In rebranding artificial intelligence with its own name – Apple Intelligence – the iconic manufacturer is making a bold bet. Apple Inc is banking on the idea that most people won’t buy the powerful A.I. software its rivals are developing. Instead, they’ll want cool hardware that incorporates A.I.
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 in a couple of existing phones, the iPhone 15 Pro and iPhone 15 Pro Max, Apple hopes to use A.I. to convince people to buy even smarter iPhones, iPads and other devices that will deliver a better personal experience.
“All of this goes beyond artificial intelligence,” Apple CEO Tim Cook said Monday in unveiling Apple Intelligence at the company’s developers 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 so doing, Apple is playing to its strengths and addressing its biggest weakness. Since it lacks its own cutting-edge version of the predictive, sounds-like-a-human technology known as generative A.I., 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 largest tech players to dominate valuable A.I. markets.
Many analysts are praising the Apple Intelligence strategy and tie-up with OpenAI.
“Apple is taking the right path to implement AI across its ecosystem while laying out the foundation for the company’s multi-year AI strategy,” Dan Ives, an analyst at Wedbush Securities, wrote in a note Monday to investors. The company has a base of hundreds of millions of users who own 2.2 billion Apple devices, he points out. “This was a historical day for Apple and [Mr.] Cook & Co. did not disappoint.”
By incorporating A.I., the company expects to make a compelling case for its users to upgrade to a new generation of Apple’s smartphones, starting with the iPhone 16 due out this fall, as well as next-generation tablets and personal computers.
Are “virtual personal assistants” the next big thing?
At the core of Apple’s strategy is what is referred to as a “virtual personal assistant.’’ This is voice-controlled software that does a wide range of administrative tasks. Apple’s personal assistant, called Siri, can give news updates and add to a grocery list. All an iPhone or iPad owner has to say, for example, is “call Tom” or “listen to this song and tell me what its name is” and Siri will automatically make the call and identify the song.
Next-generation personal assistants will be far more powerful. Instead of creating a grocery list, they might complete the online shopping or book your vacation. Or translate on the fly what your companion is saying in a foreign language.
Software that can do these things is beginning to appear. The promise of these voice-activated personal assistants is that they would automatically search out and activate such assistive software. And they would get to know users’ habits and preferences so well that they could become extremely useful in navigating daily life. The real-life applications of this technology, from helping people with disabilities to accessing hard-to-find information quickly, 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 A.I. a must-have for consumers.
Last month, rival Google demonstrated its Project Astra, which can handle not just songs or pictures but video. In a demo, an employee pointed her phone’s camera to objects around her office and the A.I. correctly identified a speaker and even recognized the type of computer code displayed on a computer screen.
Apple Intelligence will work more circuitously, initially relying on the computing power of its own devices to handle most users’ requests. Only when the system determines it needs more A.I. know-how will it reach out to OpenAI’s much more powerful system. Whatever disadvantages this process might have, Apple emphasized the positive.
Apple claims it will protect users’ privacy more robustly because the big generative A.I. engines won’t be able to tie requests from Apple to a specific user. Privacy may prove to be a big selling point for personal assistants if the technology learns the intimate details of the users who come to rely on them. The strategy also limits users’ exposure to the embarrassing gaffes that the big A.I. engines sometimes make. (A recent example: Google’s new AI Overviews suggested using Elmer’s glue to keep cheese from sliding off a pizza.)
But the strategy also carries risks if, for example, Apple’s A.I. partners decide not to share their latest and greatest breakthroughs.
Musical chairs for giants
At the root of this A.I. push is a multibillion-dollar competition to dominate the technology and reap its expected profits. Just as many companies competed in the early days of the personal computer, cellphones, and the internet, players are engaged in an intricate game of musical chairs to stay ahead of the competition.
Early this year, Microsoft edged out Apple as the world’s most valuable company as measured by market value. Its shares have soared nearly 30% over the past year, in part because of its heavy investment in OpenAI, while Apple’s shares are up less than 10%. One reason for Apple’s move this week was to convince investors it can take advantage of A.I. to boost its growth. On Tuesday, Apple shares surpassed the $200 level for the first time. But this competition involves a strange mix of partnerships.
Apple’s new A.I. strategy boosts the fortunes of OpenAI and, by extension, Microsoft, whose Windows operating system competes with Apple’s on personal computers. Microsoft and Amazon, rivals in Web-based computing services, partnered years ago to make their early personal assistants more interoperable. In January, Samsung announced its new smartphones would use Google’s A.I., even though the two companies compete in the smartphone market.
Eventually, the music will stop and the game of A.I. musical chairs will end. It’s far too early to tell which companies will be sitting pretty.
