How AI pressure is making companies rethink cloud use

Increasing cloud prices are pushing Big Tech companies into a corner

The shift to the cloud and the consequent boom in the sector was held together by its grand promise that any company could digitally transform itself and keep its data secure on the cloud. But the cost of such transformation is rising, now boosted by a spate of generative AI tools added to the mix.

Big Tech companies with fat cloud bills are facing something of a catch-22 situation as they are unable to opt out for the fear of being left behind. So, they are looking at more ways to cut corners. 

Making in-house AI chips to cut costs

On 11 July, at a semiconductor conference in San Francisco, IBM said it was considering using its in-house AI chips to lower the costs of cloud computing. Mukesh Khare, a general manager of IBM Semiconductors, said in an interview with Reuters that the company may use a chip called the Artificial Intelligence Unit in its new enterprise AI platform Watsonx. Khare noted that this would solve one of the big pitfalls of its old Watson system - high costs, as their chip was more energy efficient. 

IBM took the hint from other tech giants like Google, Microsoft and Amazon, all of whom are designing their own AI chips, with the hope that they can save money on their AI push. Up until now, the pressure was on an even smaller number of specialised chips, such as graphic chips, or GPUs, from NVIDIA. But the scope is widening to accommodate demand. Microsoft has reportedly accelerated Athena, its project to design its own AI chips. The Satya Nadella-led company hopes to make its AI chips available within the company and OpenAI by next year. 

Meanwhile, in April-end, The Information reported that Google’s AI chip engineering team had moved to its Google Cloud unit to move things faster. If operating cloud data centres is expensive, clients themselves are also struggling with the soaring prices. 

Shift to on-premises