As Apple gears up for the typically-important Worldwide Developers Conference, many seem uneasy about Apple’s ability to provide evidence that its artificial intelligence strategy (“Apple Intelligence” and Siri) is working. Some worry Apple started too late or is in some ways hobbled because of its emphasis on data privacy, which limits the degree to which Apple software can take advantage of cloud-based processing.
Those concerns might ultimately be a bit harsh.
Apple, despite the growth of its services revenue, remains a hardware company driven by sales of general-purpose devices such as smartphones. And there is an argument to be made that AI’s value is highest for special-purpose embodiments, less for general-purpose devices.
In other words, AI’s value is crucial for automated vehicles. We might argue that AI-based health monitors likewise are instances where the AI has moderately-high value.
For general-purpose smartphones, AI obviously aids photography operations, voice interactions or personalization. But we might expect too much of AI as a value driver beyond that. The specific value of AI for personal computers is arguably even lower.
Sure, voice interfaces are helpful, but most of the location-based personalization smartphones enable is not so pronounced with PCs. One might even argue AI provides lowish value for PCs.
The point is that Apple’s AI strategy and imperatives are different from those of Alphabet, Microsoft or Meta. There is an argument to be made that Apple primarily has to employ AI to improve the value of phone apps (camera, for example) or user interface. AI is useful, but not existential.
For Microsoft, AI enables many of its core businesses, from gaming to enterprise productivity apps. AI might not emperil its core revenue drivers, so long as it can keep up. For Meta, whose revenue is built on content and advertising, AI might be a net plus.
Amazon might benefit directly mostly through AI-powered logistics efficiencies and recommendations and personalization for its customers.
Alphabet, on the other hand, faces the possible cannibalization of its search business model by AI alternatives. So for Alphabet, AI leadership might be an existential challenge.
So there is an argument to be made that Apple does not actually have to "lead" in broader AI. In fact, that has tended to be Apple's approach to innovation in the past, in any case. It rarely is "first" to introduce a new type of product or category. It tends to "do it better."
And some of us recall that Apple has faced many periods when it seemed threatened. Eventually, Apple has been able to surmount such challenges.
Period | Challenges | Rebound Strategy | Outcome |
Mid-1980s to 1997 | - Declining Mac sales - Fierce competition from Windows PCs - Poor leadership after Steve Jobs was ousted in 1985 - Mounting losses and product confusion | - Steve Jobs returned in 1997 through the NeXT acquisition - Simplified product line - Microsoft invested $150M in Apple (1997) - Launched iMac in 1998, designed by Jony Ive | - Apple returned to profitability - iMac became a major hit - Re-established design and innovation culture |
Early 2000s (2001–2003) | - Skepticism over Apple's entry into consumer electronics - Slow Mac sales - Tech bubble aftermath weakened investor confidence | - Launched iPod in 2001 - iTunes Store in 2003 revolutionized digital music - Strengthened brand loyalty | - iPod became a cultural phenomenon - Boosted revenue and brand visibility - Set stage for future devices |
2007–2009 (Post-iPhone Launch) | - iPhone faced strong criticism for lacking features (e.g., no 3G, no physical keyboard) - Doubts about Apple entering the mobile phone market - 2008 financial crisis hurt tech stocks | - Rapid iteration: iPhone 3G (2008), App Store launch - Aggressive global carrier partnerships - Focus on software ecosystem | - iPhone became Apple’s flagship product - App Store created a new app economy - Massive revenue growth |
2011–2013 (Post-Steve Jobs Era) | - Concerns over Apple’s innovation capacity after Jobs’ death in 2011 - Critics claimed Apple was no longer a “visionary” company - Increasing Android competition | - Strong product roadmap under Tim Cook - Continued success with iPhone, iPad, and Mac - Services revenue growth began (iCloud, App Store, etc.) | - Stock rebounded and reached new highs - Apple maintained leadership in premium devices - Cemented Cook’s leadership credibility |
2015–2016 (iPhone Saturation Fears) | - Slowing iPhone growth - China market concerns - Critics questioned reliance on a single product line | - Diversification: Apple Watch, AirPods - Expansion of services (Apple Music, iCloud, App Store) - Focus on ecosystem lock-in | - Apple became world's most valuable company again - Services and wearables became major revenue contributors |
2020 (COVID-19 Pandemic) | - Factory closures and supply chain disruptions - Retail stores shut down - Global economic uncertainty | - Rapid pivot to remote work culture - Launched Apple Silicon (M1 chip) in 2020 - Robust online sales strategy | - Record-breaking quarters post-pandemic - M1 chip received critical acclaim - Apple solidified vertical integration strategy |
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