Apple finally threw its hat in the AI ring with Apple Intelligence. With Apple, Google, Samsung, and Microsoft all releasing their own AI-powered devices, question is: will consumers take the bait?
Nice post on Apple and AI. I appreciate the explanation on the misinformation about privacy risk (although recent research suggests that even speculation about potential risk encourages people to believe misinformation.) Still, it's important to keep trying to inject reason and clarity, so thank you. AI adoption is a fascinating race between excitement over innovation to make it actually useful and fear that it will be "too" useful. At least with Apple, the visual design and packaging will be very good.
Apple's talk about privacy-centric AI has kicked up a storm not just with Google's and Microsoft's AI product strategy but also on the networks (X..) Im just super curious for how this year is going to end.
Apple certainly takes privacy much more seriously than Google. Most people probably don't realize but Android is a massive spying engine. IOS isn't anything like that.
But the question is: can Apple control what's going on with user data at OpenAI. Realistically the answer is: not at all. OpenAI simply won't care, and that's a huge problem.
Thanks Econolog. Still early days but Apple is going to stick to its "walled garden" approach and maintain control over how data flows in its ecosystem. I feel it is going to be evolve into something similar like the appstore system but with more agents/assistants on the iPhone. In that case, users will probably have to decide how much of their privacy they want to trade in return for the productive convenience that they get in return. This is the same case for all folks who are paying members of OpenAI's ChatGPT who are comfortable in letting ChatGPT know a little about them. The problem as you have stated is what happens with the data after OpenAI collects it and how it stores/reuses it.
Amrita - Your last 4 posts have been extremely thought provoking and on point, imo. You have the ability to tell a story, break down concepts for easy digestion and then you ask interesting questions that reflect what the reader might be thinking. Love it!
I am about to record my weekly podcast on the markets and Apple Intelligence is one of the main topics that I will cover. You have given me food for thought and now I am going back to revising the episode draft ... LOL. BTW I am more focused on the longer term implications of what AAPL is building...how today's AI features could be the foundations of tomorrow's next gen AAPL revenue streams. Cheers!
I was pretty disappointed with Apple Intelligence, there weren't any game-changing features in my opinion. Market certainly thinks different based on the last few days of gains. I'll be upgrading to iPhone 15 though, not because of the AI features but because my current phone is getting too slow. Great write-up!
I see your point. Personally, I would have felt the same as well but for now Apple seems to be safe because they have played well into their strengths. Its not the game changing visionary features that a company responsible for the iPhone moment has put out but. Ok - here is a question, if Apple was able to put a demo for Siri that you cant talk to just like OpenAI would find that game-changing?
Great writing and view on the Apple announcement. I think it’s straight down the line for Apple to underpromise/overdeliver on what AI can do. It’s in their best interest to appeal to a mass audience with this announcement as it just leverages their already loyal fan base and creates enough ink to get a few more users.
There are three things really interesting about apple’s announcement that I haven’t seen mentioned much — 1) Apple is always keen to not add too many features on launch as they’re much harder to remove (and look like a mistake) if they don’t land. 2) Apple’s acquisitions of AI companies over the last few years, 30+ if memory serves, probably means they don’t *need* to incorporate OpenAI. That would make the OpenAI partnership a marketing push for name recognition and legitimacy in the AI world. 3) The architecture Apple mentioned, notably in Marques’ interview, means they could swap out any AI engine, like OpenAI, Gemini, Anthropic, etc, based on who has the right tools, who’s willing to agree to the privacy mandate and, maybe, who’s willing to pony up $ to play. This would mirror what Apple has done for years with Google search being default in Safari on all OS versions.
Delicious perspectives! All 3 of them. Your #1 and #2 we had covered earlier in an Apple post earlier this year. We share the same perspectives in that post. Additionally, we'd collected available data about all the Apple's acquisitions and mapped them out on a scatter plot to show how most of the AI acquisitions were either to be deployed upstream in their supply chain or right down to the end user with a particular focus on Voice & Multimedia.
About your #3 - I have a slightly different theory that I'm trying to validate... The Marques interview does point that out that they're making Siri or their AI assistant platform interoperable between all the different assistants available today. This also keeps the door open for a $$ deal (although I highly doubt the deal might take place because Big Tech has become the most popular punching bag for FCC/DOJ).. Something that I personally think Apple might do is create some kind of an *open* platform (compliant with SEC/FCC) where LLMs can be downloaded and installed on the iPhone just like apps are today. This would replace the business models for apps and would also eventually force some kind of a shift in UX/UI of how users interact with LLMs on the iPhone.
You’re right {checks notes} I may have seen your scatterplot on the AI acquisition topic and it’s now floating free in my head between wishing I’d worn something different to my senior prom and my grocery list. My apologies…and kudos for solid reporting that sticks with the reader.
Thanks for sending these articles my way. Since this is being dealed between the two companies at the outset it looks like a win/win for both - Apple gets to test its revenue sharing model as Gurman suggests while OpenAI gets its benefits too. I think the biggest benefit OpenAI gets beyond the $20 subscription is a wide testing ground in a production environment to see just how efficiently OpenAI's LLMs can run on Apple's devices in the end user's environment. This is the biggest non-monetary benefit OpenAI gets in terms of distribution that Gurman talks about.
Absolutely this is a benefit for OpenAI. With a wide user base and the forcing function of Apple’s requirements (priority, privacy, activity metrics). For Apple they get someone else to foot the bill for energy consumption as they figure out what elements of AI/LLM’s are important…then Apple will just put them out of business in a year or so.
A very precise and in-depth analysis of Apple's launch from the more 'consumer' side, which I greatly appreciated. On this, I would like to say that certainly the launch of Apple Intelligence, also due to the media coverage received and the expectations (which previously were mainly negative given the delays in the launch compared to the other Big Techs) will bring a regrowth of attention towards Apple , resulting in consumer trials.
Apple, it should never be forgotten, has one of the most valuable brands in the world and with a strong consumer attachment. Something different than the attachment for brands like Google, Microsoft and OpenAI (which is increasingly becoming a brand with varied and interesting messages and identities to decipher even in the minds of consumers). Furthermore, the privacy point is crucial for the market: the commitments so strongly established by the company (especially 'in the face' of Elon Musk!) represents a potentially highly differentiating factor for the company led by Cook. And, I would add, this is particularly interesting for 'the bitten apple' because it has always been part - an almost obsessive focus on privacy - of Apple's identity.
Therefore, it is not a shift that consumers see as unusual, but absolutely in line with what Apple has brought forward (just think of the commercial of people 'chasing' a boy around which represented data tracking and so on ).
True Riccardo. - privacy is the differentiating factor in this case which has been a growing pillar of product strategy for the company in the last 8-10 years.. BTW.. which commercial were you referring to about the chasing boy? I havent watched that.. Do you have a link to that?
Apple's approach to AI is an interesting one, but overall I do think it is a good move to team up with GenAI leader OpenAI. Looking forward to checking out the features. Luckily, my iPhone 15 pro should support them;)
Thanks Daan for your kind words. I agree teaming up with OpenAi is probably a smart move in the short-term as it allows them to focus on their strengths (privacy, personalization), while "outsourcing" the heavy lifting to OpenAI. Like that, Apple can simply blame any wrong answers or hallucinations to OpenAI and stay out of PR trouble.
Thanks Nick. Glad you liked it. I think it is usually when we edit the post, is where humor is inserted, need to have the right mindset to it, especially for the 2-minute summary section.
Nice post on Apple and AI. I appreciate the explanation on the misinformation about privacy risk (although recent research suggests that even speculation about potential risk encourages people to believe misinformation.) Still, it's important to keep trying to inject reason and clarity, so thank you. AI adoption is a fascinating race between excitement over innovation to make it actually useful and fear that it will be "too" useful. At least with Apple, the visual design and packaging will be very good.
Apple's talk about privacy-centric AI has kicked up a storm not just with Google's and Microsoft's AI product strategy but also on the networks (X..) Im just super curious for how this year is going to end.
Per usual...EXCELLENT. Thank you.
Thank you Diana. Glad you enjoyed the post. 🙏🏼🙏🏼
Thank you, Diana.
nice piece once again, many thanks!
Apple certainly takes privacy much more seriously than Google. Most people probably don't realize but Android is a massive spying engine. IOS isn't anything like that.
But the question is: can Apple control what's going on with user data at OpenAI. Realistically the answer is: not at all. OpenAI simply won't care, and that's a huge problem.
Thanks Econolog. Still early days but Apple is going to stick to its "walled garden" approach and maintain control over how data flows in its ecosystem. I feel it is going to be evolve into something similar like the appstore system but with more agents/assistants on the iPhone. In that case, users will probably have to decide how much of their privacy they want to trade in return for the productive convenience that they get in return. This is the same case for all folks who are paying members of OpenAI's ChatGPT who are comfortable in letting ChatGPT know a little about them. The problem as you have stated is what happens with the data after OpenAI collects it and how it stores/reuses it.
Well researched as usual. Excellent post. Thanks!
Thank you !!! Glad you enjoyed the post.
Thank you for the kind words!
Amrita - Your last 4 posts have been extremely thought provoking and on point, imo. You have the ability to tell a story, break down concepts for easy digestion and then you ask interesting questions that reflect what the reader might be thinking. Love it!
I am about to record my weekly podcast on the markets and Apple Intelligence is one of the main topics that I will cover. You have given me food for thought and now I am going back to revising the episode draft ... LOL. BTW I am more focused on the longer term implications of what AAPL is building...how today's AI features could be the foundations of tomorrow's next gen AAPL revenue streams. Cheers!
Hey Beach, thanks so much, so very grateful for your support.
Your podcast is on my list to listen to this week, looking forward to all the nuggets of wisdom that you always share in your podcasts.
I was pretty disappointed with Apple Intelligence, there weren't any game-changing features in my opinion. Market certainly thinks different based on the last few days of gains. I'll be upgrading to iPhone 15 though, not because of the AI features but because my current phone is getting too slow. Great write-up!
Thank you.🙏🙏
I see your point. Personally, I would have felt the same as well but for now Apple seems to be safe because they have played well into their strengths. Its not the game changing visionary features that a company responsible for the iPhone moment has put out but. Ok - here is a question, if Apple was able to put a demo for Siri that you cant talk to just like OpenAI would find that game-changing?
Great writing and view on the Apple announcement. I think it’s straight down the line for Apple to underpromise/overdeliver on what AI can do. It’s in their best interest to appeal to a mass audience with this announcement as it just leverages their already loyal fan base and creates enough ink to get a few more users.
There are three things really interesting about apple’s announcement that I haven’t seen mentioned much — 1) Apple is always keen to not add too many features on launch as they’re much harder to remove (and look like a mistake) if they don’t land. 2) Apple’s acquisitions of AI companies over the last few years, 30+ if memory serves, probably means they don’t *need* to incorporate OpenAI. That would make the OpenAI partnership a marketing push for name recognition and legitimacy in the AI world. 3) The architecture Apple mentioned, notably in Marques’ interview, means they could swap out any AI engine, like OpenAI, Gemini, Anthropic, etc, based on who has the right tools, who’s willing to agree to the privacy mandate and, maybe, who’s willing to pony up $ to play. This would mirror what Apple has done for years with Google search being default in Safari on all OS versions.
Just my 2¢
Delicious perspectives! All 3 of them. Your #1 and #2 we had covered earlier in an Apple post earlier this year. We share the same perspectives in that post. Additionally, we'd collected available data about all the Apple's acquisitions and mapped them out on a scatter plot to show how most of the AI acquisitions were either to be deployed upstream in their supply chain or right down to the end user with a particular focus on Voice & Multimedia.
About your #3 - I have a slightly different theory that I'm trying to validate... The Marques interview does point that out that they're making Siri or their AI assistant platform interoperable between all the different assistants available today. This also keeps the door open for a $$ deal (although I highly doubt the deal might take place because Big Tech has become the most popular punching bag for FCC/DOJ).. Something that I personally think Apple might do is create some kind of an *open* platform (compliant with SEC/FCC) where LLMs can be downloaded and installed on the iPhone just like apps are today. This would replace the business models for apps and would also eventually force some kind of a shift in UX/UI of how users interact with LLMs on the iPhone.
You’re right {checks notes} I may have seen your scatterplot on the AI acquisition topic and it’s now floating free in my head between wishing I’d worn something different to my senior prom and my grocery list. My apologies…and kudos for solid reporting that sticks with the reader.
The wariness of Apple to DOJ is a good one. But, so unlike Apple who knows they can outspend most of the lawyers in the bullpen or outlast an administration. But, perhaps you’re right, it’s not a cash play at all. Jason Snell (https://sixcolors.com/post/2024/06/ok-fine-heres-apple-intelligence/) pointed to an article by Mark Gurman (https://www.bloomberg.com/news/articles/2024-06-12/apple-to-pay-openai-for-chatgpt-through-distribution-not-cash) where the deal would eschew those regulatory/justice issue.
Thanks for sending these articles my way. Since this is being dealed between the two companies at the outset it looks like a win/win for both - Apple gets to test its revenue sharing model as Gurman suggests while OpenAI gets its benefits too. I think the biggest benefit OpenAI gets beyond the $20 subscription is a wide testing ground in a production environment to see just how efficiently OpenAI's LLMs can run on Apple's devices in the end user's environment. This is the biggest non-monetary benefit OpenAI gets in terms of distribution that Gurman talks about.
Absolutely this is a benefit for OpenAI. With a wide user base and the forcing function of Apple’s requirements (priority, privacy, activity metrics). For Apple they get someone else to foot the bill for energy consumption as they figure out what elements of AI/LLM’s are important…then Apple will just put them out of business in a year or so.
A very precise and in-depth analysis of Apple's launch from the more 'consumer' side, which I greatly appreciated. On this, I would like to say that certainly the launch of Apple Intelligence, also due to the media coverage received and the expectations (which previously were mainly negative given the delays in the launch compared to the other Big Techs) will bring a regrowth of attention towards Apple , resulting in consumer trials.
Apple, it should never be forgotten, has one of the most valuable brands in the world and with a strong consumer attachment. Something different than the attachment for brands like Google, Microsoft and OpenAI (which is increasingly becoming a brand with varied and interesting messages and identities to decipher even in the minds of consumers). Furthermore, the privacy point is crucial for the market: the commitments so strongly established by the company (especially 'in the face' of Elon Musk!) represents a potentially highly differentiating factor for the company led by Cook. And, I would add, this is particularly interesting for 'the bitten apple' because it has always been part - an almost obsessive focus on privacy - of Apple's identity.
Therefore, it is not a shift that consumers see as unusual, but absolutely in line with what Apple has brought forward (just think of the commercial of people 'chasing' a boy around which represented data tracking and so on ).
True Riccardo. - privacy is the differentiating factor in this case which has been a growing pillar of product strategy for the company in the last 8-10 years.. BTW.. which commercial were you referring to about the chasing boy? I havent watched that.. Do you have a link to that?
Uttam this is the link: https://www.youtube.com/watch?v=fjf7c-O5GyQ. P.S. It is one of my favourite ads!
Haha! Thanks for sending this our way. I love how they depicted privacy and tracking in a world of AI.
Such a brilliant write-up! Loved it!
Apple's approach to AI is an interesting one, but overall I do think it is a good move to team up with GenAI leader OpenAI. Looking forward to checking out the features. Luckily, my iPhone 15 pro should support them;)
Thanks Daan for your kind words. I agree teaming up with OpenAi is probably a smart move in the short-term as it allows them to focus on their strengths (privacy, personalization), while "outsourcing" the heavy lifting to OpenAI. Like that, Apple can simply blame any wrong answers or hallucinations to OpenAI and stay out of PR trouble.
Love the humor spliced in as usual. I imagine you two cracking up as you put these articles together.
Thanks Nick. Glad you liked it. I think it is usually when we edit the post, is where humor is inserted, need to have the right mindset to it, especially for the 2-minute summary section.