Intel Deal Shows Pull Of Artificial Intelligence -- WSJ
August 10 2016 - 3:03AM
Dow Jones News
By Don Clark
Technology companies are hurriedly snapping up startups in the
field of artificial intelligence, and Intel Corp. is the latest to
join a buying spree fueled by one of the hottest trends in the tech
sector.
The chip maker on Tuesday announced plans to pay an undisclosed
amount for Nervana Systems, a 48-employee company working on
semiconductors, software and services to exploit a popular AI
technique called deep learning.
Intel's move follows a deal disclosed Friday by Apple Inc. to
purchase Turi Inc., a Seattle-based specialist in the field. The
two acquisitions add to a string of 31 purchases since 2011 of AI
startups by large companies, according to venture-capital research
firm CB Insights. The firm lists buyers that include Alphabet
Inc.'s Google, Twitter Inc., Yahoo Inc., International Business
Machines Corp. and Salesforce.com Inc.
Factoring in smaller acquirers, PricewaterhouseCoopers LLP
counts 29 related acquisitions so far this year, suggesting the
total deal count for 2016 will top the 37 deals announced last
year.
"We are on a very swift and increasing pace," said Todson Page,
the consulting and accounting firm's U.S. technology industry deals
leader.
Industry executives link the deal activity to the rapidly
widening applications of AI, a broad term referring to ways to make
computers emulate attributes of the human brain. An initial cycle
of excitement about the technology arose in the 1980s and later
fizzled, but interest has boomed in recent years due to
breakthroughs in the field known as machine learning, especially in
the specific area of deep learning.
Instead of programming machines explicitly to, say, recognize a
human face, deep learning allows computers to learn to perform the
task by analyzing vast troves of images of faces. Apple, for
instance, uses deep learning to analyze speech commands issued to
Siri, the software used for a variety of tasks on iPhones. Other
applications include detecting credit-card fraud, interpreting
medical images, studying crop growth, and enabling drones and
self-driving cars to navigate.
"AI is about to transform industry after industry," said Andrew
Ng, a deep-learning pioneer who is chief scientist at Baidu Inc.
and an associate professor at Stanford University. Dollar figures
for the AI acquisition binge are hard to come by -- as are figures
for individual AI transactions -- because the big-tech companies
are swooping in on startups before they have built market
valuations of a size that buyers would be compelled to disclose.
The buyers need talent more than technology, Mr. Ng said, since
today's AI products quickly will need to be updated.Google, which
led its peers with nine purchases, according to CB Insights, mined
the AI research community in 2013 by buying DNNresearch, a company
helmed by the influential University of Toronto AI researcher
Geoffrey Hinton.Intel has special motivations. While its Xeon chips
handle most computing tasks in data centers, rival Nvidia Corp. has
popularized chips known as graphics processing units, or GPUs, to
more quickly handle specialized chores associated with deep
learning.
The following year, Google bought DeepMind Technologies Ltd., a
London-based startup founded by Cambridge University graduates that
some publications pegged at a price tag of more than $400 million.
The DeepMind team developed AlphaGo, the AI software that made
headlines earlier this year by defeating a South Korean master of
the game Go.
Apple helped to ignite the recent consumer AI boom following its
2010 purchase of the startup Siri. In buying Turi, the company
stands to benefit from the expertise of Chief Executive Carlos
Guestrin, who holds a University of Washington machine learning
professorship endowed by Amazon.com Inc.
Industry executives say an array of other companies feel a need
to counter AI results at younger companies such as Google and
Facebook Inc.
"They are arming up," said Matt Ocko, a managing partner at the
venture-capital firm Data Collective, which invested in
Nervana.
The pressures are particularly acute on companies that manage
vast amounts of images or sounds, said Greg Papadopoulos, a venture
partner at New Enterprise Associates, an investor in Turi.
Companies that don't step up activity through acquisitions, he
said, soon will face serious competitive threats.
Nervana, which divides its staff between the California cities
of San Diego and Palo Alto, has AI software that exploits GPUs but
also expects to deliver a chip next year it says can complete
deep-learning tasks even more quickly.
Jason Waxman, a corporate vice president in Intel's data-center
group, declined to say how it might use Nervana's chips. But Naveen
Rao, Nervana's chief executive and co-founder, said Intel had
unique manufacturing and technical expertise to help propagate the
startup's technology.
"No matter how much money we raised, we would not have access to
the same kind of technology as we will have at Intel," Mr. Rao
said.
Write to Don Clark at don.clark@wsj.com
(END) Dow Jones Newswires
August 10, 2016 02:48 ET (06:48 GMT)
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