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Although still in its early stage, Korea’s AI industry will make more prominent changes in people’s consumption patterns in the next year

Re-emergence of artificial intelligence

The term artificial intelligence (AI) was first coined by J. McCarthy at the Dartmouth Conference in 1956. Simply put, AI is technology that artificially creates human intelligence. The scope of AI study has continuously expanded, starting off with the notion of ‘computationalism’ to the more recent ‘connectionism’. Computationalism first emerged as people began to develop computers with the aim of creating machines capable of performing intellectual activities like human beings. However, there were many limitations, especially since machines are unable to communicate with humans. This later gave way to connectionism. As opposed to computationalism, connectionism argues that AI can construct artificial neural networks to imitate the human brain and continuously reduce human errors by identifying similar patterns. Connectionism has been instrumental in bringing about major achievements in the field of AI, including Google's AlphaGo, IBM's Watson and Apple's Cortana.

Changes in lifestyle due to AI

Artificial intelligence technology will naturally bring about changes in the way of life. First, it will change people’s consumption patterns and product marketing strategies. In the past, consumers decided to buy a product because of its functions but now, they do so because of the services offered by AI technologies. As a result, the service industry will become more important than the manufacturing industry. 

For example, when Apple and Google provide services for autonomous vehicles, the question will not be whether the car runs well on the road, but rather what kind of smart services can it provide for its users. In addition, focusing on electric vehicles can potentially open doors for other companies which do not have automobile engine technologies. Therefore, technological advancement of artificial intelligence will not only transform the industry, but corporate culture and consumption patterns as a whole.

Trends of major global companies

(IBM) IBM developed an artificial intelligence system called Watson. As of the first half of 2016, more than 3,500 partners are participating in developing Watson, and more than 270 applications are being commercialized. These major companies include ANZ (Australia), Bumungrad (Thailand), CaixaBank (Spain), Metropolitan Health (South Africa) and Red Ant. IBM is trying to formulate a Watson-centered ecosystem that can provide real-time data analysis services to users.

(Google) Google is developing AI technologies to upgrade its engine and develop new applications. Areas of application include home automation (Nest), automobiles (Google car), voice recognition (Google Now) and photo recognition (Google Photos). Google's ultimate goal is to become an artificial intelligence company itself. In order to develop its artificial intelligence engine, Google is focusing on securing relevant technologies mainly through the acquisition of start-ups in the field of recognition (video, face, gesture), natural language processing and machine learning (deep learning), while developing its own artificial intelligence engine.

(Apple) It wasn’t until recently that Apple established optimum grounds for technological development in the field of artificial intelligence. The company is now developing technologies only in specific fields such as virtual assistance and automobiles. Apple recently hired a large number of researchers (86 people) to integrate artificial intelligence into the field of personal assistance. It’s thus working hard to build a strong environment for technological development and securing technological competitiveness by acquiring start-ups like VocalIQ and Perceptio. In October 2015, when these two firms were acquired, Apple CEO Tim Cook said he would develop and integrate technologies only in the areas where they could prove to be competitive.

(Facebook) Facebook is developing technologies focusing on image, sound and natural language processing with a strategy to make the network smarter and more personalized. In December 2013, Facebook presented the possibility of applying artificial intelligence technology to its services by recruiting Professor Yan Le Cun from New York University, an eminent professor in the field of deep learning technology. The company acquired Wit.ai, a speech recognition startup in January 2015, and released a virtual assistant deploying AI technology “M” to the public in August 2015. Facebook is developing technologies largely focusing on drones, artificial intelligence and VR technology. It is also deploying strategies to make its social media applications available anywhere in the world.

To sum up the business strategies of major AI developers, there are three general trends: the support of enterprises, the strengthening of its own applications, and the exploring of new business domains. When it comes to supporting enterprises, IBM is the most well-known for developing various applications for Watson. The second strategy is to develop the company’s own applications. Google, Apple, and Facebook are following this strategy as they have developed or are developing a personal assistant service to captivate their users and to make them use their services at all times. Thirdly, the example of the business expansion strategy is Google and Apple’s attempt to develop autonomous vehicles. These companies are using artificial intelligence to explore a new business domain that they have never set foot in before.

Trends of Korean AI companies and 2017 market forecast

(Samsung Electronics) The company introduced 'S Voice', a smartphone application with voice recognition technology. It focuses on developing stable voice recognition technology which specializes in natural language processing. It is also developing technology with quality speech recognition, even in a noisy environment.

(NAVER) Through the use of artificial intelligence, NAVER currently provides users with various functions like N Drive and auto-completion. When users upload pictures in the cloud system, N Drive automatically classifies and places them in various categories like animal, food, and text. With the auto-complete function, certain search suggestions pop up on the search box as users type in the first few letters based on analysis of their past search results. Internet service providers (for portal, mailing, backup, etc.) such as Google and Apple are developing this technology as their core technology.

(Hyundai Motors) Since 2010, the company has aggressively expanded its development of autonomous vehicles. In 2012, it succeeded in developing a highway driving support system. Based on images, voice recognition and deep learning technology, the highway support system includes functions such as lane departure warning, lane keeping assistance, rear side warning, vehicle speed control and autonomous emergency braking.

(NCSOFT) NCSOFT established its own AI center, consisting of the artificial intelligence lab and the natural language analysis lab in 2012. In the artificial intelligence lab, researchers are finding ways to combine deep learning technology with the company’s gaming system to adjust the level of difficult according to the skills of the user. In the natural language analysis lab, researchers are mainly developing technologies converting recognized voice into text to facilitate NPC-to-user and user-to-user communication.

But it’s not only major companies that are developing their AI systems; SMEs and start-ups are as well. Although they have yet to commercialize their products, various SMEs and start-ups are developing technologies to apply AI and increase the efficiency of their applications. The number of SMEs developing AI technology is also increasing because there is demand from the government and big corporations. DIOTEK, Cldi, UBIC, KonoLabs, Lunit, Standigm, and MindsLab are newly-rising players and they are gaining attention in the market.

Prospects for domestic artificial intelligence industry in 2017

According to the Ministry of Science, ICT and Future Planning, which cited Hyundai Research Institute, the global AI market will grow from KRW 3.6 trillion (USD 3.1 billion) in 2013 to KRW 6.4 trillion (USD 5.4 billion) in 2017. KT Economic Management Research Institute predicted that the market will grow to KRW 27.5 trillion (USD 23.4 billion) by 2030. It is expected that the domestic AI market will increase following such global trends, but there will be no dramatic changes because the industry is still in its infant stage.

Revitalization plan

Although the government has initiated projects such as Exobrain and DeepView with an aim to develop core artificial intelligence technologies, there are still some hurdles to get through to revitalize the AI industry. First, more diverse participants should participate in the process of developing technologies. This will not only increase supply but also demand for relevant technologies. Second, more efforts should be put on creating a code of ethics or moral standards for artificial intelligence, as opposed to the primary focus having been put on developing applications. Third, unnecessary regulations should be adjusted or eradicated in advance.

By Wang-hun Seok
Electronics and Telecommunications Research Institute (ETRI)
whseok@etri.re.kr