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In rebranding artificial intelligence as Apple Intelligence, Apple Inc is relying on the idea that people in general will not buy the powerful AI software that its rivals are developing. Instead, they want really cool hardware that incorporates AI
It’s a compelling, but risky strategy for a company that specializes in seamlessly integrating hardware and software into must-have products. “It’s the next big step for Apple,” Apple CEO Tim Cook said Monday in the Apple Intelligence presentation at the company’s developer conference.
Why we wrote this
Apple is diving into artificial intelligence – focused on the idea of a “virtual personal assistant” – as a potential must-have app for consumers.
Lacking its own cutting-edge version of the human-sounding predictive technology known as generative AI, Apple will license that technology from other companies, starting with OpenAI.
At the heart of Apple’s strategy is what is called “the personal assistant”. Apple’s personal assistant, called Siri, can give you news updates and add to a grocery list. The next generation of personal assistants will be much more powerful. Instead of creating a grocery list, they could complete the online shopping or book your vacation.
In rebranding artificial intelligence with its own name – Apple Intelligence – the iconic manufacturer is making a bold bet. Apple Inc is based on the idea that most people will not buy the powerful AI software that its rivals are developing. Instead, they want cool hardware that incorporates AI
It’s a compelling, but risky strategy for a company that specializes in seamlessly integrating hardware and software into must-have products. Although Apple Intelligence will be incorporated into a couple of existing phones, the iPhone 15 Pro and the iPhone 15 Pro Max, Apple hopes to use AI to convince people to buy even smarter iPhones, iPads and other devices that they will provide a better personal experience.
“All of this goes beyond artificial intelligence,” Apple CEO Tim Cook said Monday in the Apple Intelligence presentation at the company’s developer conference. “It’s personal intelligence, and it’s the next big step for Apple.”
Why we wrote this
Apple is diving into artificial intelligence – focused on the idea of a “virtual personal assistant” – as a potential must-have app for consumers.
In this, Apple is playing to its strengths and addressing its biggest weakness. Lacking its own cutting-edge version of human-sounding predictive technology known as generative AI, it will license that technology from other companies, starting with OpenAI. It’s part of a larger intricate dance—part competition, part cooperation—among the world’s biggest tech players to dominate valuable AI markets.
Many analysts praise the strategy of Apple Intelligence and links with OpenAI.
“Apple is taking the right path to deploying AI into its ecosystem while laying the foundations for the company’s multi-year AI strategy,” Wedbush Securities analyst Dan Ives wrote in a note to investors on Monday. The company has a base of hundreds of millions of users who own 2.2 billion Apple devices, it indicates. “This was a historic day for Apple and (Mr.) Cook & Co. did not disappoint.”
By incorporating AI, the company hopes to make a compelling case for its users to upgrade to a new generation of Apple smartphones, starting with the iPhone 16 coming out this fall, as well as tablets and personal computers of the next generation.
Are “virtual personal assistants” the next big thing?
At the heart of Apple’s strategy is what is called a “virtual personal assistant.” This is a voice-controlled software that performs a wide range of administrative tasks. Apple’s personal assistant, called Siri, can give you news updates and add to a grocery list. All the owner of an iPhone or iPad has to say, for example, is “call Tom” or “listen to this song and tell me what his name is” and Siri will automatically make the call and identify the song.
The next generation of personal assistants will be much more powerful. Instead of creating a grocery list, they could complete the online shopping or book your vacation. Or translate on the fly what your partner is saying in a foreign language.
Software that can do these things is starting to appear. The promise of these voice-activated personal assistants is that they will automatically search for and activate such assistance software. And they know the habits and preferences of users so well that they could become extremely useful in navigating everyday life. The real-life applications of this technology, from helping people with disabilities quickly access hard-to-find information, seem endless.
A “killer app” for consumers
Many analysts suggest that these advanced personal assistants could be the breakthrough application – or “killer app” – that makes AI a must-have for consumers.
Last month, the rival Google showed its Project Astra, which can handle not only songs or photos, but videos. In a demo, an employee pointed his phone’s camera at objects around his office and the AI correctly identified a speaker and even recognized the type of computer code displayed on a computer screen .
Apple Intelligence will work in a more circuitous way, initially relying on the computing power of its own devices to handle the majority of user requests. Only when the system determines that it needs more AI expertise will it reach the much more powerful OpenAI system. Whatever disadvantages this process might have, Apple has emphasized the positive.
Apple claims that it will protect user privacy more robustly because the large generative AI engines will not be able to link requests from Apple to a specific user. Privacy can be a big selling point for personal assistants if the technology learns the intimate details of users they come to trust. The strategy also limits user exposure to the embarrassing blunders that great AI engines sometimes make. (A recent example: Google’s new AI Overviews suggested using Elmer’s glue to prevent the cheese from throwing off a pizza.)
But the strategy also carries risks if, for example, Apple’s AI partners decide not to share their latest and greatest breakthroughs.
Musical chairs for giants
At the root of this AI push is a multi-billion dollar competition to dominate the technology and reap its expected profits. As many companies competed in the early days of the personal computer, cell phones and the internet, players engaged in an intricate game of musical chairs to stay ahead of the competition.
Earlier this year, Microsoft overtook Apple as the world’s most valuable company measured by market value. Its shares have risen nearly 30% over the past year, partly due to its heavy investment in OpenAI, while Apple’s shares are down more than 10%. One reason for Apple’s move this week was to convince investors that they can take advantage of AI to boost their growth. On Tuesday, Apple shares surpassed the $200 level for the first time. But this competition involves a strange mix of partners.
Apple’s new AI strategy boosts the fortunes of OpenAI and, by extension, Microsoft, whose Windows operating system competes with Apple in personal computers. Microsoft and Amazon, rivals in Web-based computing services, partnered years ago to make their first personal assistants more interoperable. In January, Samsung has announced its new smartphones use Google’s AI, although the two companies compete in the smartphone market.
Eventually, the music stops and the AI musical chairs game ends. It is too early to say which companies will be sitting pretty.
