In June 2023, Apple chief executive Tim Cook walked onstage at the corporate’s flagship annual developers conference to announce, within the tradition set by Steve Jobs, “yet another thing.”
Just six months earlier, OpenAI’s ChatGPT had launched, gaining 1,000,000 users in only five days and triggering a brand new cycle within the tech industry. Generative AI, the technology promising a profound latest level of machine intelligence, was not latest. But the chatbot was the primary product based on large language models to actually grab the favored imagination.
The proponents of generative AI say it portends a radical future where our devices can contextually understand vast amounts of knowledge and offer dynamic, smarter, humanlike responses to our needs.
But the “thing” Cook went on to announce that June day was the Vision Pro, Apple’s mixed-reality headset which stays a distinct segment product limited to the US market. As the dust settled, commentators were quick to select up on something: not once, during a series of presentations from Apple’s top executives, had any of them even mentioned the term “generative AI”.
A yr on, there are fears that Apple could have missed the boat on a generational shift. The likes of Google, Microsoft, Meta and Amazon have raced to capitalise on the technology, investing billions of dollars into the hardware required to power generative models.
Google’s launch of the Pixel 8 smartphone in October and Samsung’s Android-based S24 in January — each powered by Google’s Gemini family of AI models — have introduced a brand new concept into the industry lexicon: “the AI smartphone”. In the “AI PC” space, rivals like Microsoft, Qualcomm and AMD have staked an analogous claim to early leadership.
Apple, nevertheless, is yet to launch an iPhone specifically marketed for the age of AI — although its latest line of iPads powered by its M4 chip, launched in May, gave a touch at its ambitions.
The company has meanwhile had a run of bad headlines, because the EU and the Biden administration pursue it over alleged antitrust violations. Its shares have recovered from a slump firstly of the yr, but after a serious growth spurt as pandemic lockdowns were lifted, sales of the iPhone, Apple’s most lucrative product, are flattening. And in what risks being seen as an indication of the times, the corporate is vying with Nvidia, the darling of the generative AI boom, for the rank of the second most dear US company.
When Cook emerges onstage at this yr’s developers conference in Cupertino on Monday, he has the possibility to alter this narrative. The company is predicted to unveil its latest operating system, iOS 18, a serious software update that can kick off its broader plan for generative AI.
But analysts say the stakes are high for Cook, who must position Apple as a real contender in a race set to define the subsequent decade of technological growth.
“Apple must dispel the perception that it has been behind on generative AI,” says JPMorgan analyst Samik Chatterjee. “They must have the ability to say: ‘OK, we have now caught up with the remainder of the industry.’”
When it involves latest technologies, Apple’s strategy has at all times been to perfect, relatively than pioneer — refining existing ideas to supply the perfect user experience.
Take the iPod in 2001. Many MP3 players were already in the marketplace when it launched, but Apple’s product was sleeker, smaller, and will hold tons of more songs. Underpinning it was a more efficient, cheaper option for purchasing music, iTunes. Six years later Steve Jobs pulled off an analogous coup with the launch of the iPhone.
Yet analysts say that with the arrival of generative AI, the corporate is under unusual pressure to make its move sooner relatively than later.
“With AI, it does feel as if Apple has had its hand forced a bit of bit by way of the timing,” says Leo Gebbie, an analyst at CCS Insight, a tech research and advisory group. “For a protracted time Apple preferred to not even talk about ‘AI’ — it liked to talk as an alternative about ‘machine learning.’”
Machine learning is a subset of AI that uses statistical evaluation to seek out patterns in large data sets; the umbrella term “AI” includes several methods and techniques for helping a pc perform a cognitive function.
“That dynamic shifted possibly six months ago when Tim Cook began talking about ‘AI’ and reassuring investors. It was quite fascinating to see Apple, for once, dragged right into a conversation that was not by itself terms,” Gebbie says.
On the corporate’s last earnings call, Cook said the corporate was feeling “very bullish about our opportunity in generative AI”, adding that the corporate has “benefits that can differentiate us on this latest era”. Cook was searching for to shut down the perception that Apple is behind on generative AI.
The competitive race Apple is entering has three dimensions: developing chips that may power AI features an increasing number of on its devices; creating so-called “killer” applications that can lure in consumers; and securing access to essentially the most advanced generative AI models controlled by rivals Microsoft and Google.
The company is very secretive about its processes, however it has not been sitting on its hands. It has built out a team of top AI talent led by former Google Brain executive John Giannandrea, who was hired in 2018.
It already has a chip powerful enough to run an “AI smartphone” — at the least, by essentially the most commonly understood definition of such a product.
Exact specifications vary, however the term typically refers to a phone with a neural processing unit chip, or NPU, that’s able to running around 30 trillion operations per second, or Tops.
These NPUs with their neural engine make it easier to run a number of the extremely compute-heavy AI applications locally on the device, relatively than through the cloud. But they create “huge technical challenges by way of memory”, says Reece Hayden, an analyst at ABI Research, a technology intelligence company. “Even very small generative models have much higher memory requirements than any phone in the intervening time can sustain.”
Apple, which designs its own custom chips for its products, has had its own dedicated neural network architecture since 2017 and its latest A17 Pro chip on the iPhone 15 Pro and Pro Max exceeds the 30 Tops benchmark.
But the iPhone 15 Pro has only 8GB of RAM, in comparison with Samsung’s S24 smartphone, powered by Qualcomm’s chips, which has 12GB. Apple is just not expected to launch a successor, the iPhone 16, until later this yr.
This is a vital battleground in the worldwide AI race. Technology market research firm Counterpoint estimates that “AI smartphones” will make up 43 per cent of worldwide smartphone shipments by 2027, with 1 billion devices in use.
Google, Apple’s predominant rival by way of phone operating systems with Android, is already forging ahead, rolling out tools for developers to utilize its Gemini models, powering latest features like “circle to go looking”, and integrating its chatbot, Bard, into what the user does on the device.
“I firmly consider we’re in a once in a generation moment to reimagine what phones are able to with the advances in AI,” says Sameer Samat, president of Google’s Android ecosystem. “We are on a multiyear journey to rebuild Android with AI on the centre of it.”
The International Data Corporation is expecting 4.8 per cent yr on yr growth in 2024 for sales of generative AI Android smartphones, but just 0.7 per cent for Apple.
“If Apple wants to alter this trajectory and speed up this growth, it’s crucial for them to stipulate a transparent AI strategy in the approaching weeks,” Nabila Popal, a research director on the IDC, says.
Apple’s challenge might be “convincing consumers why they need these latest AI features and, more importantly, why it must be done ‘on their device’, to compel users to upgrade,” she adds.
One concrete step Apple can take to indicate it’s serious in regards to the potential of generative AI is by utilizing it to reinforce Siri, the digital voice assistant it introduced in 2011.
The initial wave of AI chatbots led by ChatGPT, while catching the attention of consumers, is simply one application of the technology — with the input and output each being text. An enhanced Siri could be attuned to user preferences and able to carrying out a selected set of tasks thoroughly, reminiscent of sorting through emails.
Within the boundaries of its existing hardware, Apple can use personal data kept locally on the device to craft these sorts of personalised experiences for its users, says Tim Bates, a professor on the University of Michigan-Flint College of Innovation & Technology. “I speak about this as ‘narrow AI’,” he says.
This so-called “on-device” premise has the additional benefit of protecting user safety and privacy, as consumers are unlikely to want AI applications training themselves on their personal information and exporting it to the cloud. Running features locally also cuts out the lag involved in generating responses from a distant server.
“Siri is actually the right ‘flavour’ of interactive AI,” Bates adds. “An individual can control their data, confer with the AI, and get things done, and never be afraid it’s going to be sucked out of the device.”
The killer use case of the AI iPhone, nevertheless, will come when Apple can offer a “conversational assistant that’s fully integrated with every little thing on the device after which interfacing with some type of expert agent within the cloud,” says Wamsi Mohan at Bank of America.
This is where the expected partnerships with OpenAI — and possibly Google — are available.
While Apple has been working by itself generative models, it cannot rival essentially the most advanced models based on trillions of parameters of knowledge, so it must strike deals.
“Apple goes at it in two different contexts. One is on the iOS devices, which no one goes to do outside of Apple,” says JPMorgan’s Chatterjee. “The cloud aspect will involve separate partnerships — Apple doesn’t wish to go and put money into data centres running heavy AI models.”
This would allow Apple to introduce generative AI to the remainder of its software ecosystem. Dylan Patel, chief analyst at research group SemiAnalysis, says he expects Apple could have three layers to its AI offering, making use of multiple models: the smallest running locally on its devices, “medium sized” models running on their very own servers, and “large models” with service providers like OpenAI and Google.
Apple’s built-in advantage is its role as a hardware “middle man” between the tons of of tens of millions of iOS users world wide and the developers using its software ecosystem. It is ready not only to curate how consumers experience latest generative AI features, but additionally how developers construct them, ABI’s Hayden says.
Developers expect latest tools from Apple, says Adam Smart at mobile software analytics firm AppsFlyer, each by way of specific software development kits for constructing out AI features, and latest application programming interfaces that allow them to tap into Apple’s own features like Siri.
“An AI partnership has potential to alter the sport in the case of streamlining common, on a regular basis tasks people use their Apple devices for, reminiscent of crafting and editing emails and text messages, or simplifying voice-to-text search functions in travel and shopping apps,” he says.
The developers conference should make clear this too, says BofE’s Mohan. “I feel Apple will provide a number of the hooks which might be needed to reinforce productivity with AI.”
These moves might allow Apple to attract level with a few of its rivals, but not yet surpass them. At the moment, it’s neither pioneer nor perfectionist.
To the extent that progress rests on partnerships with large partners, the precise contours of any deal between Apple and OpenAI are unclear. Whether the 2 firms make a cultural fit, and the way long the wedding can last, is an open query. The potential pairing is all of the more striking given Cook’s decision to not even acknowledge the corporate only a yr ago.
But experts caution it could be premature to count Apple out. The AI revolution continues to be in its infancy, and not one of the Big Tech firms have yet managed to graft generative AI on to a killer hardware product.
“To use a sports analogy, I feel we’re in the primary minute of the primary half,” says Jason Banta, a company vice-president at chipmaker AMD. “It’s still very early.”
