Revenue Opportunities For Generative AI And Spatial Computing

Greg Kahn is an expert of the intersection of tech, media and advertising. He is the CEO of GK Digital Ventures and Emerging Tech Exchange.

Generative artificial intelligence and spatial computing have dominated trade press headlines and investor conferences this summer—and these topics are likely to drive investment and deal making through next year and beyond.

But for all the breathless excitement and dismissive takes, one point continues to receive less attention: where is the revenue growth likely to come from? Where are the use cases that will produce new companies? Where are the strategies that established companies can tap into to drive open new sales and product channels?

Yes, there’s been plenty of talk about the efficiencies and cost-saving value of these still-emerging technologies. As crucial as those values are, no one ever cut their way to growth. And yes, the ability of generative AI and spatial computing to unlock new forms of automating and collaborating to achieve greater heights of creativity are incredibly inspiring.

While it often takes time for emerging technologies to prove their worth, as an expert and leader in tech, I see some potential ways generative AI will drive revenues. Given how well Microsoft has positioned itself early on as an investor and partner in ChatGPT parent OpenAI, it’s not surprising that it’s demonstrated the first big example of using advanced AI as a revenue source.

Premium Is In, “Freemium” Is Out

This past summer, Microsoft 365 Copilot was introduced and it promises to redefine the company’s marketplace position. Copilot will be available at a comparatively hefty $30 per user, per month for customers on Microsoft 365 E3, E5, Business Standard and Business Premium plans.

This pricing represents a considerable premium compared to current Microsoft 365 plans. For example, Microsoft charges $36 per month for Microsoft 365 E3, which already includes Office apps, Teams, SharePoint, OneDrive and other productivity features.

By contrast, businesses opting for the AI-powered Microsoft 365 Copilot will almost double their expenses on the E3 plan. Moreover, for users subscribed to Microsoft 365 Business Standard at $12.50 per user, per month, the new Copilot offering will cost nearly three times as much.

This is a major contrast to the “freemium” models that were predicated on attracting a large audience first and then figuring out the revenue proposition after. I believe building in a clear fee for using Copilot is a response to the costs of building and maintaining AI systems. This is not something that can merely be “ad supported.”

It’s not just Microsoft responding to those pressures. Investors and the generative AI startups are feeling it too. LLM developers have raised nearly $12B in equity funding in 2023 so far, according to CB Insights. OpenAI’s $10B round has driven the surge, but four other LLM developers have also raised mega-rounds of over $100 million, including such names as Cohere, Mistral AI, Adept and Anthropic.

While Microsoft is betting heavily on large corporations as well as consumers to pay for its AI services, I predict that B2B is where most of the revenues will likely be derived, as competition for the fastest, most intelligent programs will be a make-or-break matter for those kinds of businesses.

A Vision For Spatial Computing Dollars

When it comes to spatial computing, most eyes are on Apple’s forthcoming $3,500 Vision Pro headset. But getting average consumers will initially take a backseat to enterprise players.

While I’m sure there is a sizable army of Apple fans who can’t wait to get their hands on Vision Pro when it comes out next year, the price tag will likely be too steep for any but most deep-pocketed and committed Cupertino enthusiasts. While Apple’s Vision Pro demonstration at its June developer conference made watching video streams and playing games otherworldly, it’s my opinion that companies looking for next-gen collaboration tools who will be the first customers of the headset.

In particular, health tech, education and retail will be the first test market—and the marketing frontline, if it goes well—for Vision Pro. In healthcare, hospital systems seeking to build their medical training practices and attract patients in need of surgery will be differentiated by the promise of more “modern care methods” using Vision Pro and its closest rivals. Surgeons, for example, could utilize its 3D visualization features to enhance their understanding of complex medical procedures, leading to improved precision during surgeries—something that could enhance a hospital’s profile.

Additionally, therapists could leverage this technology to design immersive therapeutic environments for patients dealing with mental health issues, enhancing the effectiveness of their treatments. In education, teachers at the best schools could be encouraged to create immersive learning programs to keep students engaged. Success in that area will influence other schools. Lastly, retail, which has struggled with reinvention in the age of e-commerce, has the opportunity to develop virtual showrooms where customers can interact with products in unprecedented ways.

In my opinion, the combination of advanced AI and spatial computing will bring “true omnichannel” experiences to consumers, a decade after the notion of breaking down the silos between in-store and e-commerce was first talked about.

While no one has been beating the drum that “How-to videos” are broken, I believe spatial computing will revitalize the form and make it more engaging—and more shoppable. From cooking recipes to home improvement to “where to vacation,” consumers who become absorbed in the surround sound and imagery of spatial computing environments will be able to speak-to-purchase or pinch-to-buy with greater ease and enjoyment than any static video can hope to achieve.

The dizzying speed with which generative AI platforms have captured our imaginations, and the near-realization of expectations for hybrid digital/physical experiences through spatial computing, can make this moment seem like a new tech revolution. But it’s not.

These tools and our understanding of their potential is still an evolution. But the intensifying demand means that our latest tech dreams must do more than merely dazzle us with glimpses of the future; they have to prove market viability as soon as possible. In this current tech boom, expect more practicality alongside the magic.

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