Gen AI's Double-Edged Sword: Why Channel Partners Must Read the Fine Print

Artificial Intelligence (AI), particularly generative AI (gen AI), is revolutionizing the IT industry across the globe, transforming business operations, enhancing efficiency and driving innovation. Its impact on IT businesses, including channel partners, is profound and multifaceted. AI not only is helping IT businesses flourish now, but it also holds significant promise for the future. Alongside its transformative potential, however, AI also presents several concerns that demand careful consideration and proactive mitigation strategies to ensure its responsible and ethical use. 

This month, Omdia, an Informa Tech Company, will publish the 2024 Channel Game Changer: AI - Good Robot vs. Bad Robot report*, which provides a thorough assessment of the impact AI is having on the entire IT industry, including the channel. Below are some key highlights from the report. 

Good Robot

Firms leveraging AI for sales prospecting and customer acquisitions saw over 50% increases in leads and conversion rates. Tailor-made, AI-derived solutions can raise customer satisfaction rates up to 20%, per “Generative AI: A Channel Impact Analysis,“ a study by Channel Futures, JS Group and ANS Group.

Generative AI had a $15.4 billion total addressable market (TAM) for partners in 2023, which will excel to $158 billion in 2028 (59% CAGR). The biggest generative AI service opportunities for partners will be in four key areas: AI services, AI software development, advanced data services and AI products, per Canalys’ report, “Generative AI will be a US$158.6 billion opportunity for the channel ecosystem by 2028,” by senior analyst Lisa Lawson and chief analyst Jay McBain. 

Related:Palo Alto Networks, Accenture Team to Secure Generative AI

Major AI silicon manufacturers continue to upgrade their chips, further intensifying the silicon battles. Recent announcements include AMD’s Instinct MI300X and Instinct MI300A chips; Nvidia’s Blackwell platform for AI training and inferencing; and Gaudi 3 AI accelerators. 

Hyperscalers making huge investments in gen AI startups include Microsoft’s $10 billion investment in AI startup OpenAI, creator of ChatGPT; plus, Amazon’s $4 billion and Google’s $2.5 billion investments in AI startup Anthropic, respectively.

Bad Robot

While AI has brought significant advancements and opportunities, it also has some baggage and raised major concerns regarding ethics and security risks, prompting scrutiny and calls for regulation from government, industry groups and the public, of which vendors and partners must be cognizant. 

U.S. President Joe Biden and his administration have been taking notable action to manage the risks posed by AI and protect citizens’ rights and safety. The Administration received commitments from several leading AI companies − including Adobe, Amazon, Anthropic, Google, IBM, Meta, Microsoft, Nvidia, OpenAI, Salesforce and Scale AI − to establish safe, secure and transparent development of AI technology (detailed below).

Related:Dell: Channel Partners Leading Generative AI Charge

The primary goal for generative AI tools is to provide the probabilistic, or most probable, answer; unfortunately, many times the most likely answer is not the right answer and AI tools tend to hallucinate, or deliver false, inaccurate information as if it were true. This issue is so prevalent that Vectara, an AI startup, provided data stating that chatbots hallucinate between 3% and 27% of the time. 

No company with promising AI solutions is exempt from the downsides of the technology. There are numerous news headlines to prove this, such as Google Gemini’s inaccurate depiction of historical figures; Open AI’s ChatGPT steadily providing nonsensical answers to prompts; and
Microsoft Bing chatbot’s threatening of news reporters.

Conclusion 

Channel partners are poised to harness the vast revenue opportunities and operational efficiencies offered by AI solutions; however, it's imperative to cautiously evaluate each AI solution, examine regulatory barriers and mitigate associated risks. By prioritizing transparency, compliance and constant monitoring, channel partners can confidently navigate the AI landscape and bring high value-added solutions to the market. 

*The Omdia 2024 Channel Game Changer: AI - Good Robot vs. Bad Robot report is created by Devan Adams, principal analyst, Channel Research and Consulting Practice. For more Omdia channel reports, check out the Omdia website’s channel research portfolio here.