Hedge Fund manager Kyle Bass used to be my favorite industry analyst, but after watching a short, fire-breathing, three minute clip from CNBC’s Closing Bell, I think Social Capital CEO, Chamath Palihapitiya, may have wrestled away Bass’ title.
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“IBM’s Watson is a joke, just to be completely honest” said Palihapitiya when asked about IBM’s hedgeway into the world of artificial intelligence and machine learning, asserting that while Big Blue has done a great job marketing the Jeopardy champion, the fact of that matter is, Google and Amazon have done a far better job amassing reams of big-data, processing it on their systems, and fundamentally understanding it, which after all, is the whole point of artificial intelligence.
IBM no longer an innovator
Given, the Bay Area based search engine giant has never won a game show, but there are indeed other, less scientific metrics that can be used to evaluate AI systems. “Companies advancing machine learning and AI don’t brand it with some nominally specious name, naming it after a Sherlock Holmes character,” said a laughing Palihapitiya. CNBC’s Brutus then stuck the knife deeper into Endicott’s Caesar saying “IBM is a services business. They aren’t building anything. They aren’t innovating.”
For those who love to hate Oracle, the stewards of the JDK weren’t spared the commentator’s scorn either. “Oracle is not a business you can short today, but it is also not a business that is going to win tomorrow,” said Palihapitiya. In the short term, the assertion is that companies like Oracle will keep the coffers full simply by squeezing income out of their existing customers. “It has an unbelievable sales and marketing machinery that will figure out how to tax its existing customers in umpteen numbers of Byzantine ways.”
Profiling the IBM customer
According to Palihapitiya, the problem lies in the fact that the marketing machines of companies like IBM and Oracle are more intelligent and organized than the clients who have to choose between them. “What IBM is excellent at is using their sales and marketing to convince people who have asymmetrically less knowledge to buy something,” said Palihapitiya. “Can you fundamentally be long these two business over the next decade? I think the answer is no.”
It’s a short little three minute video, but the guy simply rains brimstone down on Oracle and IBM. If you like that sort of thing, it’s worth a watch. If not, fee free to go search ‘cat videos’ on YouTube.
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