Most of you are familiar with the concept of “first movers” in new markets. Many of you also are familiar with the notion of “sustainable competitive advantage” (“business moats protecting firms from competition).
The long-term ability to sustain competitive advantage tends not to be so easy, as any new technology innovation--including artificial intelligence--propagates and becomes mainstream.
Similar to past innovations like electricity, PCs, and the internet, early adopters arguably had an edge.
Over time, as the technologies became widely available and mainstream, the advantage was diminished or largely lost.
But perhaps not completely lost. Consider data centers with access to lots of low-cost electricity. In such cases, competitive advantage might still remain, even for a “commodity” such as power.
The same might be noted for some manufacturers of products such as aluminum, which is highly energy-intensive as well.
In similar ways, some firms in some industries might retain competitive advantages in use of computing hardware and software, even if use of computing software and platforms is virtually ubiquitous across all industries.
High-performance computing, semiconductor design and manufacturing, software as a service and cybersecurity might provide relevant examples.
The point is that competitive advantage for adopters of artificial intelligence will likely exist for early successful adopters. Over time, the magnitude of advantage, in most cases, will shrink, though still providing some amount of sustainable advantage in some industries, for some firms.
A few firms in search and social media provide obvious examples.
Still, most firms will eventually be using AI as a routine part of their businesses, even if, in many cases, such use will not produce sustainable competitive advantage, compared to their key competitors.
New technologies offering business value will be quickly adopted and improved upon by competitors.
As technology becomes more widespread, it will become standardized, leading to price competition and eroding first-mover initial advantages.
Once the core technology becomes ubiquitous, competition will logically intensify in complementary areas such as service offerings, user experience, and business models.
So unusual advantage tends to be eroded over time. Still, some firms will likely be able to gain a period of advantage by deploying AI more effectively than competitors, until everyone catches up.
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