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This is actually a break in tradition for Apple - they had been going out of their way to call things specific names like LLMs, generative models, transformers etc. I guess they've decided that the AI term is here to stay.

Digital Crown is not really made up though.

Crowns on a watch are the standard term for the dial you turn. And it’s digital.

There are tons of their other branding names though that are made up, but it’s funny to see Digital Crown being picked since it’s the worst example for the point being made.

I thought about "spatial computing," but I discovered that it was used before the Apple vision.

AI has become so overused by now, even in the non-technical realm, that it would be too late to call it something different and risk that name ending up as something no one will use.