The pressure is on

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Apple is not having its year. iPhone sales are not what they used to be -- especially in China. The much-anticipated Vision Pro is much-debated, but sales figures are even lower than expected. And through a big anti-trust case in the US and the Digital Markets Act in Europe, Apple's mobile monopoly is slowly being diminished.

Like many of its peers, Tim Cook used the latest investor call to hint at big AI plans. Like often in the tech world, all eyes are on Apple. Especially in the weeks leading up to WWDC (June 10-14), where it will unveil its grand AI strategy.

Apple's stance on AI has been interesting.

• It's a misconception that Apple missed the boat on Machine Learning. Apple devices and software contain a multitude of models: to improve your photos, make them searchable, recommend the right app, etc. The only difference is that ML is a means to an end. It communicates about the value it brings to users. Not about what happens on the hood.
• That said: Generative AI is widely regarded as a platform shift, and Apple is notably absent. The other big boys are betting big on AI. And Apple? Till recently, they didn't mention the word 'AI'. At most, they mention there's 'Machine Learning' behind a certain feature.

Apple doesn't play into hype, and creates its own story. (Also see: 'Spatial Computing' instead of 'Mixed Reality'.) But the gravitational pull of Generative AI is so strong, not even the stoic Tim Cook can escape it.

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So ...

What to expect?

Apple is normally very secretive on its plan. With insiders only getting their hands on what Apple wants us to know. With quite a few leaks already out there, it's clear: Apple wants us to know things are cooking in its AI-kitchen.

• There will be a lot of focus on edge AI. Models that run on-device. Although running big foundation models in the cloud is more powerful, it's also a lot more time and money consuming. Apple's chips are the best in the market, so this will give the company a huge strategic advantage.
• But there will also be LLMs that run in the cloud. Interestingly enough, Apple is in talks with OpenAI (ChatGPT), Google (Gemini) and Baidu (Ernie) to put their technology into the iPhone.

The latter makes you wonder: why put their eggs in another's basket?

• Is Apple admitting it has in fact fallen behind on GenAI?
• Is it a way to have the right partner for each market? OpenAI for the West, Baidu for China, etc.
• Is it a defense mechanism? Where Apple can shift the blame when (not if) PR issues arise due to hallucinations?
• Or a clever way to ship features and make money, like it does with search? (The antitrust case finally gave us an insight into how lucrative that deal is for Apple: $20 billion.)

More questions

Although we feel quite confident about the predictions above, we're still looking to Apple for answers:

• How will Apple protect its one billion users from the limitation inherent to LLMs? GPTs - in stark contrast to Siri - can answer just about any question you throw at them. Not necessarily correctly though. We're doubtful Apple holds the key here.
• How will the interaction model look like? For sure, expect a multitude of cool, AI-driven features. But should we also expect a chatbot? And will Siri, its much-maligned virtual assistant, make a big comeback? (The answer is yes.) Fact of the matter is that apart from Google, there is no tech company that could integrate an assistant as deeply into your calendar/contacts/... as Apple. Another really big strategic advantage.
• And what about the app model? AI assistants become the primary touch point, which puts third-party apps at risk of being desintermediated. But Apple can't risk alienating developers, already stuck in an abusive relationship. Maybe, we're speculating, New Siri will allow apps to expose their data and features, building bridges between user intents and app features. Also something Apple's OS is uniquely positioned to do.

We'll know soon enough

One thing is for sure:

• The past few years, Apple's events have become quite predictable, focusing on incremental improvements.
• But this year, we're bringing popcorn.

And you?

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