I was reading the Dec 23/Jan 24 issue of Fortune magazine this morning and came across this article, “Cloud Giants Are Making It Rain for AI.” I found an interesting term coined in the article and the context within which it was coined. The term was “Cloud 2.0”.

Cloud 2.0, as defined in the article, is “…in which giants must compete based on how well their software, storage and other tools support AI”. While I like how the article suggests that AI is forcing cloud service providers to evolve their services, the definition, in my mind, can be tweaked a bit.

But before we do that, let us get into some additional insights shared in the article. The article discusses how leading cloud service providers have invested in AI startups. An example illustration from the article is below. However, the article looks at these investments from a pure infrastructure perspective, and this is where I believe it gets Cloud 2.0 wrong.

The article tilts towards an infrastructure focus, as one of the quotes highlights, “You could run Anthropic for one-third the cost of hosting OpenAI for GPT yourself.” The real advantage of partnerships goes beyond the hardware into the realm of collaborated innovation. And in my opinion, that is what Cloud 2.0 is about.

Few months ago, I wrote an article about ecosystems (From platforms to ecosystems). As organizations embrace Generative AI-based solutions, these partnerships, though at the core, mean that the models and solutions are hosted in the partner cloud, can also generate robust real advantages in the ecosystem. Irrespective of the service provider, having these models on their services will mean that these cloud providers can help generate innovative solutions that work in tandem with their own solutions.

Most of these leading tech companies have AI-enabled solutions that can work seamlessly with Generative AI models. In tandem with other solutions offered on these cloud services, client organizations will be able to build solutions that can be differentiating. And that will have a cascading effect as such innovations get marketed. More companies will try to attain these differentiating capabilities. That will be the true benefit of partnerships. That, in my opinion, is the true Cloud 2.0.