AI is turning Apple into a "loser"
axios.com
axios.com
That quote alone is hilarious. What a low effort article.
Apple has plenty of time and money to watch other people flailing around trying to make AI first devices until they even really start to take it seriously. Even if someone else figures out to make a killer mobile AI app, it will absolutely support iPhones for the foreseeable future. All apple needs to do is make sure their chip pipeline supports it.
Google is the one that is facing an existential threat. Most people see their search engine as basically just a shitty ad-infested chatbot that produces worse results than chatgpt.
A hardware business cannot demand a P/E ratio in the 30s range, especially given that supply chain disruptions are going to eat heavily into their margins.
NVDA is not targeting consumer hardware usecases AND has a significant services component in the pipeline.
As I mentioned elsewhere, Axios is not aimed at a retail investor like you.
In 2040s
Ironically I was playing around with BasiliskII last night and was reminded how janky and tasteless the OS got before making the break to Aqua.
But now there is no “war path” Steve Jobs to come in and basically lay down their life fixing the product line up.
I searched & asked ai but I couldn't find the context.
I mean, it seems to be working. Which is sad and I think says something about consumers.
> "With the cash they have on hand and the loyalty they have…there would have to be something disruptive in the marketplace that would draw away customers. It's not there yet," he says.
I take that to mean they're in a good position now, but they might start losing customers in the next 2-3 years, should stronger competitors show up. I don't disagree. I don't see Apple doing anything special that will protect them as different kinds of hardware come to market. Steve Jobs was responsible for the iPhone and iPad. Apple can only ride on his work for so long.
That said, Apple isn't really riding this wave of AI. So I feel that Apple isn't benefiting, thus it could likely be growing more than it is if it has an AI strategy that was effective.
So I don't think Apple is a "loser" but it also isn't a "winner." It is more of a spectator who is still strong in their own domain, at least for now.
Apple has recently released a paper which says AI is all maths but a lot of people are saying that they are just "coping" with them losing the AI race.
Apple is one of the largest companies, with I guess a lot of cash and just power. So if they still can't win/compete effectively in the AI race when they had gone all in once does raise some questions about what really is happening within Apple.
It was a crappy product, I agree. I keep it disabled.
> Apple has recently released a paper which says AI is all maths but a lot of people are saying that they are just "coping" with them losing the AI race.
It is a single paper and not reflectively of company strategy.
> Apple is one of the largest companies, with I guess a lot of cash and just power. So if they still can't win/compete effectively in the AI race when they had gone all in once does raise some questions about what really is happening within Apple.
Apple has to compete with other hardware vendors primarily right? Samsung mostly. And they are doing that effectively.
Everyone's models are being obsoleted 6 months after they are released. It is a capital intensive market and it isn't clear anyone is actually profitable. I am not sure that Apple needs to get involved in this race, especially when there is little that is proprietary for more than a few months.
That said, if Apple did need to get into this race, they should just buy Anthropic. It is a no drama company that just delivers. It would match Apple's corporate style and it would likely deliver a lot of key features into the various OSes.
Apple has to compete with other mobile ecosystem providers.
So Samsung + (to varying degrees) Google.
https://gs.statcounter.com/vendor-market-share/mobile/north-...
But, if you compare the growth into new spaces Apple did in the 2000s, then sure Apple of today hasn't done anything new in a while. Does it need to? Maybe from an investor point of view?
The hardware side is its own thing - some do not challenge their hardware because their goals are different like Facebook going cheap on VR rather than expensive). While nobody has as complete of a portfolio on what the M-chips have accomplished, the GB10 and Ryzen AI Max Pro seem to be similar in capability, yet late to the party and at this point just one-offs. But I don't think that really matters. Few people are buying based on deeply researched specs, so whatever is cheap and has battery life will do and there's happily plenty to choose from these days.
This isn't true IMO. Everyone is challenging them and has for a long time. Android phones have better hardware, by any arbitrary metric. Camera, screen, battery, processor - Apple doesn't have a moat here. Don't get me wrong, their stuff is good. But is it the best? Ehhh... it's close, for sure.
Same thing with Macs, just a bit more in Apple's favor. Is M series good? Yes. Is it the best? IMO, no. x86 still has an edge in many applications. Some newer processors, like Intel's Lunar Lake, challenge M in both power and power consumption. Is ARM the future? IMO no - ARM is just a vessel. Low-wattage SOCs with RAM baked on are the future for mobile devices. Intel can do that, and they did, and it competes. But with all the benefits of x86.
I mean, I'm driving 2 1440p 240hz monitors right now on Lunar Lake over thunderbolt. Not a single dropped frame, ever. And at less than 30 watts - that's for everything, it's an SOC. Apple users a bit deceived - once you jump onto the Apple ship, you stop looking at competitors. But the competitors are good. Like, really good these days.
Apple's moat is their software. They keep a tight, tight grip on it. iPhones are popular in the US because of iMessage, pretty much exclusively. If Android phones could send and receive iMessage and transfer everything over, then it's over for Apple. They know that which is why it would never happen willingly.
If Apple's moat was hardware, they would have no problem distributing their software like candy. But they don't.
Allow running any AI agent natively and see world take off. Apple is sitting on so much value and straight up refuses to share.
Apple could have said "we are not doing any sort of AI" and they would still be worth what they are today.
Did the author forget that everyone and their grandma has an iPhone in their pocket and an Apple Watch on their wrist?
Apple wiped out blackberry in the enterprise market after it dominated the consumer market and it _barely even tried_.
The cogent lesson is that ecosystems which are fundamentally supported by user network effects should ignore user networks at their peril.
Yes, short term business efficiency has increased. But other than an under-the-hood chip change (which, to be fair, was really impressive), they haven't really done anything disruptive since.
Like what, a working phone that doesn't spy on you?
[Mind, they seem to be forgetting about that lately.]
I use my phone too little to have an opinion, but I have two macs, one running Sonoma and one running Ventura, and the latter - and older - is the most stable.
That said, they have always been behind the curve with AI, and recent product releases/updates have been, uh, suboptimal. Latest Logic Pro is a disaster (e.g. unstable/crashing, removed key shortcuts killing productivity) and don't get me started on the dumbing-down of iOS.
They are for sure headed in the wrong direction, but they are just too big to fall overnight.
I am reminding when Android phablets were really cutting into the marketshare of Apple a decade ago. Apple was reluctant to release larger phones for a couple years and it was an opening.
But then all of a sudden Apple did release larger phones and the capabilities gap disappeared and then Apple's phone quality + CPU speeds + surrounding ecosystem of devices made the Android competitors pretty irrelevant.
Apple should remember from its Maps debacle that it's difficult to make up years of product tuning overnight, no matter how talented a team you have.
Time >> talent
Because everyone has talent within the same order of magnitude, but no one has invented a time machine.
Only regulation could solve this (i.e. force all dominant OS's to allow running any AI agent).
Okay, so it's not actually because the users need something that can only be provided by an Apple AI. It provides little to no tangible benefit to Apples customers. It's just that the stock market would like to be able to tick the "Has AI" box on the APPL stock.
Essentially, the trade war related instability has made it's hardware story much more precarious (just like for any other consumer or enterprise hardware vendor), so some sort of a software story is needed to help cushion margins.
The issue is, aside from the App Store, Apple traditionally never had a strong software story. If Apple does not build some sort of a software story (which at this point is AI), it's harder to justify it's current valuation and it's "FAANG" status.
It's also undeniable that a LLM Chatbot player WILL make the foray into make their own bespoke hardware in order to target the consumer market, and the "chatbot as an oracle" UX does have strong traction amongst non-technical personas.
RIM, Sony, and Nokia were also on top of the world in 2007-09, but quickly saw their fortunes turn around as Apple's App Store+Hardware Design+Gated Ecosystem story helped provide some polish and a UX that the others failed to provide.
Essentially, if Apple didn't bungle Siri, they wouldn't be in the current situation today, and Apple is facing significant risks due to supply chain instability. Some diversification is needed.
I am sure that there are going to be a bunch of these and almost all of them will suck, and if apple tried to make one now, it would also suck. Apple didn't invent the mobile phone, or the laptop, or the mp3 player, etc. They'll let someone else figure out if there is a market for it and then they'll refine it.
The same was said about Nokia, RIM, Sony, and Microsoft, yet they failed. The current iteration of leadership at Apple doesn't have a strong history of successfully launching monetizable software plays other than the App Store, and that is a fairly distinct muscle.
More critically for Apple and the target personas who read Axios, Apple will not be able to justify it's current P/E ratio, because it's growth story has become difficult and it's margins are weaker now. That is why Apple is "turning" into a loser.
> Apple didn't invent the mobile phone, or the laptop, or the mp3 player, etc
Apple in the 2000s also didn't have a PE ratio in the 30s, which gave it more breathing room as it's product was it's products, not it's stock. Apple became a victim of it's success, as it is now treated as a blue chip - and by blue chip standards it is one of the less diversified ones (similar to Tesla imo)
Maybe once Gemini is fully empowered to drive Android as a digital assistant Apple might need a good answer, but I think we're still a ways off from that point.
But their approach is so aloof of industry development that it will take at least 2 more years for it to be Apple-grade quality. It has to be local. It has to be private. It has to be amazing. It has to work well. It has to have standard easy to use purposes. It has to be integratable into apps. It has to be intuitive.
They could just release a less ambitious Siri-Ai. Just to shut everyone up.
I know we all love the post-M1 MacBooks but it’s increasingly obvious that machine is the exception to the decline of everything else including the laptop line until M1 redesign saved it.
>decline of everything else
They were still pumping out very usable AirPods/Apple TV/Watch/Phone/Macbook Airs/Air Tags.
Siri sucks (always has), and they have had some big misses, but the stuff that 90% of the population uses 90% of the time chugs along perfectly fine.
I see what you did there...
In the mean while most of its competitors are burning towers of money on AI products that they charge their consumers about 1/10th of the real cost for. While Apple goes for on-device agents that are essentially free to run.
What is unfortunate for them though is that their AI miss is happening at the same time window in which smartphones seem close to done. They've produced 3 models in a row with zero memorable innovations. You can call Apple a hardware company but it's above all an iPhone company.
Consumers are actually down on AI now. There's increasing negative sentiment whenever a company advertises it now has "AI" in its products. They are trusted less, not more, and viewed with suspicion.
Apple is actually better positioned the more it relegates genAI to smaller local models which are good for a much more tightly-constrained number of key tasks for which LLMs aren't too horrifying.
The iPhone has stagnated so much I got the Oppo after having had every single iPhone since the original one in 2007. I legit cannot list a single notable thing that is new in the 16 Pro vs. the 15 Pro. The only thing that came to mind was the 48mp ultra wide sensor chip married to such a shitty lens that it legit has worse quality than my 15 Pro's old 12mp chip. I tested them back to back.
I've been a huge fanboy for decades but lately absolutely nothing from the company excites me anymore as they just can't deliver. The big new Apple Watch update that was rumored never came. Meanwhile we have so much better looking rounded OLED ones from competitors.
It is well established that upgrading every year is a waste of funds; A lot of users buy a phone every 5-8 years (or after a destructive event) -
IOS is nice to use. That's all that matters to a huge proportion of the market.
Me? I'll keep my 13 Mini until it dies, or until a new "Mini" is released - phones don't need to be massive.
Give them a permanent place in the lineup, treating phones like every other very personal device meant for humans. Small, medium, and large.
If you do that, and give people time to see exactly why 5.42 screens are superior to 6.1"+ sizes, then I think the numbers will start to change from what we saw with the iPhone 12 mini and iPhone 13 mini, which were both launched when people were less on the go than in 100 years.
okay mate
Seems you care enough to reply that you don't care
I am disabled and would pay buckets of money for certain things that siri obviously should be able to do but can’t. If I suffer a fall alone and yell “hey siri, I fell, call 9-11” I’m not entirely certain she can reliably do that and that’s insane to me.
AI is turning Apple into a market "loser"
Apple hasn't done the same kind of homework yet, as Siri has largely been moribund nor will Apple be the reciever of significant state funding and subsidizes for R&D the same way Toyota is.
So to say they haven't done "the same kind of homework yet" seems quite presumptive. Only Google has done anything remotely similar with TPUs and certainly not on the deployment scale that Apple has done.
FWIW I don't care either way, I don't get emotionally attached to corporations, I just think the entire framing of the original post is very reactionary and naive, and I continue to think that the comparison with Toyota is an apt way to illustrate that.