Vijay Kumar Gaba: AI

Showing posts with label AI. Show all posts

Tuesday, March 5, 2024

Cognitive dissonance- 4

Continuing from last week

The development of Artificial Intelligence (AI) is still in the early stages. How many more job losses shall we witness in the coming years due to automation?

Last week, one of the popular viral videos on Indian social media was about the views of Mr. Rahul Gandhi, Lok Sabha MP, and Mr. K. Annamalai, Tamil Nadu State President of BJP, on the challenges of artificial intelligence (AI). In the video, Mr. Annamalai is seen eloquently explaining the challenges of AI to young students, while Mr. Gandhi is seen doing some whataboutery to hide his lack of proper understanding.

Discussing the matter with many people who chose to forward the video to me, I found that the key reason for their forwarding this video is to show Mr. Gandhi in a poor light and not bother about the challenges of AI. They deliberately chose to ignore that both Mr. Gandhi Mr. Annamalai may not be in a position to make policies, at least for the next five years; whereas Chief Ministers of the largest populated and most industrialized states in India, and even some of the top leadership of the country, may be equally lacking in understanding about the challenges of AI, as Mr. Gandhi. Many of these may even fail to spell Artificial Intelligence correctly. That ought to be an issue these people should be worrying about and discussing.

Until a few months ago, India’s IT minister rejected the threat of AI to jobs in India as “nonsense”. Recently he reluctantly acknowledged that “AI may result in automating some routine jobs but will also result in job creation in various data science, data curation, etc.” This is in total contrast to what the global IT leaders believe. For example, Elon Musk insists AI will get humans to a point where “no job is needed.”

In a recent famous interview with Trucker Carlson, President Vladimir Putin expressed fears that the developments in AI and genetics could potentially be a threat to humanity as a whole in the future. He said, “When there arises an understanding that the boundless and uncontrolled development of artificial intelligence or genetics or some other modern trends, cannot be stopped, that these researches will still exist just as it was impossible to hide gunpowder from humanity... when humanity feels a threat to itself, to humanity as a whole, then, it seems to me, there will come a period to negotiate at the inter-state level on how we will regulate this.”

Notwithstanding the state of denial by politicians, the campus recruitment by Indian IT companies in FY24 was just 75000, the lowest since 2002.

The Viking expansion during the 8^th – 11^th centuries reshaped the history, culture, and commerce of the world, by laying the ground for global colonial imperialism. It was aided by the first industrial revolution (1760-1820). The Second Industrial Revolution (1870-1914) redrew the contours of global strategic balance. The atomic attack on Hiroshima and Nagasaki (1945) established a new world order that was dominated by trade and commerce rather than military power. The development of Artificial Intelligence is a similar event in world history. It has the potential to redefine how people procreate, live, think, work, interact, transact, entertain, and die. AI could pose a much bigger threat than nuclear weapons; and could be a bigger service to humanity than any medicine or healthcare procedure.

Confining the discussion on AI to job losses would be beyond ridiculous.

On a lighter note, let me share a recent anecdote. An acquaintance (56-year-old) was running a 110-seater call center in Delhi for 24yrs. He had to shut the operations as his major clients automated their processes. He has converted the facility into a stock market jobbing facility by retraining all 110 operators. He is making 2x more money than the best years of call center business. Employees are also taking home 25-50% more. He told me, “Let Nvidia and Musk do whatever. We will make money trading their stocks. If we cannot compete with Nvidia, and Microsoft, we will own them!”

The point is that unemployment due to AI is a worry only for those who refuse to adapt, retrain, and reskill. For others AI is a major opportunity to move to higher orbits. The real damage due to AI could happen in social, personal, and emotional spheres.

Tuesday, December 5, 2023

Finding a place in the ‘Normalized’ global order

Last week I started a discussion (see here) on how the human race might already be in the process of obliterating the memories of the devastating wars fought during the first half of the twentieth century. These wars not only changed the global political map but also deeply impacted international relations, human psychology, demography, technology, and global economics.

Since the early twentieth century, many experiments have been done in the areas of political, geopolitical, financial, economic, demographic, and science & technology. Some of these experiments failed, many succeeded and had a tremendous impact on human life, and some ended after serving their useful purpose. Some of these experiments could be listed as follows:

· Nazism, Marxism, Zionism & Radical Islam;

· USSR; NATO; Warsaw Pact; European Union; Viena Convention and VISA system; Germany bifurcation;

· Decline of Japan as a military power after Hiroshima & Nagasaki, and rise of Japan as a technology leader and economic power;

· Keynesian economics; Central Banking; Bretton Wood agreement; supremacy of USD as global reserve currency;

· UN, World Bank; end of imperial colonialism; Non-Align Movement; WTO (and GATT);

· China’s cultural revolution (including the one-child policy);

· Internet; birth control pills; microelectronics; communication;

· Dematerialization of commodities, securities & currencies;

· Petrodollar; the rise of neo-colonialism (financialized western world exploiting resource-rich developing and underdeveloped economies); export-based economic growth model of Asian tigers; and

“Artificial intelligence” (AI) is a new equivalent of the 1940s atom bomb in the present context. The technological advancements in generative AI seek to supplement the declining demographics and present huge productivity enhancement potential. However, the rise of authoritarian regimes and hyper nationalistic tendencies creates the potential for misuse; raising the specter of a repeat of the Hiroshima-Nagasaki type disaster.

On its part, India has also experimented with many things and is still trying to find its place in the global order. We have tried central planning (Nehruvian Socialism); Equality and preference for the poorest amongst poor (Gandhian Socialism); centralization (nationalization of banks, insurance, mobility, energy) to decentralization (privatization of banks, insurance, pension, roads, aviation, ports, energy, defense manufacturing, etc.); imbalanced growth (resource-rich states feeding the industrialized states in replication of colonial model) to balanced growth (industry moving to resource producers); non-aligned; strategic alliances; localization (SAARC) to globalization (BRICS+); multilateralism (GATT & WTO) bilateralism (FTAs); Peaceful coexistence (Panchsheel) to surgical strikes; Secularism to Hindu Nationalism; etc.

We have completed a remarkable journey from a totally devastated nation in 1947 to becoming the fifth-largest economy in the world. The indications are that this journey may continue at an accelerated pace over the next couple of decades. However, at a micro level, we are far from becoming a middle-income country as over 50% of our population fails to meet the basic living standards.

Recent events in Ukraine and Palestine indicate that our influence over international matters may be even lower than it was in the 1950s and 1960s.

Our eagerness to grab the so-called ‘China+1’ opportunity indicates that we do not mind becoming a factory for the developed country, doing low-margin manufacturing; even if it involves significant incremental climate damage to our already “severe” category conditions. Our leadership has made it clear at the recent climate meeting in Dubai that our commitment to emission targets cannot be at the expense of economic growth (see here); even if it is unsustainable.

The recent incident in Uttarakhand where we needed to import a drilling machine from the US and a mining expert from Australia to rescue 41 workers trapped in a tunnel shows how inadequate we may be in skill and technology. It is common to see product promotion for basic commodities like cement & adhesives, manufactured with foreign technology. We have no leadership in the development of generative AI; 6G and 8G telecommunication infrastructure (still struggling to roll out 5G networks).

Obviously, the effort to assume strategic and technology leadership are seriously lacking in our growth endeavor.

India (small elite urban population) vs Bharat (majority poor, largely rural population) debate has been raging ever since independence. The disparity between these two sections has continued to widen with acceleration in the growth.

Nonetheless, for a small section of the Indian population engaged in manufacturing, construction, mining, financial services, technology services, and premium & luxury consumption, this is perhaps the best time in two centuries. By implication, this is also the best time for the financial investors, who have invested in the equity of these businesses. On a relative basis, Indian businesses may not be doing as well as their American or Chinese counterparts, but in absolute terms, they are doing great, especially from a historical context.

Small investors like me therefore may have a good opportunity to create wealth. More on this in the coming days.

Friday, September 30, 2022

4th Industrial Revolution – Is the circle of civilization completing?

“Fourth Industrial Revolution” is one of the most popular buzzwords these days. One gets to hear this almost every day in one context or the other. Business leaders, administrators, policy makers and money managers etc. have been using it in their presentations and interactions. In some cases it is used as a cliché, without intending any specific trend or opportunity. However, in most cases it is used to imply that new technologies and applications being used in the areas like manufacturing, mobility, communication, healthcare, education etc. are bringing remarkable change in the ways we are used to function. Metaverse, Clean Fuels, 5G, Drones, Artificial Intelligence, Convergence of Technologies, Blockchain, etc. are some of the pieces that are putting this revolution together.

For the youngest generation, the changes this revolution is bringing to their lifestyle might not appear stark. They were born in a world where technological changes have been fast, dramatic and disruptive. For the older generation, however, the experience is overwhelming.

The pandemic has added another dimension to the extant global development paradigm. A larger number of people are now looking for evidence to assess if we human being were less “happy” before we started to study and research the functioning of universe, cosmic events, natural phenomena like gravity & relativity, adopted the modern science and technology to carry out our day to day functions, trade and commerce, etc. In fact, if we do honestly assume "happiness" as the "ultimate goal" of all our social and economic activities; then most parts of modern science and technology may appear redundant to us.

An esoteric explanation of the fourth industrial revolution could be that we as a scientifically evolved society are trying to complete the circle by connecting the present to the point where it all started. Some indicators of this endeavor could be seen from the following trends:

· We are increasingly accepting the Sun and Water as the primary source of energy and nutrition. Terms like chemical free, carbon free, etc. command the highest premium. Smoke rising from chimneys that symbolized earlier industrial revolution is considered regressive now.

· We are increasingly preferring to stay in our respective caves, leaving the job of hunting and bringing food to few warriors (ecommerce, food delivery, work from home, video conferencing etc.)

· The commitment to family and society is diminishing. “Individual” rather than the “community”, is becoming the focus of most activities, including sales & marketing, politics, religion, etc.

· “Tribes” are becoming smaller and inward focused.

· Procreation is not a priority for a significant proportion of the global population. In the next five decades we might see the global population stagnating or even declining.

· The laws of the jungle have gained acceptance in most jurisdictions. The interest of the strong is accepted as justice even in the most developed societies. Lions and Elephants act at will while the rabbits and deer wait in horror to be devoured.

Friday, July 15, 2022

Metaverse – a good sustainability trade

In yesterday’s post I mentioned that in my view the likely demographic change over the next couple of decades is a more interesting investment theme than the more popular climate change or ESG. (see here) Some readers have sent their comments and views on the topic. A few have expressed disagreement with my hypothesis; but a large majority seems to be in agreement. A couple of readers have pointed out that demographic change and climate change are intricately intertwined and share a circular causal relationship. I fully agree with this viewpoint. The investment themes that support both climate change and demographic change could actually be the best investment theme. Metaverse is one such theme, in my view.

The Federation of Indian Chambers of Commerce & Industry (FICCI) in a recently released knowledge paper – “Metaverse and Emerging Opportunities” – highlighted some interesting aspects of this massive opportunity that has the potential to transform, inter alia, the way we work, study, communicate, entertain, socialize, get healthcare and transact with each other. The following are some excerpts from the FICCI paper that I believe are relevant for researching Metaverse as an investment theme.

What is Metaverse?

Meta (Beyond – Greek Word) + Universe (English) = Metaverse is an offering which provides users immersive and multisensory experiences using futuristic technologies.

In technical terms, Metaverse is a network of 3D virtual worlds focused on social connections. It is a collective virtual space, created by the convergence of virtually enhanced physical and digital reality. It is an independent virtual economy, enabled by digital currencies and non-fungible tokens (NFTs). It is device independent and is largely democratized and not owned by a single vendor. Metaverse is built on a combination of Blockchain, Virtual Reality (VR), Augmented Reality (AR), 3D hologram, and Video.

Metaverse allows people to enhance or mimic their physical activities in the virtual space. This could mean transforming the existing physical activities that one is doing or by transporting to a new virtual world. Presently, multiple Metaverses are functioning independently from each other, having a functionality of their own. However, as the concept evolves, we shall see large Metaverses encompassing all the activities with broad functionality, or even conglomerates of multiple Metaverses integrated with each other.”

The opportunity size

A recent Citi report predicts that with 5bn potential uses, the total addressable market for the Metaverse in B2B and B2C segments could be between $8 trillion and $13 trillion by 2030.

Gartner expects that by 2026, 25% of people will spend at least one hour a day in the Metaverse for work, shopping, education, social media and entertainment. Metaverse is a trillion dollar opportunity per year around 2030 onwards while it is a $60billion now in 2022.

On the B2B segment, some of the use cases include:

· Transformation of “Workspace collaboration” with always ON conference/meeting rooms for global meetings, conferences.

· Talent acquisition, hiring and onboarding taking a new dimension in Metaverse

· Digital test run of products and experience different options.

· Learning, education, training, skill development with avatars (manufacturing, factory setups will get good leverage with this tech)

· Healthcare (Telemedicine, Therapies, Surgeries)

· Defense (Training, On-boarding, Recuperation, Simulation)

· Real-estate, E-commerce companies can have product demos, showcase and branding opportunities

· Advertising will move to the next level with a unique kind of storytelling experience for the audience using 360 videos and 3D technology.

B2C use cases for Metaverse include

· Gaming and entertainment

· Education, Learning, Skilling

· Travel and Tourism

As a consumer I could already imagine a few things like:

* No need for expansive showrooms for automobiles, electrical appliances, electronics, watches etc. Virtual shopping malls could be equally popular as the traditional shopping malls.

* Much less need to physically visit doctors for regular consultation.

* Much less frequency of business visits. Virtual conferences, book launches.

* Lower frequency of visits to stadiums for watching games; or to theatres for watching movies.

* No need for physical coaching/training centers.

* No need for builders to make a sample flat or employ a huge sales team.

All of this essentially means less traffic on roads and lesser use of air conditioning and therefore less pressure on the environment. The present generation which is reasonably tech literate and is more comfortable with virtual shopping, working and socializing could be hitched to the Metaverses with broader functionalities.

Key concepts

The Metaverse is composed of many core elements that are combined together to provide a whole new world to the users. These technologies include eXtended Reality (XR), Blockchain, Artificial Intelligence and the Internet of Things but are not limited to them.

Blockchain is a shared, immutable ledger for recording transactions, tracking assets and building trust. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.

A non-fungible token (NFT) uses the technology of blockchain to create something that is unique and irreplaceable in the digital world.

A cryptocurrency, crypto-currency, crypto, or coin is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. Individual coin ownership records are stored in a digital ledger, which is a computerized database using strong cryptography to secure transaction.

Artificial intelligence (AI) is the ability of a computer or computer-controlled robot to perform tasks commonly associated with intelligent beings like humans.

The eXtended Reality (XR) is a superset that covers Augmented Reality, Mixed Reality and Virtual Reality. Virtual Environments are considered as synthetic or computer-based spaces.

The Internet of Things (IoT) is a network of people, devices, and services [2] that can sense, connect to one another, make inferences, and act(uate) at scale. It is considered that over 30 billion IoT devices are already deployed globally today.

Tuesday, May 18, 2021

Self-reliance is not limited to managing the current account

Self-Reliance (Atamnirbharta) has been one of the key policy objective of Indian government, especially during the second term of the incumbent prime minister. It is clarified that self-reliance does not connotes self-centred systems; rather it encompasses a concern for the whole world’s happiness, cooperation and peace.

The stated aim is to make the country and its citizens independent and self-reliant in all senses. The five primary focus area identified to achieve the objective of self-reliance are —

Economy — Quantum jumps in various growth parameters, not just incremental changes.

Infrastructure — Building infrastructure that represents modern India.

Systems — Making systems technology driven.

Demography — Making the population vibrant.

Demand — Realizing full potential of the power of demand.

A number of programs, schemes and incentives have been announced in past one year under the umbrella of Self-Reliant India, encompassing support to a variety of sectors like agriculture, MSME, manufacturing, housing, infrastructure building, and exports, etc.

From various documents and public speeches by the prime minister and his cabinet colleagues, it appears that the idea of self-reliance is still at the stage of developing a conceptual framework; even though a slew of schemes and incentives have already been placed under this umbrella. Defining this idea in terms of a robust conceptual framework may actually take few more years, given the extraordinary circumstances presented by the Covid19 pandemic, which may result in result in reprioritization of fiscal and monetary policy objectives.

There is little debate on the point that digitalization has to be at the core of any economic development and modernization plan for future. In this context, I find it pertinent to highlight some of the data from ‘Digital Economy Compass 2020”, published by statista group. The report, inter alia, highlights some of the key global markets and consumption trends that may sustain in post Covid19 world. It also mentions the key players in each evolving market segment.

The services like healthcare, fitness, learning, entertainment, gaming, 3D printing, contact tracing (bio metrics, travel, GPS, demographics, talent hunt, etc.), communication, financial services (payment gateway, money transfer, transactions), collaborative software development, cloud hosting, cybersecurity, business and manufacturing process automation have acquired larger part of the markets (consumption, investment, and development etc.)

Manufacturing processes are being increasingly dominated by artificial intelligence, robotics, internet of things, etc. Development of 5G ecosystem is another major area of growth in global economy. Blockchain technology has made a prominent place in global commerce ecosystem.

Global trade is overwhelmingly dominated by ecommerce. Last year Chinese ecoomerce giant Alibaba alone logged a total merchandise trade that exceeded GDP of all but 14 top nations in the world.

Work from home trend is likely to sustain for longer than presently expected. This is leading to higher demand for products and services like home automation, food delivery, gaming, streaming of music and video, home management services, fitness, e-dating, shared mobility etc.

All these trends are essentially leading to materially higher demand for electronic devices (phones, tablets, laptops, servers etc.) and semiconductor chips to be embedded in various appliances (washing machines, cars, alarm systems, automatic machines, smart TV, refrigerators etc.)

Software is essentially the fulcrum that supports this entire global digital ecosystem. There is a variety of software development services like enterprise software, system infrastructure software, application development, and productivity enhancement software, etc.

The point to note is that presently Indian capabilities in these spheres are limited. Only 4-5 Indian companies appear on global podium, but their participation is mostly limited to software services. In most other areas our capabilities and size are limited in global context. The government programs and schemes (e.g., production linked incentive for mobile manufacturing) are presently focusing on low end value addition (mostly component assembly and contract manufacturing). If India has to become self-reliant in the modern world, the focus has to be on joining the top league in global digital ecosystem. Manufacturing mobile phones and chemicals may help in little more than managing the current account.

Tuesday, April 20, 2021

The new paradigm

Over past couple of weeks, I had exciting interactions with some professionals from the IT capital (Bengaluru), Pharma Capital (Hyderabad), Engineering capital (Chennai), Financial Capital (Mumbai) and political capital (Delhi) of India. From these interactions I learned that a definite new paradigm is emerging in Indian commercial space. The following are some key take away from my interactions:

1. Traditionally, a majority of Indian entrepreneurs have not aimed for global scale in their businesses. Despite a rich history in the areas like culinary and textile, few businesses of global recognitions and scale could be created in these areas. However, now the first generation entrepreneurs have materially widened their vision. Many of them are now working on business ideas with global markets and scale in sight. No eye now widens on the mention billion dollar figures.

2. The skills in Artificial Intelligence are becoming common place. In late 1990s Indian youth acquired skills in basic programing and coding of computer programs. This helped them crossing ocean in hoards and make a good career. A similar phenomenon is developing in artificial intelligence skills. The difference however is that unlike 1990s, now a large proportion of the young professionals want to become entrepreneur of independent professionals. They are not looking just good salary. I am sure a few of them would certainly be able to repeat the fables of Bill Gates, Jack Ma, Jeff Bezos et. al.

3. The best part is that there is a strong start up ecosystem already in place. There are numerous investors who are willing to risk money on a good idea. Not many are looking at government for support. In fact, if I were to take my sample as representative, the only support neo entrepreneurs are seeking from the government is (i) less interference; and (ii) supportive tax structure.

4. A lot of people of Indian origin, who are settled abroad are positive on Indian skills and entrepreneurship. They are helping the new ideas with financial and technical support. Many of them appear to be keen to have substantial exposure to Indian startup ecosystem.

5. Though, the visibility of startups in technology enabled financial services (FinTech), retail, food delivery, and gaming is highest, some amazing developments are happening in the area of agriculture technologies, space technology, engineering design, water management, logistics management, pharmaceutical research and healthcare.

After this round of discussions, I am even more convinced that we have already entered into a business and economic paradigm. I believe that over next couple of decades, maximum value creation shall happen in businesses with technology leadership. Intellectual property shall derive significantly higher premium over conventional property. “Services” will continue to be key driver of economy rather than “Goods”; notwithstanding the government’s focus on manufacturing and construction.

On the negative side, the pace of elimination of smaller businesses, which cannot invest in technology and are not equipped to become ancillary of a large business, will continue to accelerate. The inequalities shall rise on multiple levels – economic, skills, access and opportunity.