IBM’s $10 billion bet on what comes after AI

**SPEAKER_1** (0:01)
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**Arvind Krishna** (2:23)
I'll say something provocative.
I think foundation models are going to become commodities. I think that right now, the token price on all of these is going to go way up. It just has to to justify the capital investments.

**Bob Safian** (2:37)
That's Arvind Krishna, CEO of IBM, and he has a strong metaphor for current AI systems that are just not the right size for all uses.

**Arvind Krishna** (2:47)
I guess you could, for those in the suburbs, take your kids to school in an 18-wheeler every morning.
You could go milk shopping in an 18-wheeler. Then you'd ask yourself, is it really the most effective vehicle for that? I think right now we're using the 18-wheeler for everything.

**Bob Safian** (3:04)
This is Masters of Scale. I'm Bob Safian, your host. IBM is playing a distinctive role in the AI race, not building AI models, but betting on how best to use them, and on what comes after them. In this conversation, recorded in front of a live audience as part of New York Tech Week at IBM's Manhattan HQ, we dig into why Arvind thinks most enterprises are using an 18-wheeler for every task. Plus, what kind of risk-taking businesses need to take right now, how to think about cost versus benefits when implementing AI, IBM's big bet on quantum computing, and much, much more.
Please welcome to the stage IBM Chairman and CEO Arvind Krishna.
Arvind, first of all, thank you for hosting us at your house. We're together as part of New York Tech Week. IBM is a New York institution. It is a global institution. As a company, it's had to continually reinvent itself, from mainframes to PCs and consulting and Cloud, and now AI and on the cost of quantum computing. How do you think about staying fresh as tech moves and are there things about IBM's legacy that are an advantage versus what isn't an advantage?

**Arvind Krishna** (4:35)
Yeah. Look, the advantage is client intimacy, knowing your clients. The advantages are around trust. I don't think we have knowingly ever done anything wrong with a client's IP or data or people.
Those are advantages. I think our people are incredibly technically adept. I would say they're experts in the areas where they have spent time and energy. So those are all the advantages. Now, technology keeps changing.
I'll be the first to acknowledge, sometimes we are really good at predicting where it's going to go, and we get ahead of the wave and do that. You mentioned a few of those. The mainframe certainly, but this is now 60 years ago was one of them. I would say the IBM PC may have been another one of them. I think embracing Java in the Internet era was another great one. And then you sometimes miss them.
It's not for actually lack of knowledge. You miss them because the business model doesn't align. You don't quite know how to get the investments and returns to come together. I would say public cloud is one of them, kind of like, that we missed. I would actually turn around and say despite inventing the IBM PC, client server was another one that we missed. So I think it comes into, you could probably miss some.