrating AI with startups is the need of the hour as it raises the marketing standards. The AI applications may be used for analysing data sets, identifying patterns and creating a personalised experience.
Big giants are giving the users the power of voice for better recommendations and analysis. Artificial Intelligence enabled applications with smart capabilities are attempting to solve real-world problems. However, this is only scratching the surface of AI’s value. In the coming years, the technology is slated to increasingly help companies to streamline the process for which the need for AI startups is going to be far more than before. It can, therefore, be said that AI startups and AI-enabled startups are codependent on each other for the companies to choose and pay for products.
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Srishti currently works as Associate Editor at Analytics India Magazine. When not covering the analytics news, editing and writing articles, she could be found reading or capturing thoughts into pictures.