Cloud AI vs. Local AI: Which Is Best for Your Business?

AI is expected to hold a global market size of over 800 billion by 2030. While this number is a long-term projection, it showcases the immense interest and investment in AI solutions. Cloud AI, in particular, has transformed the way businesses adopt and use artificial intelligence and will continue to do so in the future.

This article will explain what cloud AI is, its advantages and challenges, and how it compares to local AI. We will also discuss webAI as a solution that challenges the limitations of traditional cloud AI with a privacy-first, local approach.

What is Cloud AI?

With over 90% of companies using the cloud in some manner, launching artificial intelligence systems on the cloud is a natural progression. Executive leadership and entry-level employees alike use cloud-based AI to improve their decisioning and work performance.  

Cloud AI is an artificial intelligence solution that processes data and executes models in the cloud rather than on local devices. The cloud is a network of remote servers that store and manage data, applications, and computing resources. Users can access these resources from any internet-connected device.

How It Works

Picture the AI cloud structure like a wheel. The hub (center of the wheel) hosts the cloud’s processing center. The spokes of the wheel lead to various business operations (e.g., manufacturing plants and custom service operations). Data gathered during business operations is sent along the spokes to the hub where AI computation takes place, and a decision is sent back to the business operations. 

This centralized infrastructure often requires an internet connection and secure data transfer. 

Popular Examples

Commonly used cloud AI platforms include:

• AWS AI: Amazon Web Services (AWS) AI is an artificial intelligence service with pre-built AI services for natural language processing, computer vision, automated speech recognition, and machine learning tools. 
• Google Cloud AI: Google Cloud AI encompasses Google Cloud's AI and machine learning services. Users have access to generative AI models for vision, speech, translation, and text processing. Google Cloud AI also offers tools for custom model development and deployment.
• Microsoft Azure AI: Microsoft Azure AI offers solutions for speech recognition, natural language understanding, computer vision, and customizable machine learning platforms.

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Key Features

Cloud AI relies on external servers to function and provides advanced decisioning and high performance. Popular AI platforms offer ready-made tools that can revolutionize business operations. These solutions perform specific functions that simplify and speed up common business practices. 

Who Uses It

Cloud-based AI has potential uses across a wide variety of industries. Cloud AI has proven useful for e-commerce applications by analyzing customer behavior and providing personalized, data-backed insights. Healthcare companies use cloud AI for medical imaging analysis and patient care. 

In financial services, it's used for the real-time analysis of financial data and market trends. Manufacturing companies rely on cloud-based AI for predictive maintenance and quality control systems. 

Key Advantages of Cloud AI

Industries utilizing cloud AI appreciate its benefits and ability to give businesses a competitive edge. 

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• Large Dataset Processing: Cloud AI can handle large datasets and support the simultaneous operation of multiple models. With the cloud, companies don’t have to invest in significant computational power. They essentially rent it from the cloud. 
• Accessibility: Cloud AI provides global access, allowing teams to work with AI models from anywhere with an internet connection. This is a clear benefit for companies with offices worldwide. 
• Cost-Effective for Training: Cloud AI can be cost-efficient for businesses that need high-compute power temporarily, such as during training phases. 
• Ease of Implementation: Many cloud AI solutions offer pre-built frameworks that companies can launch immediately. These models may not be custom to the company's needs and typically aren’t owned by the company, but they can be immediately useful. For example, certain large language models simplify daily tasks and ease employee workload.  

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The Challenges of Cloud AI

Cloud-based AI is not a perfect solution. Below, we discuss the challenges of using cloud AI, including data concerns, latency issues, scalability problems, and possible ongoing costs. 

Data Privacy Concerns

There are inherent risks of uploading sensitive or proprietary data to third-party servers, particularly for industries like finance and healthcare. With many cloud AI solutions, you don’t own the model and don’t have full control of how your data is used. 

Further, your data must be sent to the cloud for processing. This increases exposure to cyber threat actors. 

Latency Issues

Reliance on remote servers can introduce delays, making cloud AI less suitable for real-time applications. 

Scalability

Quick market growth requires scaling cloud artificial intelligence effectively. As network size and data transaction volumes grow, congestion can cause processing delays and higher transaction costs. This scaling challenge is especially detrimental for high-volume industries. 

Ongoing Costs

Cloud-based AI has the potential for high recurring expenses from data storage and transfer. The pay-as-you-go cost structure of cloud systems is detrimental to growing companies. 

How Does Cloud AI Compare to Local AI?

Cloud AI limits your ability to successfully scale operations and keep proprietary information secure. Your right-fit AI solution might be local AI. 

Local AI (often called edge AI) refers to artificial intelligence systems that process data and execute models directly on local devices like smartphones, laptops, or servers. Local AI solutions stand apart from cloud-based infrastructure. 

• Data Privacy: Local AI addresses data privacy concerns by processing information directly on-site, thus reducing exposure to breaches and avoiding third-party cloud providers. It offers a privacy-first approach for regulated industries.
• Latency: Local AI processes data directly on local devices, leading to faster performance. Cloud AI's server communication can't compete with the low latency of local.  
• Cost: Under cloud AI, you need to pay recurring fees for cloud storage, data transfer, and compute power. Local AI avoids these continuing fees by processing data directly on local devices.
• Control: Local AI gives businesses full ownership of their AI models, unlike cloud-based systems where computing resources and pre-trained models are often rented. With a local AI solution like webAI, companies can protect proprietary algorithms and maintain a competitive edge.

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Choosing between the cloud and local AI depends on specific business needs, but for privacy and latency-critical use cases, local AI has clear advantages. 

Why Businesses Are Moving Beyond Cloud AI

The previously highlighted challenges of cloud-based AI force businesses to seek alternatives. Cloud providers and users are looking into possible solutions to existing challenges, but the fact remains that cloud operating systems are expensive to scale past a certain point and pose detrimental security issues. 

Businesses will continue to adopt hybrid models where cloud AI is used for certain large-scale applications and local is for tasks that require real-time data processing and security. 

Make the Right Choice for Your Business with webAI

AI operations in the cloud are highly accessible and can process large volumes of data with lower initial costs. The ongoing costs, exposure to threats, high latency, and lack of model control make the cloud less viable in the long term. This is where local AI steps in as a possible alternative or tailored complement to existing cloud operations.

Businesses need to carefully consider their needs—scalability, privacy, cost, and latency—when choosing cloud AI and/or local AI solutions. Explore webAI’s solutions for a privacy-first, cost-effective alternative to traditional cloud AI. Discover solutions for aviation, logistics, healthcare, and beyond. 

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