Regarding the AI Design market: Analyze market trends through the Porter’s five forces analysis.

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Regarding the AI Design market: Analyze market trends through the Porter’s five forces analysis.

Hi there, and thanks for asking Wonder! I understand that the previous response you received for this question was not specific to the AI design market, and that you would like an analysis of market trends in the AI design market using the Porter’s five forces analysis. After extensive research through industry reports, company websites, user forms and industry media articles, I determined that it is not possible to conduct an analysis of this depth on the AI design market at this time, because the market is not sufficient mature to assess those five aspects of market dynamics. Additionally, articles discussing the launch of the AI algorithms have mixed reviews, and most industry insiders believe that these companies are actually using complex algorithms instead of AI. However, I have compiled below the information that is available on this market, relative to Porter's five forces.
The two best resources I found to answer your question are Smashing Magazine and Merchant Maverick.


METHODOLOGY
I began my research by reviewing company websites for LogoJoy, Wix, ADI and TheGrid, and discovered that these companies do indeed promote themselves as having launched AI website/logo design. I then searched through tech websites, tech reviews, designer articles, blogs, sites, and user articles, and discovered that not only are reviews generally negative , especially for TheGrid; but industry insiders also express the majority opinion that these designers are in fact using complex algorithms instead of true AI.


SUPPLIER POWER
For this aspect of Porter's five forces, we will assume that 'suppliers' to the AI design market are developers, either developers of AI itself, or developers working in tandem with AI, within the AI design market.

In terms of driving up prices, it's unlikely that suppliers in this industry can drive up the price. This is because the major competitive advantage AI design companies offer is low price. For example, a logo design at LogoJoy is currently $20 despite the fact it is currently the major player in the AI logo design industry. Hence, it's unlikely that developers in this industry will be able to drive price up; in fact, it's expected that price will reduce as more players get involved.

Additionally, although there has been conversation about the potential for AI to put developers out of work, user reviews indicate differently: many analysts currently opine that using services such as Logojoy, despite several positive reviews, is a classic case of "pay less, pay twice," because the design usually lacks "soul" that only an artist can bring to a design.


BUYER POWER
There is currently not sufficient information to perform a thorough assessment of this aspect, because the industry is at a stage where buyers are still warming up to the market. However, buyer power is relatively strong relative to the plethora of non-AI options currently available to users looking to spend very little on website design. These options include hiring designers in developing countries, through freelance websites, to design websites and logos for similar prices. With so many options available to users in the low-end website design market segment these AI design companies target, it seems likely that buyers keep prices relatively low viz the level of non-AI competition for the same market. While it is possible that these AI companies may be able to maintain their price by providing better solutions, that higher tier service market has yet to arise and cannot yet be analyzed.


COMPETITIVE RIVALRY
The competition in this industry is not so much between different AI design companies, such as Wix versus The Grid, but with traditional designers. This article, discussing the rise of AI, provides the following industry feedback: "thousands of web developers and designers emphasize that artificially developed websites couldn’t possibly be as meticulous as hand-drawn ones, as they lack the human intelligence factor that is brought into the project by a real artist. The result, they say, would cause websites to appear mechanical and procedurally generated, lacking the fluidity and grace that a human developer brings into the project."

An industry expert writing in Smashing Magazine believes that the rise of AI will be good for the design industry but not as a replacement for actual designers. The author believes that human designers and AI can work together to create better websites and product designs faster. If this approach becomes more widespread, the AI design market - including developers - may actually benefit from its major competitor today. Freelance developers and businesses which use these platforms to create websites and designs for their clients are springing up.

Again, there is not yet sufficient information on competition between AI design market companies to perform an analysis - industry players like The Grid was still in private beta mode when in January 2017, despite the fact it has been dominating the news since 2014.


THREAT OF SUBSTITUTION
The AI design market is viewed as the future of designing, so there is currently little threat of substitution with something new.
At the moment, there are many non-AI substitutes available, including the self-help design sites like Squarespace designers from developing countries willing to accept cheaper pay for work. However, these are existing players, not potential substitutes entrants.


THREAT OF NEW ENTRY
As the industry grows, new companies may enter the industry. Apart from developing a true AI technology that can build better and original designs (rather than generic websites), there aren't many barriers to entry. However, the technology itself, is a big obstacle so if companies like Wix and The Grid perfect it, they are likely to establish a dominant position in this industry going forward.


CONCLUSION
To conclude: although my research indicates that the AI design market is too nascent to admit a true analysis per Porter's five force analysis, I did learn that the so-called AI design market is unlikely to put developers out of work in the near future, and that the current competition is not so much between companies using AI, as it is between AI platforms and traditional webs design platforms. Thank you for using Wonder. Please let us know if you need anything else!


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