Artificial intelligence has experienced an explosion of growth in recent years, with companies like OpenAI, Anthropic, and Google leading the charge in providing powerful foundational models. But despite their immense computational capabilities, these AI providers are increasingly finding themselves in a familiar position—one that resembles the fate of telecom giants in the past.
In the telecom industry, infrastructure providers built the backbone of communication networks, yet they eventually found themselves competing not on innovation but on price, reliability, and scale. Meanwhile, a new wave of companies emerged, offering user-friendly interfaces and value-added services on top of these networks, becoming the real consumer-facing brands. Today, a similar pattern is emerging in AI, where a new breed of AI wrappers is rapidly capturing market attention and customer loyalty.
AI Wrappers: The New Kings of the AI Economy
AI wrappers are companies or platforms that use existing AI models but differentiate themselves by offering improved usability, domain-specific expertise, or additional automation capabilities. They act as intermediaries between the raw power of foundational models and the end user, providing a tailored, more accessible experience. These wrappers often build agentic systems that extend AI capabilities beyond simple text generation, integrating AI into real-world workflows more seamlessly.
One of the most notable examples is Cursor, an AI-powered coding assistant that integrates deeply with software development environments. While OpenAI provides the underlying models, Cursor enhances them with context awareness, code-specific optimizations, and user-friendly interactions that cater specifically to developers. Similarly, Jasper has become a dominant force in AI-powered content creation, building atop existing LLMs but fine-tuning the experience for marketing and branding purposes.
Other examples include:
- Replit Ghostwriter: An AI-powered coding assistant built into the Replit platform, offering features customized for its user base.
- Notion AI: A productivity tool that integrates AI to help users generate content, summarize notes, and organize information in an intuitive way.
- Synthesia: A video generation platform using AI-powered avatars and voice synthesis, making it easier for businesses to create professional content without requiring actors or video production expertise.
These AI wrappers add convenience, improve user workflows, and tailor AI capabilities for specific needs—something foundational models alone struggle to do.
Why AI Providers Are Like Telecoms
Telecom providers built the infrastructure that powered the internet, but their value quickly became commoditized. Consumers didn’t buy “bandwidth”—they bought streaming services, social media, and communication apps that provided the real utility. The underlying networks remained essential but largely invisible.
AI is heading down the same path. Foundational model providers like OpenAI, Anthropic, and Google are in an arms race to create more powerful models, but they face two fundamental challenges:
- Differentiation is difficult: At the model level, once competitors catch up in quality, the main differentiator becomes price and API access rather than unique features.
- Customer experience is owned by wrappers: Just as customers interact with Netflix rather than their internet provider, most AI users will engage with AI wrappers rather than the underlying models.
Unless foundational AI providers can create a breakthrough that redefines the way AI is used, they will likely remain the equivalent of cloud computing providers—essential but invisible to end users.
Can AI Providers Compete?
AI model creators face a strategic dilemma. Do they continue improving their base models and risk becoming commodities, or do they move up the stack, integrating more directly with users?
There are a few potential paths they could take:
- Vertical integration: OpenAI, for instance, is already moving in this direction with ChatGPT, aiming to make its own application as sticky as possible. Google has integrated Gemini into its search products, while Anthropic is working on making Claude a more accessible assistant.
- Exclusive partnerships: By offering custom AI models for select partners, providers can maintain an edge. This strategy mirrors what Nvidia has done with its GPU dominance—selling to cloud providers while also enabling high-performance, exclusive partnerships.
- Fine-tuned solutions: Rather than offering general-purpose models, AI providers could develop industry-specific solutions for enterprise applications, ensuring they remain a step ahead of generic AI wrappers.
However, even with these efforts, the fundamental shift in value remains: users prefer tailored experiences over raw power, and AI wrappers are best positioned to deliver those experiences.
The Future of AI: Who Wins?
The current trend suggests AI providers will continue building the foundation, but the real profits and brand recognition will go to those who package and distribute AI in a way that users love. AI wrappers are already dominating certain verticals, and as agentic AI systems become more advanced, we will see an even greater separation between infrastructure and experience.
If AI providers fail to adapt, they risk becoming the “AT&T” of the AI age—powerful but replaceable. Meanwhile, the new kings of AI will be the platforms that understand user needs, integrate AI seamlessly, and create interfaces that feel indispensable.
The AI landscape is rapidly shifting, and while foundational models remain crucial, they are no longer the defining factor in AI’s success. The future belongs to those who can bridge the gap between raw AI power and user-friendly experiences. As we move forward, expect more AI wrappers to emerge, reshaping industries and pushing AI providers further into the background.
In the end, AI might power the revolution—but the wrappers will own the kingdom.