| Constellation Research

UiPath adds AutoPilot generative AI to its automation platform: Here's what it means

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

UiPath launched Autopilot, which melds generative AI, domain specific AI and its automation platform, to automate work via natural language. The launch adds to the automation platform push at UiPath that's well underway as the company aims to shed its image as a robotics process automation (RPA) company.

On the surface, UiPath Autopilot is YAGAIA (yet another generative AI announcement), but if you zoom out a bit you'll see what the vendor is trying to do. The short version: UiPath plays in process mining, RPA, task mining, automation across multiple domains and optimization and if you roll all of those things up you get a platform. That platform can create business value.

To UiPath CEO Rob Enslin the company's narrative is a spin on the platform always wins theme. Autopilot aims to further that narrative and position the company to be a more AI at work play. UiPath is betting that there will be process and automation focused generative UI use cases that will remain above the foundational model commoditization. Autopilot capabilities include generative AI experiences for developers to create workflows and build automations, target business users and enable faster testing of automation.

Customers cited in UiPath's press release noted that Autopilot within the company's automation platform can consolidate various copilots and systems, so they act in concert to follow business and process rules. For good measure, UiPath is adding its UiPath Trust Layer, which will govern data and interactions with generative AI and large language models.

As Constellation Research analyst Andy Thurai noted, UiPath wants to be between you and generative AI. Enslin added that UiPath isn't an RPA company but an AI at work company. In an interview with Diginomica's Jon Reed, Enslin noted UiPath is a business automation platform with a complete stack of tools to discover processes, automate them and then optimize from there.

UiPath is also working with ERP giants like SAP, which is a big partner, and has connectors to multiple enterprise systems. The company will also connect you to Amazon Bedrock and multiple generative AI connectors. Enslin wants UiPath to be more than the sum of its parts. Sure, UiPath process mining is running at Colgate, Verizon and Pfizer, but it's the expanded platform that's driving the benefits. The problem? Every vendor wants to be an automation platform.

Nevertheless, UiPath is well on its way to be seen as something bigger than RPA. Indeed, UiPath said it will start to sell and market an iPaaS offering in 2024 that will include the following:

The company's library of connectors, templates and accelerators.
Delivery options for Automaton Suite in multiple regions.
Data mapping and transformaton capabilities.
API design, creation and management tools.

These two slides from UiPath's recent Investor Day lay out the automation narrative, which is bigger than generative AI. For UiPath, generative AI provides semantic capabilities to the broader automation platform.

In the end, UiPath has to sell its narrative to CXOs. Don't count Enslin on this one given his sales history at Google Cloud and SAP. UiPath sells business outcomes and returns to CXOs. With process, task and document mining along with automation, UiPath can generate some heady returns for customers. The company prioritizes financial services, healthcare, manufacturing, and the public sector.

For its part, UiPath is planning to become more efficient, move customers to a cloud model and keep sales and marketing expenses at about 30% to 35% of revenue on a non-GAAP basis. And UiPath plans to leverage its SAP partnership and gain wallet share with its platform.

Add it up and UiPath's Autopilot launch isn't groundbreaking but spins the company's broader narrative forward. Now it just has to get buy-in from CXOs.

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Adobe Max 2023: Firefly's new model, GenStudio and everything announced

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Adobe launched a new model behind its Firefly generative AI image system and outlined GenStudio, which is a suite that will enable enterprises and marketers to better manage the content supply chain.

Although those two items were among the headliners at Adobe's Max conference in Los Angeles, the company launched several new enhancements, products and services with generative AI layered throughout the company's portfolio.

The company made its case that creativity is the new productivity and will take a huge leap due to generative AI, which will enable creatives to explore possibilities, scale and personalize experiences.

More: Adobe raises Creative Cloud prices, adds generative AI credits | Adobe Firefly heads to enterprises, Adobe Express | Adobe reports strong Q3, ups outlook for Q4

Not surprisingly, Firefly and generative AI was a common theme for Adobe at Max. The new Firefly Image 2 Model provides enhanced photographic quality with higher resolution and colors and improves human rendering. Firefly Image 2 Model is available today at Firefly's site and roll out to Creative Cloud apps.

Firefly Image 2 Model will also enable generative match, new photo setting and prompt guidance. Adobe also outlined Firefly Vector Model, which provides the highest quality output for vectors used in logos, website graphics, product packaging and icons, Generative Match, which matches output with existing brand styles, and Firefly Design Model, which is generative AI for template designs.

Adobe added that Firefly models will also play a big role in GenStudio. For instance, teams can customize Firefly with branded assets and automate and integrate custom models in Creative Cloud workflows.

GenStudio is Adobe's enterprise play to improve the content supply chain. Adobe's plan is to move manual processes to AI and automation, connect workflows across silos, democratize content creation and be transparent.

Research: Connecting Experiences From Employees to Customers | Constellation ShortList™ Digital Experience (DX) Platforms | Constellation ShortList™ Content Management System (CMS) – Hybrid | Constellation ShortList™ Digital Asset Management (DAM) for High Volume Commerce

The company said GenStudio brings together applications across Adobe's portfolio including Creative Cloud, Express and Experience Cloud. Firefly and Adobe Experience Manager Assets are also included along with other applications.

Here's what Adobe GenStudio is hoping to do:

Scale content creation with generative AI including ideation, creation and editing.
Minimize manual tasks for creatives and automate production.
Use models to customize content to brands.
Automate workflows and handoffs.
Improve collaboration.
Provide metadata across the content cycle.
Minimize waste and centrally manage approved assets.
Give enterprises insights on performance.

To accomplish those goals, Adobe said GenStudio will be available in modules to cover workflow and planning, creation and production and delivery and activation. All modules will have an analytics engine. GenStudio is available now.

Adobe deployed GenStudio internally and said it saw an 83% decrease in time spent packaging content and an 88% decrease in time spent activating content. Amit Ahuja, senior vice president, Digital

Experience Business at Adobe, said GenStudio "can take tasks that would normally take hours or days down to minutes."

Here's a selection of other Adobe announcements at its Max conference.

Adobe Experience Manager Sites gets updates to be better equipped as an enterprise content management system. Adobe said Experience Manager Sites has performance improve to boost search rankings, traffic and conversions, tools to optimize web content and experiment. The platform also simplified its authoring tools and enabled marketers to drag and drop Microsoft Word and Google Doc content and layouts into Experience Manager Sites.
Creative Cloud gets more than 100 new features with Illustrator, Photoshop and Stock adding Firefly features and web-based workflows. Other apps including Lightroom, Premiere pro and After Effects will get AI features.
Illustrator will get Text to vector Graphic capabilities via Firefly. Other Illustrator additions include Mockup and retype.
Adobe Express will use Generative Fill and Text to Template. Aside from a bevy of new features in Express, Adobe said the software will have an integration with Wix for web pages. Adobe will also make Express available on Google Chromebooks.
Premiere Pro users can publish videos directly to Instagram, Facebook, YouTube and TikTok.

Constellation Research's take

Constellation Research analyst Liz Miller said:

"While much of the world is launching their first go-round of generative AI tools, Adobe is introducing a significant evolution of the Firefly portfolio of models with Firefly 2. The quality of output from Firefly is truly impressive with more detail, clarity and accuracy with every prompt. But it should also be noted that while the models are being refined to improve output, the business model is similarly being updated and upgraded to answer some of the significant business, ethical and creative concerns the market has. From creator and artist protections to content authenticity data to ensure availability for enterprise use, Adobe is focused on making this new ago of AI creativity positive for creators and users alike.

Adobe has also applied AI tools in smart places, helping creatives, marketers and business users alike be more efficient, effective and authentic. While it might sound trite, for a team to take hours of mundane work off their plate while simultaneously giving space for new paths to creativity to emerge is game changing. AI has revitalized so many creators who can now unleash their ideas in entirely new mediums. Adobe fully intends to stay ahead of that turn.

Adobe's differentiator has always been in the capacity to redefine and reapply creativity, be it through artistry or through portable document formats. The next step will be Adobe bringing these communities of creativity and connecting them in the name of profitable, durable growth."

Looking ahead

Adobe also showcased 11 early-stage innovations that revolved around generative AI. The prototypes may not make it to be commercial offerings but give Adobe's engineers and researchers to highlight their work.

The headliner at Adobe Max Sneaks was Project Stardust, an object aware editing engine. Project Stardust gives users the ability to select, edit and delete elements in any image. You can select people in a photograph, move them to a different place and fill in the background where they were standing. Elements like clothing can also be changed.

Other select innovations highlighted include:

Project See Through, an AI tool that makes it easy to remove reflections from photos.
Project Fast Fill, which takes Firefly to video with the ability to add, remove and expand content with text prompts. This tool, available in Photoshop now, would be added to Adobe's video applications.
Project Dub Dub Dub uses AI to improve video dubbing and automatically translate an audio track to a supported language.
Project Poseable, which takes an image generation model that can interact with 3D objects including poses from photos of real people.
Project Draw & Delight, a suite of generative AI tools that can take an initial doodle or scribble and turn it into polished and refined sketches. Users can then experiment with colors, styles and backgrounds.

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Boomi Steps Up on Automation and AI as Integration Demands Evolve

Doug Henschen

Former Vice President and Principal Analyst
Constellation Research

Doug Henschen is former Vice President and Principal Analyst where he focused on data-driven decision making. Henschen’s Data-to-Decisions research examines how organizations employ data analysis to reimagine their business models and gain a deeper understanding of their customers. Henschen's research acknowledges the fact that innovative applications of data analysis requires a multi-disciplinary approach starting with information and orchestration technologies, continuing through business intelligence, data-visualization, and analytics, and moving into NoSQL and big-data analysis, third-party data enrichment, and decision-management technologies. Insight-driven business models are of interest to the entire C-suite, but most particularly chief executive officers, chief digital officers,…...

Boomi says customers want more than integration from integration platform as a service (iPaaS) providers. Automation and AI headline next steps unveiled on the Boomi World Tour.

Boomi unveiled its evolved “Intelligent Integration and Automation Platform” on October 3, with the intelligent part being Boomi AI. It’s an advancement over the company’s existing artificial intelligence capabilities, but the headliner in Boomi AI is the addition of, you guessed it, generative AI capabilities.

The announcements, made in Silicon Valley during the first stop of the five-stop Boomi World Tour, marked the first big strategic moves spearheaded by Boomi CEO, Steve Lucas, who took the helm of the company in late 2022. Lucas previously served in executive roles with iCIMS, Adobe, SAP and Salesforce, so he’s used to leading companies in competitive enterprise markets. The change in leadership came 18 months after Dell’s 2021, $4 billion sale of Boomi to private equity firms Francisco Partners and TPP Capital.

During his keynote, Lucas emphasized that integration alone is no longer enough for organizations to overcome “digital fragmentation.” Of course, Boomi is no stranger to supporting more than application and data integration, having added Flow (workflow and automation), API Management, Master Data Hub, and Data Catalog & Preparation components to its platform over the years. But Lucas is driving the company to do more. Several customers I spoke to at the event echoed Ken Maglio of customer World Wide Technology, who said, “He seems to have lit a fire a under everyone's feet to lead the industry.”

Boomi CEO Steve Lucas announces the ‘Intelligent Integration and Automation Platform’ to kick off the Boomi World Tour.

A recent step toward broader and deeper iPaaS capabilities was Boomi’s June 2023 release of Boomi Event Streams. The new message queueing and streaming service manages and monitors event-driven connections through a unified user interface, enabling customers to sense and respond to sudden changes in execution, performance, risks and customer opportunities.

Boomi is also no stranger to AI and machine learning (ML), having introduced Boomi Suggest, an ML-based integration recommendation feature, way back in 2010. It added Boomi Resolve, a predictive assistance feature, in 2014. This spring, Boomi added Boomi Quick Start, a no-code, question-and-answer-based approach to building application and data integrations and automating business processes. All three features leverage the de-identified knowledge graph of more than 200 million integrations handled on Boomi’s cloud-based platform over the past 20 years.

Boomi AI, last week’s big announcement, brings together Suggest, Resolve and Quick Start into a broader AI platform that now also includes Boomi GPT. Built on a composable AI framework that can swap in and out the models that best fit. Examples of open source LLMs include LLaMA, LLaMA2 and others, as well as other advanced ML models and techniques. Boomi GPT will enable users to generate and explain new integrations and automations through natural language interactions. On the roadmap is enabling Boomi GPT to generatively document and explain existing integrations on the Boomi platform -- a useful addition for times when integrations or automations were developed by people who have since left the organization.

Boomi GPT is generally available today through a new Pro-AI Edition of the Boom Platform. Additional Boomi AI capabilities including Autonomous Orchestration, Autonomous Management and Special Connectors are set for release through a separate Enterprise – AI Edition of the platform set for release some time next year.

Boomi detailed 2023 platform composability, democratization and visibility and control improvements including the introduction of Event Streams and Boomi GPT.

As the many GenAI announcements made this year demonstrate, any software vendor can access open source LLMs and cloud compute capacity. Indeed, several iPaaS vendors have made GenAI announcements in recent months. So how do such offerings stand apart?

Boomi’s AI will be differentiated, said Ed Macosky, Chief Product Officer, because the vendor can train AI models (on a private, internal cloud) against its massive, de-identified knowledge base of more than 200 million integration patterns. It’s a dynamic resource that will support continuous optimization, as integration points and pipelines and automation patterns constantly evolve.

Constellation’s analysis. In Constellation’s view, having more data will absolutely give vendors with more customers and longer history AI advantages, but before this year, generative AI features weren’t even on customer radars. Many customers I talked to were cautious about GenAI adoption and more excited about enhancements announced by Macosky on platform scalability and performance, and new security compliance certifications. Macosky also peaked a lot of interest by pre-announcing a lightweight, no-code Task Automation product (with mobile capabilities shown in a demo), which Boomi plans to release in early 2024.

Leaders and fast followers looking for productivity gains will undoubtedly try out Boomi GPT right away. More conservative customers might take a wait-and-see approach. Boomi was clear in portraying Boomi GPT and its broader AI capabilities as being aimed at augmenting humans and adding more potential users, not replacing them. And it was clear from the demos that AI-suggested Quick Starts and Boomi GPT-generated integrations and automations will be starting points that will need the final touch of human review and approval before being put into production.

Where AI meets iPaaS is concerned, it’s all about doing more integration and automation work in a shorter time so teams can get more done and move on to the next project.

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What's good for customers won't thrill Wall Street

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Zoom Video Communications held its annual Zoomtopia conference, rolled out a series of generative AI capabilities across its platform and made it clear that it all about reinventing work with tools like Zoom Docs as well as customer experience. What was missing? Talk about add-ons for Zoom's AI Companion, price increases, monetization strategies and ways to get more money out of customers.

If Zoom's analyst Q&A was any indication, Wall Street isn't thrilled about delivering value without charging more. Wall Street is hooked on this concept of $30 extra a month per user for generative AI features.

The abbreviated list of questions went like this:

What is your monetization strategy and where can we expect incremental revenue?
How do you monetize virtual agent vs. human agent capabilities in Zoom Contact Center?
How can the company monetize and upsell Zoom One?
GPU costs aren't cheap so what's the plan for pricing AI Companion?
Please explain the decision to offer AI Companion at no additional cost relative to the competition.

See a theme here?

Zoom executives didn't exactly alleviate concerns about monetization. Customers, however, are happy that Zoom isn't prematurely gouging them. For adoption, Zoom's approach to refrain from add-ons isn't a bad idea. The company said nearly 30,000 companies have enabled AI Companion so far.

CFO Kelly Steckelberg said the AI products recently announced are free. Regarding Zoom Docs, the company will outline monetization closer to general availability.

As for Zoom Contact Center, Steckelberg added that Contact Center is sold on a per seat basis and Virtual Agent is based on queries. "They're priced according to bring value to the customer," she said. Features like AI Expert Assist for Contact Center could be monetized at some point, but that's separate from AI Companion.

Zoom One is a big opportunity, said Steckelberg, who noted that the bundle approach will see more traction as renewals come up. Zoom One Pro prices increased at the beginning of 2023.

On GPU costs, Steckelberg noted that Zoom outlined that it expected gross margins to fall a bit due to "the computing power we are continuing to acquire."

Zoom's Mahesh Ram, Head of AI Applications, addressed the elephant in the AI room for software companies. He said:

"When you listen to the customers intently, you hear what they're saying. And I think what we were hearing from customers was, if you make AI a premium offering, then I have to choose between the haves and the have-nots. And we see generative AI as being something that's just part and parcel of everyday work and collaboration.

If you have a 20,000, 50,000 employee workforce company and you're having to think about $30 a month, you're making decisions that are probably not in the best interest of your business.

We want to make Zoom the platform of choice. We want to make it as valuable to every employee as possible in every business. As you start talking to customers, there's a collective sigh of relief."

The upshot here is that Zoom is playing a long game with customers and that the future benefit is vendor consolidation. Workday is playing a similar game and Adobe’s generative AI pricing seems fair, but the club of vendors not focusing on add-ons is small. As vendors go add-on happy, CIOs are going to look to consolidate costs and vendors. That outcome will only benefit platform plays like Zoom that held back from the add-on pricing frenzy.

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Cybersecurity confession parade led by Clorox, MGM, Caesar's Entertainment

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Companies hit by cyberattacks in the last quarter are detailing the financial hits with earnings on tap and rest assured there will be more disclosures to come. Clorox said it will see a big sales hit in its first quarter. MGM said it will incur costs of $100 million due to a data breach in September. And Caesar's reportedly paid ransomware to avoid a hit to its results.

The trio of disclosures is likely to be just the start. In July, the Securities and Exchange Commission adopted rules requiring public companies to disclose material cybersecurity incidents and report annually on risk management, strategy, and governance.

With the new regulatory requirements, it's possible that the quarterly confessional season will be as much about cyberattacks as earnings and revenue growth.

Here's a look at three recent incidents and the financial hits involved.

Clorox

Clorox quantified its sales hit due to a cyberattack--a fiscal first quarter loss and a sales decline ranging between 28% to 23% compared to a year ago. In the first quarter of a year ago, Clorox reported revenue of $1.74 billion. Based on Clorox's first quarter guidance sales will fall in a range between $1.25 billion and $1.34 billion.

As previously disclosed in a regulatory filing, Clorox was hit by a cyberattack disclosed in August hampered production. Business was on track leading up to the cyberattack. Because of the attack, Clorox had to restore its systems and manually take orders. On Sept. 25, Clorox began transitioning to automated order processing.

Clorox said in a statement that sales will be down significantly and well below the mid-single digit growth previously outlined. The company is now projecting a loss between 75 cents a share and 35 cents a share. In the first quarter of a year ago, Clorox delivered earnings of 68 cents a share.

According to the company, it expects "to experience ongoing, but lessening, operational impacts in the second quarter as it makes progress in returning to normalized operations." Clorox said it may benefit from retailer restocking. Clorox said it will update investors on the cyberattack impact for the rest of the fiscal year.

MGM

MGM said that it suffered an attack on Sept. 11 and discovered the incident on Sept. 29. The high-profile attack forced MGM to go with manual customer facing processes.

Ultimately, MGM said it took a $100 million hit in the quarter. The attackers got information ranging from phone numbers, names, addresses, data of birth and driver's license numbers. A limited number of customers had Social Security numbers and/or passport numbers stolen.

MGM said it has put safeguards in place and the damage was confined to September. MGM said in a regulatory filing that the impact from the cyberattack is about $100 million for its Las Vegas resorts. The company also saw impacts to occupancy through its app and website but has mostly recovered. In addition, MGM had one-time expenses of $10 million in the third quarter due to the attack to cover consulting services, legal fees and third-party advisor expenses. That $10 million is likely to be covered by cyberinsurance.

Caesar's Entertainment

Caesar's Entertainment disclosed an attack due to a "a social engineering attack on an outsourced IT support vendor used by the company."

The company said that it detected the attack and contained the breach. On Sept. 7, Caesar's determined that the attackers acquired a copy of the company's loyalty database, which included driver's license numbers as well as Social Security numbers.

According to Caesar's the financial hit should be limited, but there will be expenses going forward to remediate. However, Caesar's reportedly paid a $15 million in ransomware to avoid any customer disruption, according to CNBC.

Caesar’s attack happened in the same time frame as MGM's breach.

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HOT TAKE: NICE Picks Up Proactive Outbound with a Side of CCaaS

Liz Miller

Vice President & Principal Analyst
Constellation Research

About Liz Miller: Liz Miller is Vice President and Principal Analyst at Constellation, focused on the org-wide team sport known as customer experience. While covering CX as an enterprise strategy, Miller spends time zeroing in on the functional demands of Marketing and Service and the evolving role of the Chief Marketing Officer, the rise of the Chief Experience Officer, the evolution of customer engagement, and the rising requirement for a new security posture that accounts for the threat to brand trust in this age of AI. With over 30 years of marketing experience, Miller offers strategic guidance on the leadership, business transformation, and technology requirements to deliver on today’s CX strategies. She has worked with global marketing organizations to transform everything from…...

The pre-holiday shopping specials must still be hot because the acquisition news keeps rolling, this time with NICE Systems, announcing its intent to acquire LiveVox, a San Francisco-based Contact Center as a Service (CCaaS) platform that has differentiated itself thanks to AI-powered proactive, outbound engagement capabilities. This is especially important as contact center and service look beyond their norms of tech stacks with clear delineation between inbound and outbound systems to solutions that combine capabilities for a more holistic customer journey-driven experience strategy.

LiveVox cut its teeth on key points of intelligence including health industry and risk intelligence, evolving into a robust communications solution that combines a customer relationship management (CRM), workforce optimization (WFM), omnichannel communications and a broad portfolio of AI-powered assistants, bots and models. There’s even an outbound dialer, cloud PBX and hardware offering to keep an eye on. Integrated into NICE’s open, flexible comprehensive customer engagement platform.

What We Know About the Deal: Growth Positive

According to press releases issued by both companies, this deal has been approved by both boards and will see LiveVox stockholders will receive $3.74 in case per share of LiveVox common stock, placing the estimated value of the deal around $350 million. This is a sharp departure from 2021 when LiveVox was merged into a SPAC valued at over $850 million. Based on recent earnings details from LiveVox, the company has been operating at a loss, which over the past year has narrowed. NICE CEO, Barak Eilam, believes this move gets the market one step closer to the promise of smart conversational AI with NICE. “In joining forces with LiveVox we now have the strongest and broadest proactive outreach portfolio,” Eilam noted in the release. “The era of Digital Engagement is already here and we are excited to enable organizations to propel their Digital Engagement and Conversational AI forward. In joining forces with LiveVox we now have the strongest and broadest proactive outreach portfolio.”

NICE notes that the deal should be cash flow positive and accretive to NICE’s operating income, operating margin and non-GAAP EPS during 2024. The deal is expected to close in early 2024.

What It Means for NICE: Expands the Scope of Communications and Engagement

This acquisition picks up a collection of outbound tools which will allow NICE customers to include proactive points of engagement to their customer journey workflows, not to mention a CRM alternative. This will also be a boon for existing LiveVox customers looking to take advantage of the NICE portfolio of business ready AI tools around automation ranging from robotic process automation (RPA) that can automate mundane tasks that benefit agent productivity to journey orchestration capabilities that will be critical to connect inbound and outbound engagement strategies, workflows and proceses…which again highlights the importance of that CRM offering to keep that close.

It's also important to note that LiveVox brings a customer portfolio that will expand NICE’s footprint in the fast-growing midmarket, addressing Wall Street questions around how NICE can address a slowing market and growth trajectory.

The Bottom Line: Best Practices Will Be Critical

In the moment, this deal will be talked about as an expansion of AI-related capabilities. And yes, that is absolutely going to happen. But looking beyond the AI hypecycle, this also is a clear signal from NICE that the trend of collaborative dynamic communication as the center point for true, holistic CX that focuses on where and how the customer’s experience exists as opposed to where functions, departments of technology exists is the path to profit and growth. This new view understands that customers don’t identify departments…they just identify the contextual experience they want, expect and need. But, best practices that showcase where and how this dynamic customer collaboration can and should bridge the gaps between CX’s frontline of sales, marketing and service are needed now more than ever.

This also feeds into the conversation around what NICE could do as various strategic partners have launched their own CCaaS solutions. While those partnerships continue to be important for all parties, this new holistic offering provides customers a single stop for comprehensive customer communications.

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How Kinetic aims to transform digital EV repair, maintenance and aftermarket services

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Kinetic is a company aiming to transform the aftermarket for electric vehicles (EVs) with a business model that rhymes with cloud infrastructure-as-a-service.

The effort is worth watching since Kinetic blends physical and digital services as automobiles evolve from mechanical systems to digital ones that resemble data centers on wheels. Who is going to maintain and repair all those EVs? While charging infrastructure is an issue, maintenance and repair could be just as critical.

Kinetic, which raised $10 million in Series A funding from Lux Capital and Construct Capital as well as early-stage venture capitalists, has a bevy of big backers with experience with disruptive models as well as the auto industry. Kinetic will use the money to expand its engineering team and scale its Kinetic Hubs. The company has one service hub in Orange County, CA with another one planned to launch in Las Vegas.

I caught up with Kinetic CEO and Co-founder Nikhil Naikal to talk shop. Naikal previously was CEO of Mapper.ai, which was an end-to-end provider of high-definition machine-readable maps. That company was sold to Velodyne Lidar, which makes lidar sensors for autonomous vehicles, robotics and other industries. Here are the key points from the conversation.

The transformation of the automobile industry. The core thesis behind Kinetic is that the aftermarket for automobiles will have to transform from one focused on internal combustion to one focused on digital systems and sensors. "If you strip down an electric car, half of it is what it used to be--brakes, tires, steering column--the other half isn't the same. The drive trains are different, there's more compute, more sensors, more self-driving," he said. "The infrastructure that is needed for repair and maintenance is going to be rethought and reimagined just because of the makeup of these new cars."

According to the International Energy Agency there were 26 million electric cars on the road in 2022, up 60% from 2022.

The problem Kinetic aims to solve. Today, an accident involving an EV or sensor-heavy auto involves a car to an insurer, who then orchestrates a drop-off for repair and a rental car. The repair center returns the car to its original state physically, but then gets hampered by what Naikal calls "last mile digital aspects." These digital repairs and calibration of systems today often require a house call and potentially days where the automobile sits in a lot. The repair center may have to eat the cost of the rental car for repair delays. Simply put, today's digital repair last mile is akin to a doctor making a house call. Kinetics is more like an urgent care facility. "You can start working with us and be done in an hour," said Naikal, who noted that Kinetic will operate behind the scenes. "We see ourselves slotting into the existing framework and we work with existing collision repair centers and dealerships."

Kinetic's plan. With the opening of the company's hub--each hub is about 5,000 square feet and looks more like a clean room than an auto shop--Naikal said Kinetic will focus on sensor repair and safety systems. Automobiles have millions of lines of code and sensors have proliferated. Those systems also need repair, reprogramming and recalibration that require robotics, software and AI to fix. "We are providing physical and digital infrastructure and there's already a vibrant market," said Naikal. "You'd be hard pressed to find a car without adaptive cruise control or lane changing sensors. It's real business today."

As EVs and ultimately autonomous vehicles gain share, Kinetic's business will evolve, said Naikal. That decision is smart since EV domination may be delayed by charging infrastructure and other hurdles. "We made an early decision to start focusing on an aspect of vehicles that lies at the intersection of both ICE (internal combustion engine) and EV," he said.

Simply put, Kinetic's hubs will have plenty of work to justify a build out today since cars of all types are only getting more sensors and digital systems. Each hub will serve a 10- to 12-mile radius and service auto repair shops, dealers, collision centers and other auto aftermarket players who need digital servicing. Kinetic will charge based on consumption of services and the benefit to customers is a 60-minute repair turnaround. Kinetic's goal is to halve the cycle time from pickup to digital repair, calibration and return as it scales.

Business model inspiration. Naikal said Kinetic's model rhymes with infrastructure as a service player such as AWS. Kinetic is a B2B company that will enable dealers, manufacturers, auto repair shops and aftermarket companies transform. Kinetic's hubs are multitenant and save the food chain upfront costs to equip their facilities with digital repair services.

And like AWS, Naikal said Kinetic will continually add on services and evolve. "We do see the possibility of satellite locations and a shop within a shop approach to help consumers understand the digital system," said Naikal, who said a digital-based aftermarket for autos is inevitable. "There will also be an ecosystem of third-party applications." If successful, companies will be built that use Kinetic's infrastructure, added Naikal.

You could call Kinetic an EV aftermarket as a service company.

Data and digital twins. One of the more interesting aspects of Kinetic's model is the potential data play. Naikal said Kinetic is "reconstructing digital twins of the cars we capture." "The data in the vehicle itself improves the experience," he added. Indeed, Kinetic could be in a position to help automakers determine the wear and tear of a model after a few years or provide data the improves engineering processes going forward. Kinetic could also provide insights that inform future models from automakers.

"When cars come into our centers, we'd be capturing 4 to 5 million data points on the car and supporting an ecosystem," he said.

Challenges ahead. Naikal said much of the focus for Kinetic is on finding locations and scaling locations. There's also a supply chain element where Kinetic must procure robots and automation tools in advance. "We want to scale as fast as possible. So, I think that's one of the challenges. The second challenge, of course, is we're basically a software company and a last mile integrator of hardware," said Naikal.

What the digital automotive aftermarket may look like. Naikal said it's likely that car companies and consumers will look to upgrade memory, install new driving models and add localized features. And yes, the auto aftermarket will have to solve for battery swaps. "If in 5 years, the technology changes so you can extend range there should be the ability to slot that in," said Naikal. "This will require automation since you just can't change a 700-volt battery easily. It's going to look a lot like slotting in memory on a much larger scale."

Going forward, it's also possible that consumers will want to change the body of a car, said Naikal. How that model evolves with automakers remains to be seen. "We are trying to think about consumer pain points today and build with an eye on tomorrow," said Naikal.

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Clorox quantifies cyberattack: Q1 sales to tank

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Clorox quantified its sales hit due a cyberattack--a fiscal first quarter loss and a sales decline ranging between 28% to 23%.

As previously disclosed in a regulatory filing, Clorox was hit by a cyberattack disclosed in August hampered production. Business was on track leading up to the cyberattack.

Because of the attack, Clorox had to restore its systems and manually take orders. On Sept. 25, Clorox began transitioning to automated order processing.

Clorox said in a statement that sales will be down significantly and well below the mid-single digit growth previously outlined. The company is now projecting a loss between 75 cents a share and 35 cents a share. Adjusted earnings will range from a loss of 40 cents a share to breakeven.

Clorox said it will update investors on the cyberattack impact for the rest of the fiscal year.

Digital Safety, Privacy & Cybersecurity Security Zero Trust Chief Information Security Officer Chief Privacy Officer

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Google's Pixel Pro 8 will run foundational models on device

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Google launched its Pixel 8 Pro device and one of the main pitches beyond the usual software, camera and processor upgrades is that the device can run the company's foundational generative AI models locally.

Yes, your phone will be a little generative AI machine.

If you've been following any of the recent hardware launches the next battle is on device model processing. Amazon's Alexa event also had a heavy LLM spin, Apple touched on running AI and machine learning models locally and PC makers are betting (more like praying) that there will be an upgrade cycle due to model training. Microsoft's Surface event was really about a barrage of Microsoft 365 Copilot launches. Bottom line: Hardware launches are increasingly about the models, algorithms and generative AI behind the services.

Google's event to launch the Pixel 8 and Pixel 8 Pro carried the foundational model with hardware theme farther. First, Google's latest pixel phones will feature the Google Tensor G3, a new processor that will enable on-device speech recognition, an update to Magic Eraser to remove larger distractions with on-device models and provide summaries to recordings.

Google Assistant with Bard will also be available on the Pixel 8 line. In practice, you can take a picture of a sign at the beginning of a trail and ask for hiking recommendations. Assistant for Bard is rolling out to select testers.

Rick Osterloh, Google's Senior Vice President of the company's Devices and Services unit, said on-device generative AI capabilities mean no latency and better experiences and features. He added that the device unit worked closely with Google Research to distill foundational models, so they run efficiently on Pixel Pro 8.

"Google's generative AI models can run right on the phones you have throughout the day," said Osterloh. "We engineered Pixel 8 Pro to run Google's foundational models right on device. This leads to directly improved experiences."

To that end, Google said it will support 7 years of software updates for Pixel 8 and Pixel 8 Pro.

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Zoom expands reach, generative AI use cases with pricing that aims for market share

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Zoom Video Communications expanded its reach into project management with its Zoom Docs and expanded its use of generative AI through its platform.

At Zoomtopia 2023, Zoom rolled out a bevy of new features and use cases for AI Companion, its generative AI play for hybrid work. CEO Eric Yuan said work is evolving and Zoom plans to reinvent its platform to go with that change.

In a nutshell, Zoom has been systematically expanding its reach beyond its core video communications tools that made the company a verb. Zoom Docs is an example of how it is broadening its hybrid work reach. The company is also looking to become a go-to employee and customer experience platform.

The big question here is whether enterprises will consolidate collaboration and engagement platforms and choose Zoom. With Zoom's expansion, the company will bump into multiple players including Google and Microsoft as well as customer experience vendors.

In addition, Zoom has rolled out a pricing strategy with its Zoom AI Companion that could help it grab market share. Zoom isn't doing the standard $30 per user per month add-on approach with its AI tools. Zoom is also encouraging usage as it is adding Zoom AI Companion to Zoom Mail, Meeting, Team Chat and other areas. It's too early to see whether Zoom's generative AI pricing strategy pays off, but CIOs are likely to get sticker shock as add-ons add up.

Here's an overview of what Zoom announced at Zoomtopia.

Hybrid work and collaboration

Zoom Docs, which is an AI-powered workspace aimed at helping enterprises collaborate and mange projects. Although the name makes Zoom Docs sound like a collaborative document creator, Zoom argued that Zoom Docs will enable teams to manage projects, create wikis, tables, and tasks in addition to providing typical document functions. According to Zoom, Zoom Docs is an example of how AI Companion can be leveraged throughout the platform. Zoom Docs is tightly integrated with Zoom Meetings, which can use content summaries and documents to create docs. Zoom Docs will be generally available in 2024.

Zoom AI Companion will be able to generate and organize ideas in Zoom Whiteboard. Zoom added that it will expand the capabilities of its industry plays including healthcare and higher education.
Zoom's Workspace Reservation will add a feature called Wayfinding to reserve seats and make it easier for employees to find their desks when hoteling in an office.
My Office View in Huddles will get presence indicators and location information so employees know whether collaboration will be physical or in a virtual huddle.
Zoom Scheduler will get single-booking links and updates to incorporate unique schedules. Zoom Scheduler will be integrated into Salesforce.

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