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The chatbot blew our minds away when it first appeared over a year ago. Conversing with AI felt like the dawn of a new era, seeing them confuse complex ideas, as if they were human in the next room. However, the state of development has since been fragmented in an interesting way.
Despite all the excitement and billions of things being devoted to AI development, where are there truly transformative applications? While Apple, Microsoft, and Meta have been in over a year to integrate AI into ecosystems, the biggest breakthrough in AI equals incremental improvements in existing products. Microsoft put the chatbot in words. Meta has put one on Instagram. Apple’s flagship AI project? Delayed Siri upgrades that have not arrived yet.
Instead, there are independent developers who are racing, writing and deploying the entire software application, autonomously managing their investment portfolio, and building AI agents that can generate real-time content in a completely new format. The most meaningful innovations are not happening within Big Technology. It’s happening on the edge between the poor builders who see AI as the basis of something completely new, rather than as an additional feature.
Corporate resources are not a substitute for innovation, and protecting the moat is a dangerous strategy in the middle of technological change. Today’s major tech companies are behind, giving the ground to more agile, imaginative and uninterrupted challengers, slowing them down by internal complexity.
Big Tech has everything you need to beat AI, but it’s not the case
Apple, Microsoft, and Meta have almost endless resources, an armed forces of engineers, and the world’s largest AI research budget. On paper, they should rule the AI revolution. Instead, their AI strategy looks like a patchwork fix. Rather than building something radically different, they are fundamentally trying to horn shoes into existing product lines with new technology.
I’ll take the apple. The company that once revolutionized personal computing, mobile phones and digital payments is now struggling to offer SIRI timely, AI-powered upgrades. Although we have data, talent and resources, we cannot integrate AI into our ecosystem in a meaningful way.
Microsoft, Meta, X, and other tech heavyweights likewise throw power and corporate resources on AI, but they all come up with chatbots, which are the same application.
All of this does not suggest that these companies are satisfying or disregarding the more innovative use of AI. Microsoft has deep integration of AI into productivity software, Google has built it into searches, and Apple is rumoured to develop AI-powered device processing. But their approach is cautious and designed to add to what is already there rather than building something entirely new. They are fundamentally defensive moves, trying to maintain an existing empire rather than accepting the unknown. And they’re making serious mistakes.
In-service can be as much a hindrance as its advantages
Known for its iconic origins, all of the pioneers of dotcom are growing. Mark Zuckerberg is no longer a college dropout wearing a hoodie that disrupts the internet with a crude startup. He is a big name for the company that runs one of the world’s largest advertising empires. Once moving fast and breaking things, Facebook has slowly become cautious and reactive. This is a company that is trying to narrow AI into existing business models rather than building something fundamentally new.
And history is clear. The slow adaptation is how the giant falls.
Yahoo had every opportunity to dominate the Internet, but it dismissed search as a secondary feature and failed to recognize its central role in the early online economy. Google did a serious search and built an empire around it.
Microsoft was an uncontroversial leader in software, but dismissed smartphones as a niche market. By the time we realised the mistake, Apple and Google had already split the mobile world, and Windows Phone was dead upon arrival.
IBM was once the gold standard in computing and underestimated the rise of cloud architectures. Amazon quietly built AWS on the backbone of the internet, but IBM focused on enterprise hardware and services.
It has now been founded by the founder of high-tech, which we once idolised as rulebreakers and destroyers. They’re making the same mistake. AI is not just another feature that is bolted to words, Instagram, or Siri. This is a whole new paradigm. It calls for new business models, new interfaces, and new ways of thinking.
True AI innovation is driven by unconstrained things
Some of the most compelling and innovative AI applications have not emerged from expensive R&D labs. These are built by a small team of developers who ship products over the weekend. These developers have not added AI to existing products. They are building a whole new product with AI at its core.
There are tools that allow you to autonomously trade and manage your crypto portfolio, generate interactive lessons in seconds in any subject, and spin up full stack web apps from a single prompt. And more and more, developers are embracing the unexpected strengths of AI: improvements, humor and surprises.
One outstanding example is AI Dungeon, a web-based game in which AI tells a developmental story based on player prompts. Generate characters, plot twists, generate environments in real time, and adapt to all user interactions. This is a case study of what dynamic and user-driven content looks like on the AI-first Internet.
The other is Scenecraft. This is a tool that allows tabletop game masters to generate narratively consistent fantasy scenes from a few lines in their story setup. When used by players in games like Dungeons & Dragons, it helps you immerse yourself in visual arts, character design, Lore (all in real time, custom built worlds. Not an AI layer on top of existing game engines or productivity suites. This is a whole new type of product that emerges from the creative possibilities of AI itself.
This type of experiment is reminiscent of the early app store era, which reflects the early internet era. In both cases, what began as strange experiments, virus hits, and floods of personal projects laid the foundation for an entirely new platform. What seemed like a play was, in hindsight, the beginning of an earthquake change.
And that’s the point. The freedom to scale, align with roadmap, or explore ideas that don’t need to serve your existing customer base is exactly what creates space for these projects to open new ground.
AI won’t win by companies stuck in the past
Every technical shift brings new class winners. Previously, Pivot had elevated companies like Google, Amazon, Facebook, and others like Yahoo and IBM had struggled to adapt to the rapidly evolving landscape. The smartphone revolution dominated Apple and Android, and Microsoft, Nokia, and BlackBerry could not adapt.
The same goes for AI. The companies that truly define this era are not old security guards. They will become crude and relentless newcomers building AI native products that have not been devastated by attitude from the past.
