Article's Content
Article's Content
There are two types of opportunities for capitalizing on AI’s ability to fuel innovation: AI-native and embedded AI.
Understanding where innovation lies — and what kind of innovation it is — starts with understanding these categories. And learning the differences between these two types of products and companies will change the way you think about what it means to be an industry leader.
Let’s break them down!
What Are AI-Native Products and Companies?
AI-native refers to products and companies built from the ground up with artificial intelligence at the core of their operations and services. Rather than just integrating AI into existing systems, these companies are designed to fully exploit the capabilities of AI, enhancing innovation and efficiency in their domain.
Jasper and Copy.ai are AI-native products that cater specifically to content creation and leverage AI to assist marketers and creators in generating high-quality content more efficiently.
Midjourney was built to focus exclusively on AI-driven visual content creation.
ElevenLabs converts text to speech using an AI voice generator.
These types of specialized AI-native businesses are the companies that have been making the market size of AI grow considerably in recent years.
But that isn’t the only way that companies are taking advantage of AI’s opportunities.
What Are Embedded AI Products and Companies?
Embedded AI refers to the integration of artificial intelligence technology into existing products and services, enhancing their functionality without fundamentally altering their primary nature. This strategy allows established companies to adopt AI technologies to improve performance, user interaction, and service efficiency.
A classic example of embedded AI is Adobe Photoshop, which has incorporated AI features like the ‘Magic Eraser’ to automate complex editing tasks with simple commands. Another notable case is Zoom, which leverages AI for features like real-time transcription and meeting analytics, enhancing their core video conferencing service.
Numerous companies across various industries have already adopted embedded AI to remain competitive and innovative. There are even plenty of products that you might not realize use embedded AI on the backend, as the front end of the product may seem identical.
What Are the Advantages of AI-Native Solutions?
AI-native companies and products offer three main advantages, stemming from their fundamental approach of embedding artificial intelligence at the core of their operations and product design from the very beginning.
Let’s take a look at each one.
Opportunity for Innovation
One of the primary advantages of AI-native companies is their ability to innovate and create entirely new product categories. Companies like Jasper and ElevenLabs exemplify this potential.
Jasper has carved out a niche in AI-driven content creation, providing tools that automate and enhance the writing process for marketers and content creators.
ElevenLabs offers groundbreaking voice synthesis technology, enabling realistic voice generation and customization, which opens new possibilities in various industries, including entertainment, customer service, and assistive technologies.
This is why companies that lead their industries in AI place significantly more importance on using AI to create new sources of revenue and increase revenue from their core business.
Unrestricted Branding and Design
AI-native companies and products benefit immensely from the absence of legacy constraints. Unlike established companies that often struggle to integrate new technologies into old systems, AI-native companies design their infrastructure and products around the most advanced AI technologies available.
For example, powering and training AI depends on using the most advanced GPUs available. Companies like Nvidia keep launching new AI chips designed for this, and a new AI-native company will have to buy them. Companies trying to embed AI products might choose a cheaper option by using their existing infrastructure and end up with worse results.
Future-Proofing Infrastructure
By focusing on AI from the outset, AI-native companies are better positioned to incorporate continuous advancements in AI technology. This approach allows them to stay at the cutting edge, adapting quickly to technological developments without the need for extensive overhauls or compatibility fixes.
For example, an AI-native company can build their product with the expectation that AI will improve rapidly in the future. That means they can build the backend to be able to rapidly integrate with new AI models as they come out. That can even be true for older companies that build new infrastructure as they create new AI tools.
Many companies embedding AI into existing products are working with older backend systems and didn’t have the luxury or the foresight to build their backend infrastructure with AI in mind years ago.
Overall, the advantages of AI-native companies and products lie in their visionary approach to product and business model design. By building around AI, these companies ensure that they are not only current with today’s technology but are also primed for tomorrow’s innovations, securing a significant strategic advantage.
What Are the Advantages of Embedded AI Solutions?
Embedded AI offers its own range of advantages for established companies seeking to enhance their existing products and services with the power of artificial intelligence.
By integrating AI into their current offerings, these companies can leverage their brand recognition and trust to introduce innovative features quickly and efficiently.
Leveraging Existing Brand Recognition
One significant advantage of embedded AI is the ability to capitalize on existing brand recognition and customer loyalty.
Well-known companies benefit from a trusted brand, which can reduce the resistance typically associated with adopting new technologies. When a company integrates AI into an existing product, it enhances user experience and strengthens their market position by adding a modern tech flair to a well-established brand.
Speed of Deployment
Embedded AI allows companies to innovate rapidly. Since the fundamental infrastructure and customer base are already in place, integrating AI into existing platforms can be quicker and less costly than developing a new AI-native solution from scratch.
Expedia, for example, already uses AI for customer support and creating listing content, and they’re looking to add embedded AI features to offer personalized travel suggestions.
Adding Value to Existing Products
Perhaps the most direct benefit of embedded AI is the added value it brings to current products and services.
Zoom’s implementation of AI-driven features like real-time transcription and meeting summaries has significantly enhanced their core offering, making the platform more appealing to a broader audience. This addition has not only improved functionality but also increased the product’s accessibility, helping Zoom to stand out in a competitive market.
The advantages of embedded AI are clear. It helps established companies to innovate within their existing frameworks, leveraging their brand strength while simultaneously improving their products with the latest in AI technology. This approach solidifies their market position and provides customers with enhanced, cutting-edge experiences.
Combined AI-Native and Embedded AI Opportunities
Companies can maximize their impact by not only developing AI-native products but also embedding these innovations into existing products. Google’s plan for Gemini, a platform that enhances their suite of products through smarter AI integrations, exemplifies this approach.
Here’s how companies can follow suit and the benefits of doing so.
Creating and Embedding AI-Native Products
The first step is to develop an AI-native product that stands on its own merits, offering a unique solution or service based entirely on AI. That’ll likely involve steep upfront costs, and it could take time. The other option is to buy an AI-native company, like when Google acquired DeepMind in 2014.
Once established, this technology can then be integrated into other products within the company’s portfolio. This integration helps enhance existing products’ functionality while showcasing the company’s innovation capabilities. That’s exactly what Google has done with their purchase, now called Google DeepMind. That same team helped develop Gemini, the AI-native solution that Google is now embedding into Gmail, Docs, and other Google products.
This is an innovative model that allows Google to expand on their AI-native opportunities with all of the advantages of embedded AI looking forward.
Branding and Marketing
Combining AI-native and embedded AI strategies allows companies to position themselves as leaders in innovation, enhancing their brand image.
By marketing products that are both cutting-edge and integrated with familiar applications, companies can appeal to both tech-savvy consumers and loyal customers. This approach attracts attention and reinforces the brand’s reputation as a forward-thinking industry leader.
Better Product Experience
Embedding AI-native innovations into existing products can drastically improve the user experience by making these products more intelligent and responsive.
For instance, integrating AI-driven analytics tools into a CRM system can give users deeper insights and predictive capabilities, making it even more valuable.
Sales Funnel Enhancement
By embedding AI as a product add-on, companies can create new upselling and cross-selling opportunities within their sales funnel. This approach not only increases the perceived value of existing products but also attracts customers looking for the latest AI functionalities, driving additional revenue streams.
In essence, companies can unlock substantial business value by creating robust AI-native technologies and integrating them into existing offerings. This strategy improves existing products and strengthens their position in the market, boosting growth in both new and existing customer segments.
How to Keep Up With Leading SaaS Trends
Embedded and AI-native companies are leading the charge in SaaS today. Things are moving so quickly that it can be tough to keep up, but it’s important to stay on top of all the changes coming to the industry to keep a competitive edge.
That’s why we break down what makes the most advanced digital marketing teams tick. Every week, we deliver in-depth articles uncovering the marketing secrets that so many companies try to keep hidden.
For some of our recent breakdowns, check out where we outlined the marketing strategies of Stripe, RingCentral, and 1Password.
