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AI Meets ROI: Where Artificial Intelligence Is Already Smart Business

Decades of research and billions of dollars have poured into developing artificial intelligence, which has crossed over from science fiction to gameshow novelty to the cusp of widespread business applications. Artificial intelligence is an area of computer science where computers are designed to think and operate much like a human brain, supported by advanced forms of computing and software. But it’s only as smart as the amount of information fed into its memory banks. The more information, the smarter it gets. The greatest advancements have been demonstrated in the area of game playing, but AI is now showing its mettle in the business world. “People are starting to kick the tires, looking to see how it can help their business and the bottom line,” said David Schubmehl, who follows the AI field for research firm IDC. “The return on investment evidence is not yet clear, but it’s starting to happen.” Facebook ( FB ), Alphabet ( GOOGL ), IBM ( IBM ) and Nvidia ( NVDA ) are among tech leaders with big artificial intelligence ambitions. “We’re starting to see a lot of companies beginning to use different types of AI tech for various uses,” said Schubmehl. “We’re also seeing a lot of venture capital money flowing in and a lot of acquisitions taking place.” IBM, which may have the deepest AI investments and most far-reaching ability of any company, has pitched “cognitive computing” as a tool for businesses via its cloud-based Watson platform. Facebook is using AI to decipher the best ways to bring Internet service to remote areas of the world and to make its News Feed feature more relevant to users of the social network. Alphabet is using it to enhance Google search abilities, improve voice recognition and to derive more data from images and video. Nvidia has developed chip technology for AI platforms used in autonomous driving features, and to enhance how a driver and car communicate. Alphabet,  Mobileye ( MBLY ) and others also are tapping AI in the race for driverless cars. It’s not enough to have Google Maps loaded up: A self-driving system must identify potholes, weather conditions, traffic congestion and other drivers’ behavior — improvising and improving on the fly. AI: Ready, Chess, Go Artificial intelligence, a term coined in 1955, was popularized when IBM’s “Big Blue” became the first computer to beat a reigning world chess champion, Gary Kasparov, in 1997. IBM won again in 2011, when its Watson computer on “Jeopardy!” outsmarted the game show’s two top players ever. Last October, an AI computer beat a three-time European champion in the ancient Asian game of “Go.” AphaGo, built by DeepMind, part of Alphabet’s Google, beat Fan Hui by 5 games to 0, the first time a computer program has ever beaten a professional Go player and a feat thought to be a decade away. On Tuesday, AlphaGo won the first game vs. Lee Sodol, who is ranked No. 5 in the world. Tuesday’s match shows that AlphaGo has made big improvements since beating the No. 633 ranked Fan Hui last year. Google paid $400 million to acquire DeepMind in 2014. But despite rapid advances, artificial intelligence is still in the early stages of business deployment. “A lot of what AI is being used for today only scratches the surface of what can be done,” said Babak Hodjat, co-founder and chief scientist at Sentient Technologies . “It will become so ubiquitous that we won’t even call it AI anymore.” AI Picks Out Your Shoes Sentient emerged from stealth mode in late 2014 with a massively distributed AI platform that companies can use to boost performance. As shoppers at Shoes.com  browse through photos of shoes and click on ones they like, Sentient’s technology narrows the selection, so people don’t get overwhelmed by choices. There’s no need for text-based searches or drill-down navigation, said Hodjat. The AI technology deciphers what shoppers are looking for, letting them quickly dive deeper into a catalog to find the perfect item that might otherwise go undiscovered. “We’ve revolutionized the user experience on an e-commerce website,” said Hodjat. “It’s a huge change in the way users interact with products online and therefore drives conversion.” Sentient has received $143 million in venture capital funding, the most of any AI startup, according to research firm CB Insights. Since 2010, AI startups have received $967 million in funding.  Intel ( INTC ) alone has invested in 16 AI companies, including  Saffron Technology . Saffron says its platform “mimics the fundamental principles of how humans remember and learn.” In a case study on its website, Saffron helped an insurer to identify fraudulent auto insurance claims. Over 10 weeks, Saffron examined 113,000 claims from one year in one state and found three potential fraud rings. It then detected that these rings were part of a larger ring involved with 38 claims, of which the insurance company had paid out about $400,000 in claims. Saffron was able to collect data that identified relevant and unknown relationships, including different providers, demographics and injury descriptions, creating a knowledge store that had never been done before. Saffron forecasts that the insurer can avoid a payout of tens of millions of dollars a year. AI goes by terms such as machine learning and deep learning. IBM calls it cognitive computing. In October it launched Cognitive Business Solutions, with 2,000 consultants skilled in data analytics, cloud computing and other areas. More than 500 companies have deals to use Watson, as a cloud service, to develop commercial products, apps and services. Turner Broadcasting on Feb. 29 signed a deal to use Watson in its ad sales efforts. The  Time Warner ( TWX ), unit owns TBS, TNT and CNN. Using IBM Watson, Turner expects to parse through all manner of data to help draw in more advertisers and provide them with greater impact. Watson Can Predict Low Blood Sugar Watson Health is a platform for physicians, researchers, insurers and other companies focused on health and wellness. Medtronic ( MDT ) is collaborating with IBM on personalized care for people with diabetes. By analyzing patient info and data from Medtronic devices, Watson can predict low blood sugar programs three hours in advance. Artificial intelligence is all about using advanced technologies to help develop brainy reasoning from disorganized information — unstructured data — to derive accurate decisions. “What we’ve done with all our research is to really understand how to add unstructured data to a decision,” said David Kenny, general manager of IBM Watson. Unstructured data comes from a multitude of sources that is not organized. It can be the data bits from photos, medical images or video and audio transmissions. It can be the tons of data that flows in from cameras or sensors in buildings or smartphones, from Web traffic, tweets, inside emails, government filings or business documents. The more information an artificially intelligent computer can digest the smarter it gets. Today The Weather, Tomorrow… Collecting data on a massive scale is among the reasons IBM acquired several Weather Co. properties, including Weather.com, Weather Underground and mobile and cloud-based assets, for a reported $2 billion in October. IBM will be able to analyze data from more than 2 billion weather reference points, over 40 million smartphones and 50,000 airplane flights per day, letting it offer a broad range of data-driven products and services to more than 5,000 clients in the media, aviation, energy, insurance and government industries. IBM said it can provide predictive weather analytics along with real-time analysis of social media chatter, detailed understanding of transportation flows and other data that will benefit retailers and distributors. The Weather Co. assets will serve as the foundation of a new Watson unit focused on the Internet of Things (IoT). Early this year, IBM announced that it would invest $3 billion to build out IoT products and services. “The more we do this, the smarter Watson gets and the smarter AI gets,” said Kenny. As to why AI is becoming more widespread: “It works,” Kenny said. “Users of AI are saving time and money. They’re making faster decisions and getting better outcomes.” An analysis of Facebook and Alphabet’s Google by research firm Innography shows a surge in AI patent filings that began in 2010. Alphabet currently has more than 3,000 AI patents that are active or pending government approval. Facebook has about 870. AI Knows Where You Live Facebook last June opened an artificial intelligence lab in Paris with a goal of improving the way users interact on the world’s largest social network. “It’s our hope that this research will ultimately help us make services like News Feed, photos and search even better and enable an entirely new set of ways to connect and share,” Facebook said at the time. It also has AI research teams at its Menlo Park, Calif., headquarters and in New York. Facebook in February revealed its Connectivity Lab project. It used AI to analyze 8.3 million square miles of land, using roads, schools and other structures to determine where and how many people live in a given area. That can tell Facebook’s Aquila drones where to go to provide Internet access to less-developed areas, as part of the company’s Internet.org initiative. “This data will give us a greater understanding of how populations are dispersed, so governments and others can prioritize investments in infrastructure, from transportation to healthcare and education,” Facebook said.

Artificial Intelligence A Job Killer? Software Developers Fear So

Software developers fear that the rise of artificial intelligence might take away their jobs. That came out as the top worry of the biggest percentage of respondents to a survey of 550 software developers, conducted by research firm Evans Data. In the survey, 29% of the engineers agreed with the statement that their top fear is “I and my development efforts are replaced by artificial intelligence.” This was more troublesome than their software platform becoming obsolete, which was the second-most-cited worry at 23%, or that the new platforms they’re focusing on fail to gain market acceptance, at 14%. According to the survey, the thought of obsolescence due to AI also was more threatening than becoming old without a pension, being stifled at work by bad managers or by seeing their skills becoming irrelevant. While the developers who worried about AI were found across industries and platforms, one strong correlation was that they were more likely to self-identify with being loners rather than team players. Decades of research and billions of dollars have been poured into the development of artificial intelligence, which is quickly expanding from the tech elite to the smallest startups. Facebook ( FB ), Alphabet ( GOOGL ) and IBM ( IBM ) among other tech leaders have big ambitions for pushing the envelope of artificial intelligence. Facebook is using AI to decipher the best ways to bring Internet service to remote areas of the world and to make its News Feed feature more relevant to users of the social network. Alphabet is using it to enhance Google search abilities, improve voice recognition and to derive more data from images and video. IBM, which has perhaps the deepest investments and most far-reaching ability of any company in the field, now offers AI services through its cloud-based platform, used by companies to improve business decisions and operations, based on its Watson cognitive computing platform. More than 500 companies have deals with IBM to use Watson cloud services to develop commercial products and apps. Since 2010, AI startups have received $967 million in funding, according to CB Insights. Among the most active investors is Intel ( INTC ), which has invested in 16 AI companies.

Booming RSA Pits Security Rivals IBM, CyberArk, Palo Alto Networks

SAN FRANCISCO — CyberArk ( CYBR ) CEO Udi Mokady surveyed the crowd. A man decked in a traditional Native American headdress passed the booth — his movement highlighted by the nearby fire-truck-red semitrailer that  Fortinet ( FTNT ) rolled in as its booth, and Palo Alto Networks ‘ ( PANW ) towering blue signage. Tweeted photos show a bright orange fox touting social media security firm ZeroFOX. Open-source manager Black Duck Software handed out “No ducks” T-shirts. And the entire event was overshadowed by a Terminator-Darth Vader mash-up mascot. “A lot of CEOs don’t even walk the floor,” Mokady told IBD at the annual cybersecurity RSA Conference in San Francisco’s Moscone Center convention hall. “But there are a lot of meetings that set the tone for the year, (there are) relationships happening behind closed doors.” If the RSA Conference sets the tone for the cybersecurity industry , 2016 will be marked by roaring noise — mostly in marketing. But execs tend to agree the overarching themes for the year will center on technological leaps and possible collaboration. Platform, Platform, Platform “Platform” is a buzzword for a reason, Needham analyst Scott Zeller wrote in a research report after Palo Alto Networks last month crushed Wall Street’s Q2 expectations. The broad-based platform approach works in security. But Palo Alto wasn’t the only vendor lauding its platform-centric approach at the RSA Conference. An overwhelming majority of companies — IBM ( IBM ), FireEye ( FEYE ) and Fortinet included — touted their platforms. Consumers are confused, Fortinet threat researcher Derek Manky told IBD. That’s where third-party testing comes into play. Fortinet calls it a “security fabric,” which integrates Fortinet’s firewall with threat intelligence data from FortiGuard researchers. “We can say how good we are, but there are a lot of third-party vendors that are doing validation of security,” he said. A recent test by NSS Labs ranked Fortinet’s FortiGuard 3200D and Check Point Software Technology ‘s ( CHKP ) 13800 NGFW Appliance as top products, blocking 99.6% of all exploits. The lab examined 13 leading products comprising 96% of the next-generation firewall market. Palo Alto Networks’ PA-7050 scooted in with 95.9% effectiveness, trailing a Juniper Networks ( JNPR ) offering and two Cisco Systems ( CSCO ) products with a respective 98%, 96.5% and 96.3% scores. Confusion is lending itself to the advent of software-as-a-service (SaaS) offerings, former iSight Partners CEO John Watters told IBD. FireEye acquired iSight in January for $275 million and retained Watters and much of the iSight leadership team. Watters sees SaaS making a play for the platform market. “The big trends line is customers are moving from best-in-class niche product to best-in-class platform,” he said. “And they’re moving from a self-serve model to an as-a-service model.” That shift benefits FireEye. New FireEye-as-a-Service billings nearly doubled in 2015 vs. 2014, CFO Michael Berry told analysts during the company’s Q4 earnings conference call in February. Data Sharing … Or Not Palo Alto Networks, Fortinet, Intel ( INTC ) Security and Symantec ( SYMC ) are leading a sector push to share threat intelligence data across the map. In 2014, the quartet became odd bedfellows in a security collaboration dubbed “the Cyber Threat Alliance.” Davis Hake, Palo Alto Networks director of cybersecurity strategy, told IBD the group’s goal is to reduce the noise generated by low-level, easy-to-launch attacks. “We take that data back out, and we work to democratize it with the rest of the security community,” he said. “It allows us to understand, across the community, attackers’ game plans against all of these other entities.” Palo Alto Networks CEO Mark McLaughlin, on the company’s recent earnings call, said the days of monetizing threat data are over. A company’s value stems from its overall platform, he says. Watters disagrees: “All the people that are driving sharing are people who don’t have a bunch of intellectual property,” he said. “Everybody is filling up each other’s in-boxes with all the same stuff. It’s all the machine-generated event data.” ISight fits into a detection hole in FireEye’s model, he explained. “We detect … everything that leads up the time they hit enter on the keyboard,” he said. “As soon as they hit enter, we went blind because we didn’t have attack surface monitoring.” FireEye’s incident response leg, Mandiant, sees the attack itself, watching how hackers escalate privileges, jump firewalls and burrow through systems. ISight detects the attack prep and follows the fallout on the black market. That intelligence is proprietary, Watters said. Because of that, FireEye doesn’t need to reboot its software every several years; the software is updated every hour. Fortinet makes a similar boast, noting its FortiGuard research updates systems every five minutes. Big Data, Internet of Things and AI Artificial intelligence (AI) won’t look like Haley Joel Osment in the 2001 Steven Spielberg flick. Rather, machine-learning will be bolstered by data-heavy Internet of Things devices, Sol Cates, chief security officer for encryption specialist Vormetric, told IBD. The trend could boost the chip sector. Tesla Motors ( TSLA ) partner Nvidia ( NVDA ) forged alliances with Facebook ( FB ) and Chinese Internet major Alibaba ( BABA ) during Q4 for speedy intelligence chips, Nvidia CFO Colette Kress said during last month. Just as “platform” is a commonplace buzzword, so too are Big Data, the Internet of Things and the cloud, Cates says. But they’ll also be integral to future technology — and that’s either a boon or a bust for the cybersecurity industry. AI generates two big questions for the sector, Cates said. “How do we protect the sensitive data going in? And how do we harness it for security?” he asked. The problem is, the cybersecurity industry often trails innovation. “We have to figure it out after the fact, and we’re not yet experts on it.” IBM, which just acquired Resilient Systems , plans to push machine-learning to accelerate automated penetration testing, Marc van Zadelhoff, the company’s security general manager, told IBD. Penetration testing — purposefully probing a system for vulnerabilities — will become more and more necessary in the security world as the BYOD (bring your own device) trend opens more endpoints. Gemalto exec David Etue argued during an RSA lecture that software updates could right the likely-to-occur wrongs as the cybersecurity sector tackles the Internet of Things market. “If we get this right, this puts us in a position for long-term success,” he said. Fortinet’s Manky says wrangling the Internet of Things and protecting Big Data will be more complicated than that. Industry experts estimate 20 billion-30 billion Internet-capable devices will come online in the next four years. “That generates a lot of noise, and there’s a lot of traffic, you need to inspect all of that,” Manky said. “Anything and everything is a target now. … If you think of any device that has an Internet connection, it’s got memory, it has a processor and a connection, and that’s all hackers need to go after (it).”