Generative AI, Microsoft Updates, Gen Z Consulting Dilemma, AI Overbuilding, Vision Pro Review

[00:00:02] [SPEAKER_00]: It's Thursday, August 22nd, 2024, and I'm Dave Sobel.

[00:00:06] [SPEAKER_00]: Four things to know today.

[00:00:08] [SPEAKER_00]: Generative AI nears the trough of disillusionment Gartner warns of ROI and maturity challenges.

[00:00:15] [SPEAKER_00]: Microsoft sets a September 30th deadline for API migration and updates their services

[00:00:20] [SPEAKER_00]: agreement for 2024.

[00:00:23] [SPEAKER_00]: Windows Recall AI feature returns.

[00:00:25] [SPEAKER_00]: As Microsoft prepares an October preview after security delays and

[00:00:31] [SPEAKER_00]: Consulting's Gen Z Dilemma is the industry losing its long-term appeal.

[00:00:37] [SPEAKER_00]: This is the Business of Tech.

[00:00:41] [SPEAKER_00]: I'm a sucker for the Gartner hype cycle.

[00:00:44] [SPEAKER_00]: Gartner's 2024 hype cycle emphasizes the importance of enterprises strategically adopting

[00:00:50] [SPEAKER_00]: emerging technologies like autonomous AI and human-centric security.

[00:00:55] [SPEAKER_00]: Generative AI is positioned at the peak of inflated expectations urging organizations

[00:01:01] [SPEAKER_00]: to assess their ROI and maturity before deployment.

[00:01:05] [SPEAKER_00]: The hype cycle identifies four emerging technology themes, autonomous AI, AI augmented software

[00:01:12] [SPEAKER_00]: development, total experience, and human-centric security.

[00:01:17] [SPEAKER_00]: The total experience concept aims to enhance customer and employee interactions.

[00:01:22] [SPEAKER_00]: Human-centric approaches in cybersecurity advocate for a culture of trust and adequate

[00:01:28] [SPEAKER_00]: training.

[00:01:29] [SPEAKER_00]: The report also addresses the need for realistic expectations regarding autonomous AI technologies

[00:01:35] [SPEAKER_00]: and promotes tools to enhance developer productivity, stressing that technology should harmonize

[00:01:41] [SPEAKER_00]: with human capabilities.

[00:01:43] [SPEAKER_00]: And according to data presented by Stocklytics.com, by 2030, generative AI is projected to account

[00:01:50] [SPEAKER_00]: for over 40% of the total AI industry market size, growing from $36 billion this year to

[00:01:57] [SPEAKER_00]: $356 billion.

[00:01:59] [SPEAKER_00]: The user base for generative AI tools is expected to reach nearly $730 million,

[00:02:05] [SPEAKER_00]: with significant growth driven by investments from major tech companies and increasing

[00:02:10] [SPEAKER_00]: global interest.

[00:02:11] [SPEAKER_00]: While the U.S. will remain the largest market, China's generative AI industry

[00:02:16] [SPEAKER_00]: is set to grow by 903%, fueled by government support and a vast consumer base.

[00:02:24] [SPEAKER_00]: But generative AI is projected to be less profitable than previous tech waves, with

[00:02:29] [SPEAKER_00]: RBC analysts estimating gross profit margins could drop from 75% to around 60% due to

[00:02:36] [SPEAKER_00]: high development and operational costs.

[00:02:39] [SPEAKER_00]: Despite this, they anticipate that the revenue from AI-powered software could double

[00:02:45] [SPEAKER_00]: potentially leading to higher absolute profit dollars, even with lower margins.

[00:02:52] [SPEAKER_00]: Why do we care?

[00:02:53] [SPEAKER_00]: Generative AI is on the way down.

[00:02:55] [SPEAKER_00]: I may be early to think it's in the trough of disillusionment, but Gartner is placing

[00:03:00] [SPEAKER_00]: it just about to enter.

[00:03:02] [SPEAKER_00]: So regardless of in or about to, the backlash is real.

[00:03:07] [SPEAKER_00]: The key is that this is normal.

[00:03:09] [SPEAKER_00]: Podcast listeners will get a great discussion about this from the live show,

[00:03:14] [SPEAKER_00]: Dropping Tomorrow in the Feed.

[00:03:16] [SPEAKER_00]: Thus, the key is finding the most useful use cases and matching solutions to customer

[00:03:21] [SPEAKER_00]: needs.

[00:03:22] [SPEAKER_00]: I'm intrigued by the RBC data about profitability.

[00:03:25] [SPEAKER_00]: I'm doubtful this will impact services revenue, as good advice is still good advice.

[00:03:31] [SPEAKER_00]: Let's be aware, particularly as this might impact vendor strategies if they have to

[00:03:36] [SPEAKER_00]: drive more volume.

[00:03:39] [SPEAKER_00]: Today's episode is supported by Huntress.

[00:03:42] [SPEAKER_00]: You want to focus on your clients and are always looking for ways to get more time.

[00:03:48] [SPEAKER_00]: Use Huntress' fully managed cybersecurity platform to fight off cyber threats.

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[00:04:25] [SPEAKER_00]: Visit huntress.com slash MSP radio to find out more.

[00:04:32] [SPEAKER_00]: Some Microsoft warnings.

[00:04:33] [SPEAKER_00]: Microsoft has warned partners to migrate to the new Application Programming Interface,

[00:04:39] [SPEAKER_00]: or API, by September 30th to avoid service disruptions, as less than 20% have completed

[00:04:45] [SPEAKER_00]: the migration.

[00:04:47] [SPEAKER_00]: The low adoption rate is concerning, as failing to update could impact billing

[00:04:51] [SPEAKER_00]: reconciliation.

[00:04:52] [SPEAKER_00]: The new API offers faster download times and reduced latency and will replace four

[00:04:58] [SPEAKER_00]: older APIs.

[00:04:59] [SPEAKER_00]: Partners are encouraged to seek assistance if they encounter challenges during the

[00:05:04] [SPEAKER_00]: migration process.

[00:05:06] [SPEAKER_00]: And starting in October 2024, Microsoft will require all Azure customers to enable

[00:05:11] [SPEAKER_00]: multi-factor authentication to enhance security and reduce account compromise

[00:05:15] [SPEAKER_00]: risks.

[00:05:17] [SPEAKER_00]: Notifications will be sent to customers to prepare for the change, which is part

[00:05:21] [SPEAKER_00]: of Microsoft's Secure Future initiative.

[00:05:24] [SPEAKER_00]: Organizations can choose from various MFA options, but those facing challenges

[00:05:28] [SPEAKER_00]: can request additional time.

[00:05:31] [SPEAKER_00]: Certain tools will not require MFA until early next year.

[00:05:36] [SPEAKER_00]: And Microsoft's updated their services agreement, effective September 30th, 2024,

[00:05:41] [SPEAKER_00]: emphasizing that its AI services are not substitutes for professional advice and

[00:05:46] [SPEAKER_00]: outlines data extraction and reverse engineering restrictions.

[00:05:49] [SPEAKER_00]: The agreement clarifies that Xbox users may need to share data with third party

[00:05:54] [SPEAKER_00]: platforms.

[00:05:55] [SPEAKER_00]: It includes specific terms for AI services, prohibiting harmful activities and usage

[00:06:01] [SPEAKER_00]: for creating other AI services.

[00:06:04] [SPEAKER_00]: Additionally, it addresses mass arbitration for disputes involving

[00:06:08] [SPEAKER_00]: multiple customers.

[00:06:10] [SPEAKER_00]: Why do we care?

[00:06:12] [SPEAKER_00]: Well, a bunch of Microsoft warnings are all very tactical, yet important to

[00:06:16] [SPEAKER_00]: process the relevant ones for you.

[00:06:19] [SPEAKER_00]: Mid Journey's AI Image Generator website is now open to everyone for free,

[00:06:26] [SPEAKER_00]: allowing users to create up to 25 images without charge.

[00:06:30] [SPEAKER_00]: Previously, users had to generate images through Discord, which was

[00:06:33] [SPEAKER_00]: considered cumbersome.

[00:06:35] [SPEAKER_00]: The new website simplifies the process, enabling users to sign in with

[00:06:39] [SPEAKER_00]: Google or Discord and access a history of their generated images.

[00:06:43] [SPEAKER_00]: It features an easy-to-use interface with sections for exploring others'

[00:06:46] [SPEAKER_00]: creations, creating new images and editing them.

[00:06:50] [SPEAKER_00]: After the free trial, users can choose from various paid plans for

[00:06:54] [SPEAKER_00]: continued access.

[00:06:55] [SPEAKER_00]: And it's back!

[00:06:57] [SPEAKER_00]: Microsoft will release a preview of its Windows Recall AI feature in

[00:07:01] [SPEAKER_00]: October for Windows Insider users after delaying it due to security

[00:07:06] [SPEAKER_00]: concerns.

[00:07:07] [SPEAKER_00]: Recall captures screenshots at short intervals to help users query

[00:07:11] [SPEAKER_00]: their history.

[00:07:12] [SPEAKER_00]: The feature will be off by default unless activated during setup,

[00:07:17] [SPEAKER_00]: that Microsoft emphasizes security as a top priority.

[00:07:22] [SPEAKER_00]: Why do we care?

[00:07:23] [SPEAKER_00]: Well, you knew it was coming back.

[00:07:25] [SPEAKER_00]: That Recall feature wasn't cancelled, so heads up, it's coming back.

[00:07:29] [SPEAKER_00]: I also wanted to highlight Mid Journey.

[00:07:31] [SPEAKER_00]: Unless an organization gives guidance on AI via some level of

[00:07:34] [SPEAKER_00]: governance, don't be surprised if you see more AI-generated images

[00:07:38] [SPEAKER_00]: and that it's all a complicated mess of copyright.

[00:07:44] [SPEAKER_00]: And time for some big ideas.

[00:07:46] [SPEAKER_00]: My YouTube community polls tell me this is a popular segment.

[00:07:50] [SPEAKER_00]: Let me know.

[00:07:51] [SPEAKER_00]: I'd love to hear from you what you value in the show.

[00:07:54] [SPEAKER_00]: There's a survey on YouTube.

[00:07:56] [SPEAKER_00]: I had to know more.

[00:07:57] [SPEAKER_00]: Business Insider with Consulting has a Gen Z problem.

[00:08:02] [SPEAKER_00]: Gen Z consultants increasingly view consulting as a temporary

[00:08:06] [SPEAKER_00]: stepping stone rather than a long-term career, driven by high

[00:08:10] [SPEAKER_00]: pressure work environments and a desire for meaningful engagement.

[00:08:14] [SPEAKER_00]: Many young professionals are seeking fulfillment beyond the prestige

[00:08:17] [SPEAKER_00]: and stability that consulting offers, often planning to transition

[00:08:21] [SPEAKER_00]: to more impactful roles after gaining experience.

[00:08:25] [SPEAKER_00]: The shift in focus from benefits to workplace culture reflects a

[00:08:29] [SPEAKER_00]: broader trend among this generation who prioritize work-life balance

[00:08:33] [SPEAKER_00]: and personal passion in their careers.

[00:08:36] [SPEAKER_00]: And for the second time this week, I'm focusing on Tanay's newsletter,

[00:08:39] [SPEAKER_00]: and this one is Overbuilding in AI, a Modern Twist on an Old Tale.

[00:08:45] [SPEAKER_00]: The article discusses major tech companies' significant capital

[00:08:48] [SPEAKER_00]: investments in AI infrastructure, highlighting a potential

[00:08:51] [SPEAKER_00]: overbuilding trend reminiscent of past investment booms.

[00:08:56] [SPEAKER_00]: While companies like Google, Amazon Meta, and Microsoft are

[00:09:00] [SPEAKER_00]: overbuilding, they acknowledge the risk of overbuilding but

[00:09:05] [SPEAKER_00]: prioritize the fear of underinvestment.

[00:09:08] [SPEAKER_00]: Unlike previous cycles, today's AI boom features stronger demand

[00:09:13] [SPEAKER_00]: signals, flexible infrastructure, and concentrated investments among

[00:09:17] [SPEAKER_00]: a few major players, which may mitigate some risks.

[00:09:21] [SPEAKER_00]: However, the article cautions that overbuilding can still lead to

[00:09:24] [SPEAKER_00]: significant challenges if demand does not keep pace with rapid

[00:09:28] [SPEAKER_00]: expansion.

[00:09:30] [SPEAKER_00]: And a review, Matthew Ball with 9 takeaways from the Vision Pro

[00:09:35] [SPEAKER_00]: after 6 months.

[00:09:37] [SPEAKER_00]: After 6 months, the Apple Vision Pro is primarily viewed as a

[00:09:41] [SPEAKER_00]: VR headset with limited AR capabilities, excelling in entertainment

[00:09:46] [SPEAKER_00]: but facing significant drawbacks such as weight, comfort, and

[00:09:50] [SPEAKER_00]: high price.

[00:09:52] [SPEAKER_00]: Developer investment remains low and few native apps available.

[00:09:56] [SPEAKER_00]: While the device showcases advanced technology, it has not yet

[00:10:00] [SPEAKER_00]: proven to be a necessary replacement for existing devices like

[00:10:04] [SPEAKER_00]: laptops or smartphones.

[00:10:06] [SPEAKER_00]: The Vision Pro's launch has influenced competitors to reconsider

[00:10:09] [SPEAKER_00]: their strategies, but widespread adoption remains uncertain,

[00:10:13] [SPEAKER_00]: highlighting the challenges head-mounted devices face in

[00:10:16] [SPEAKER_00]: becoming mainstream despite Apple's entry into the market.

[00:10:21] [SPEAKER_00]: Why do we care?

[00:10:22] [SPEAKER_00]: Does consulting have a new problem?

[00:10:24] [SPEAKER_00]: I didn't think this was new.

[00:10:26] [SPEAKER_00]: Some use consulting to get experience before moving to other roles.

[00:10:30] [SPEAKER_00]: I consider consulting a valuable skill, and so I'll note that

[00:10:34] [SPEAKER_00]: building career paths here is critically important.

[00:10:38] [SPEAKER_00]: If someone can find applications for the Vision Pro, it will be

[00:10:41] [SPEAKER_00]: a winner, but so far, no takers.

[00:10:46] [SPEAKER_00]: Today's episode is supported by CoreView.

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[00:11:30] [SPEAKER_00]: Visit coreview.com slash MSP and find out more.

[00:11:36] [SPEAKER_00]: Thanks for listening.

[00:11:37] [SPEAKER_00]: Today is National Tooth Fairy Day.

[00:11:39] [SPEAKER_00]: It's also National Burger Day.

[00:11:41] [SPEAKER_00]: We're going to celebrate that second.

[00:11:43] [SPEAKER_00]: Have a question you want answered?

[00:11:45] [SPEAKER_00]: I take those listener questions, send them in, ideally as a

[00:11:47] [SPEAKER_00]: voice memo or video, to question at mspradio.com.

[00:11:50] [SPEAKER_00]: I answer and listen to our questions live each week on our Wednesday

[00:11:54] [SPEAKER_00]: live show this coming week, 3 p.m. Eastern, YouTube and LinkedIn.

[00:11:58] [SPEAKER_00]: This weekend, my interview with Jonathan Romley about

[00:12:01] [SPEAKER_00]: international hiring, and you'll be surprised by his

[00:12:05] [SPEAKER_00]: recommendation to not do online job postings.

[00:12:09] [SPEAKER_00]: Plus, in the podcast feed, the live show for Wednesday with

[00:12:12] [SPEAKER_00]: Ryan Morris and Seth Robinson as we talk AI bubble and

[00:12:15] [SPEAKER_00]: SaaS pricing models.

[00:12:17] [SPEAKER_00]: And if you've got a comment or a thought on a story, put it

[00:12:19] [SPEAKER_00]: in the comments if you are on YouTube or reach out on

[00:12:21] [SPEAKER_00]: LinkedIn if you're listening to the podcast.

[00:12:24] [SPEAKER_00]: And the number one thing you can do to help share with a

[00:12:27] [SPEAKER_00]: colleague.

[00:12:28] [SPEAKER_00]: Have a great weekend.

[00:12:29] [SPEAKER_00]: Talk to you on Monday.

[00:12:32] [SPEAKER_00]: The Business of Tech is written and produced by me,

[00:12:34] [SPEAKER_00]: Dave Sobel under ethics guidelines posted at

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[00:13:09] [SPEAKER_00]: Once again, thanks for listening to me.

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