Apple falls behind in AI race | DW News

Key Concepts

• AI Lag: Apple's отставание in artificial intelligence compared to competitors.
• Install Base: Apple's large user base of iOS devices (2.4 billion) and iPhones (1.5 billion).
• M&A (Mergers and Acquisitions): The potential need for Apple to acquire an AI company.
• LLM (Large Language Model): Apple's goal to develop its own proprietary LLM, similar to ChatGPT.
• Cosmetic Updates: Minor, superficial changes to iOS and other frameworks, lacking substantial AI integration.
• Regulatory Headwinds: Challenges from regulatory bodies in the US and Europe regarding Apple's App Store business model.
• Tariff Threat: Potential impact of US tariffs on Chinese-made goods, affecting iPhone production and sales in China.
• Innovation Imperative: The urgent need for Apple to innovate and take risks in the AI space.

WWDC Keynote and Apple's AI Strategy

The WWDC keynote was described as a "yawner" and a "low bar" due to its lack of significant AI announcements. The focus was primarily on cosmetic updates to iOS 16 and other frameworks, rather than addressing the "elephant in the room," which is Apple's отставание in AI. Investors and developers are eager to see Apple innovate and leverage its install base with AI-driven features.

Apple's Position in the AI Race

Apple is considered behind competitors like Google, OpenAI, and Microsoft in AI development. This отставание is a concern for investors and consumers, who are looking for reasons to upgrade their devices. The analyst suggests that Apple might be forced to pursue M&A, potentially acquiring a company like Perplexity, to accelerate its AI capabilities.

Investor Sentiment and Stock Performance

Apple's stock has experienced its worst run in over a decade, sliding over 20% since the beginning of the year. This decline reflects investor concerns about Apple's AI strategy and its ability to compete in the rapidly evolving tech landscape.

Potential Turnaround and Apple's Approach to AI

While some argue that Apple is "missing the boat" on AI, an optimistic view suggests that Apple might be waiting for AI to mature and become more user-friendly before fully integrating it into its products. However, the analyst emphasizes that AI represents a "fourth industrial revolution," and Apple cannot afford to remain on the sidelines.

Opening Up On-Device AI to Third-Party Developers

Apple is opening up its on-device AI model to third-party developers through APIs. This move is seen as an "olive branch" to developers, encouraging them to create more AI-powered applications for the Apple ecosystem. However, it's considered a "band-aid approach" compared to the larger issues Apple faces in AI development.

Siri's AI Enhancement and Past Missteps

Apple had previously promised AI-enhanced Siri capabilities, but had to "walk back" many of those promises. This misstep is considered a "black eye" for Apple and contributed to the cautious approach taken at the recent WWDC.

Acquisition as a Potential Solution

Acquiring an AI company, such as Perplexity, is presented as a "no-brainer" solution for Apple. The analyst points out that competitors like Google, Microsoft, and OpenAI are actively making acquisitions in the AI space. Apple's significant financial capacity (estimated at $300 billion for acquisitions) makes its lack of acquisitions in the AI sector even more puzzling. OpenAI's acquisition of Jony Ive's company is highlighted as a significant loss for Apple.

Competition and Innovation

Apple is facing increasing competition from companies like Google and Meta, particularly in areas like smart glasses. The analyst suggests that Apple is "on a treadmill from an innovation perspective" and that criticisms from competitors like Zuckerberg are "legit."

Regulatory Challenges and Tariffs

Apple faces regulatory challenges in the US and Europe regarding its App Store business model. These "regulatory headwinds" further emphasize the need for Apple to pursue M&A and be more aggressive in AI. The potential impact of US tariffs on Chinese-made goods is also a concern, as it could affect iPhone production and sales in China, a key market for Apple.

The Path Forward: Innovation and Risk-Taking

The analyst concludes that Apple needs to "innovate, innovate, innovate" and "take more risk" in the AI space. This includes going after the install base and experimenting with new AI-driven features, even if some of them fail. The next 6-12 months are crucial for Apple to demonstrate its commitment to AI and regain investor confidence.