Luxury Institute: Edge AI Is The Future Of Personalized Luxury

Tuesday, 01. September 2020 14:30

NEW YORK, Sept. 01, 2020 (GLOBE NEWSWIRE) -- Artificial intelligence, primarily in the form of machine learning, has made great strides over the past decade. In order to serve the best interests of its luxury brand clients, the Luxury Institute has developed deep expertise in “Edge AI”. Edge AI is a recent innovation in artificial intelligence that operates inside each customer’s device, such as a smart phone or smart watch, without transferring personal data. The term “edge” is derived from the fact that individual devices live at the decentralized end of the AI ecosystem, as opposed to the cloud, which is at the center. Luxury Institute predicts that Edge AI will take the luxury industry by storm over the next decade. The security, privacy, personalization and cost advantages vs. Cloud AI, make Edge AI best suited for serving discerning affluent clients who demand privacy and security when they conduct high-value, high-risk, high-investment and high-emotion decisions and purchases. Eventually mainstream consumers will benefit from the luxury industry’s leadership too. Edge AI empowers private, secure, cheaper, real-time, highly-advanced personalization. Luxury Institute believes that luxury industry executives should be uncomfortably excited, yet inspired, about the high potential of Edge AI to enable them to build deep, trusted client relationships and enhance their business performance.

Business applications of Cloud AI, in particular, continue to grow. The progress has been fastest where no human personal data is involved. Industrial Cloud AI applications, where the sourcing of data is from non-human sources such as factories, tractors and aircraft engines, provide improvements in safety, reliability and performance. The most valuable form of data, human personal data, is being created by individuals at an accelerating exponential growth rate on a multitude of devices. Facebook, Amazon, Apple, Netflix and Google (FAANG) use Cloud AI to make predictions and recommendations to consumers primarily to influence purchases and/or consumption behaviors.

The standard methods of FAANG Cloud AI are to extract data from each user and gather it along with the data of millions of people in massive servers in the cloud, putting the data at high risk of cybercrime. Data scientists engage in high-cost, centralized model development, deploying the models on massive data center cloud servers. The models travel to the individual devices, make recommendations, and receive feedback. Companies of all kinds, inspired by the growing cloud services of the platforms, have adopted the Cloud AI way of machine learning. However, Cloud AI, even when outsourced, generates high data transfer and storage costs along with high cyber-security, legal and ethical risks for the companies that adopt it, while delivering marginally effective results. The downsides of using Cloud AI for consumers and ethical brands will only get worse in a more, and more, predatory digital world.

The new Edge AI model is like a perfect judo move that completely flips the Cloud AI model on its back. With Edge AI, the data never leaves the customer’s mobile phone, laptop or IOT device. Instead the algorithm travels to the device, and, by consent only, enters, trains, learns, predicts and recommends locally. Only the resulting insight, encrypted and scrambled with noise, goes to the cloud from each individual device to improve the model, benefitting all customers. Model updates occur continuously in a virtuous cycle of privacy, security, training, learning, prediction and personalization for each customer.

The Luxury Institute has thoroughly evaluated and distilled the attributes of Edge AI for its clients. CEO, Milton Pedraza, is an entrepreneur and avid private investor in the technology that is driving the rapidly emerging personal data economy. We know of no other consulting firm, luxury, or otherwise, that has accumulated this depth and breadth of operational personalization expertise. Pedraza has identified the five major advantages of Edge AI in order to help luxury brands drive advanced personalization for high performance:

1. Privacy is the default setting

With Edge AI, personal data never leaves the customer’s device. No one, besides the individual data creator, ever has access to the customer data. Privacy is the default setting. Even when the model-generated consumer insight is sent to a central server, it is encrypted and injected with a type of “noise” called differential privacy and homomorphic encryption that protect the customer’s identity. Bringing the algorithm to the data, instead of bringing the data to the algorithm, creates more than data privacy; it creates a high-level of data secrecy. This method not only meets the standards of any privacy law, in any country; it also meets the privacy standards that affluent consumers, who are highly concerned about privacy, duly expect from ethical luxury brands.

2. Cybersecurity is designed into the process

Edge AI decouples the need for doing machine learning with the need to store the data in the cloud. Since no data is amassed into a vulnerable central server, the cyber attack surface area is reduced, so it becomes almost impossible for hackers and cyber criminals to steal the sensitive data of millions of people in one fell swoop. Even the data scientists can never see, or touch, the individual data creator’s data, or identity. While hackers can attack one individual’s device, the highly distributed and decentralized state of the personal data across millions of devices makes it almost impossible that massive data hacks such as those at Equifax, Marriott, and Capital One will be attempted, or will succeed. The security and legal liability risk is reduced to almost zero.

3. Data access and model updates are continuous and real-time

With Edge AI, brands are bringing the computing process to the data inside the customer’s device. Only the insights that are generated by the algorithm are sent back to the central server for the model to learn from the collective feedback of millions of users, enhance the predictive power of the model, and send it back to individuals with improved predictions. Unlike Cloud AI projects, which are start and stop, and where data access is limited, Edge AI provides the brand seamless, continuous, legal access to the most relevant, richest, and up-to-date customer data. This ensures that the pattern recognition and prediction power of algorithms is always turned on to deliver customer value instantly. As one billion plus smartphones, equipped with advanced AI chips, and possessing greater computing power enter the market, powered by 5G, most machine learning models will be able to run locally continuously to benefit brands and customers.   

4. Cost efficiencies scale with use

The cost reduction benefits of Edge AI vs. Cloud AI are multiple. First, the processes and costs of acquiring the best data are minimized if the brand can go directly to the customer, establish verifiable trust, and continuously access the relevant data through an ethical exchange of value. There is no coercion, and there are no expensive third-party brokers involved. The legal terms and conditions of use are minimal because no data exchange is required. Because no data is being transferred, or stored, there are almost zero data storage costs. Since the computational power required for the algorithm is provided by the computing power of the customer’s device, it requires zero cost to operate for the brand. In fact, the more devices the algorithm runs on, the more the computational power scales for free. Communication and bandwidth costs are dramatically reduced vs. the massive data transfers of Cloud AI. Consumers also save on battery drainage that Cloud AI’s constant data extraction creates. Edge AI modeling projects require far fewer data scientists and developers to maintain. GDPR, CCPA and other privacy legislation compliance costs are dramatically reduced, or eliminated. Unlike Cloud AI the compelling cost efficiencies of Edge AI scale with use. Switching to Edge AI is a no brainer.

5. Better, faster personalization is guaranteed

Because the Edge AI prediction engines train directly on each individual’s data, true personalization is the key output. Distributing the hard-core analytics and computations over individual smartphones with Edge AI also drastically reduces the time required to develop personalized recommendations. Luxury brands will embrace Edge machine learning for faster model deployment and faster responses to fast-changing consumer behaviors. The beauty of this approach is that a user’s device personalizes the model locally, based on her historical data and current usage, while all users’ updates simultaneously enhance the shared model. This process is continuously repeated and updated. Advanced personalization is possible, with real-time actions and reactions between brands and customers becoming the standard.

General use cases in society

Necessity is the mother of invention. Google wanted to help individuals to type faster and better on their keyboards using predictive algorithms as they typed their text messages. Google data scientists innovated Edge AI to accomplish the job without violating privacy or legal boundaries. Thus, Edge AI was born and continues to evolve rapidly. In health care, hospitals are collaborating in pooling their sensitive patient databases for diagnosing MRIs by creating shared definitions and standards, and continuously improving the MRI predictions over millions of patients. No personally identifiable patient data ever leaves the confines of the respective hospital databases. In self-driving cars, as well as in current safety features such as automatic braking, there is no time for data to travel to a central server, diagnose the threat, and send back a response. Using Edge methods in real time can save lives.

Use cases in the luxury industry

Luxury Institute predicts that the luxury industry, across all goods and services sectors, will see the high value, and embrace Edge AI rapidly. We can imagine individual iconic brands such as Hermes, Gucci, Louis Vuitton, Chanel, Dior and St Laurent using Edge AI, powered by access to historical apparel and accessories purchase data, plus travel, browsing and location data, to personalize recommendations and design custom products for their clients. Brands such as Bulgari and Cartier will be able to access relevant data to personalize jewelry and watches recommendations for affluent individuals. We expect multi-brand, multi-category conglomerates such as Kering, LVMH, Richemont, Capri and Tapestry to be able to combine one client’s actionable insights across many of their multi-brand interactions. This will enable the groups to hyper-customize for a client across many categories instantly.

In automotive, brands such as Genesis, BMW, Mercedes-Benz and others will have the legal permission to use their client’s driving, purchasing, travel, location and other data to recommend improvements in driving habits and travel benefits. In health care, personalized, preventive medicine will be empowered by combining genetic, medical history, food consumption, wellness and fitness behaviors, and many other streams of real-time data, to protect, enhance and promote the individual’s best health care interests. In real estate, Sotheby’s, Christie’s, and Engel & Völkers can find their clients the best homes to buy and sell, and help them manage their real estate assets long term. The same will be true for travel and hospitality giants such as IHG, Marriott, and Hilton. Imagine what financial services powerhouses such as Citibank, JP Morgan Chase, Visa, MasterCard and American Express can do to personalize for clients and members, especially those with the most complex financial lives. Several companies can even collaborate to deliver coordinated, memorable, personalized experiences to one client.

“Edge AI is a dramatic breakthrough. It completely redesigns machine learning into a secure, private, cost efficient and effective process,” said Milton Pedraza Luxury Institute CEO. “The Cloud AI providers, such as Amazon and Google, know that Edge AI is the future, yet, are unwilling to disrupt their rapidly growing, highly profitable cloud AI businesses in order to serve the best interests of their clients. They are fully aware that Edge AI is a superior method, both for their corporate clients and their valued customers. Edge AI’s technical challenges have been, or continue to be, surmounted quickly by start-ups and entrepreneurs. Today, as we move up to create a better future, it is time for the luxury goods and services industry to get comfortable with being uncomfortable and master Edge AI to unlock the power of personalized client relationships.”

About Luxury Institute and the Global Luxury Expert Network (GLEN)
Luxury Institute is the world's most trusted research, training, and elite business solutions partner for luxury and premium goods and services brands. With the largest global network of luxury executives and experts, Luxury Institute has the ability to provide its clients with high-performance, leading-edge solutions developed by the best, most successful minds in the industry.

Over the last 17 years, Luxury Institute has served over 1,100 luxury and premium goods and services brands. Luxury Institute has conducted more quantitative and qualitative research with affluent, wealthy and uber-wealthy consumers than any other entity. This knowledge has led to the development of its scientifically proven high-performance, emotional intelligence-based education system, Luxcelerate, that dramatically improves brand culture and financial performance.

To learn more about Luxury Institute, the Global Luxury Expert Network (GLEN), or to become an expert member, please visit Luxury Institute.

Contact Milton Pedraza: mpedraza@luxuryinstitute.com

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