AI Shift at Apple Isn't a Setback, but a Study in How to Pioneer New Technologies.
Apple, known for its meticulous approach to innovation, is changing its tactics in the realm of artificial intelligence (AI). The tech giant, which has traditionally focused on building technology in-house, is now exploring strategic partnerships with leading AI companies to enhance its AI capabilities and stay competitive.
In a departure from its usual "Build It" strategy, Apple is adopting a more collaborative approach. This shift is evident in its plans to collaborate with AI powerhouses like OpenAI and Anthropic. This move marks a significant change as Apple's internally developed AI models have struggled to match the performance of third-party large language models.
Apple's new AI strategy is centred around a privacy-first, on-device processing approach. The company is leveraging its own hardware, such as M-series chips and neural engines, to run AI locally, rather than relying heavily on cloud infrastructure like its competitors Microsoft and Meta. This approach contrasts with the massive investments these tech giants make in cloud-based AI and open-source models.
In terms of spending, Apple's AI budget is relatively modest, with plans to allocate around $9.5 billion in 2025, which equates to around 2.4% of its revenue. This investment is primarily focused on enhancing its integrated ecosystem rather than broad, aggressive AI model development.
Historically, Apple has been praised for its ability to scale innovation, making technology the industry standard and rolling it out to millions of enterprise users. However, it's worth noting that Apple didn't invent the graphical user interface, the mouse, the multitouch technology, or even Siri. These innovations were either taken from other companies or acquired.
Apple's current AI woes are evident in the delay of the new Siri, which hasn't materialized as planned. Senior execs have admitted that the new version of Siri hasn't met Apple's high standards, forcing a return to the drawing board. Reports suggest that Apple held internal talks about buying Perplexity and considered using technology from Anthropic or OpenAI to power the new Siri.
This measured, ecosystem-centric approach reflects Apple’s long-term innovation style but is designed to address investor concerns about AI competitiveness and product innovation pace. By preserving its distinctive edge while leveraging the external AI ecosystem, Apple aims to strike a balance that will keep it competitive in the fast-moving AI landscape.
In the shift of Apple's AI strategy, finance plays a crucial role in allocating approximately $9.5 billion towards AI development by 2025, which is a fraction of its total revenue. This investment is aimed at enhancing its integrated ecosystem, rather than pursuing broadmodel development.
The new AI strategy also emphasizes innovation leadership, as Apple aims to strike a balance between preserving its unique edge and leveraging external AI frameworks, such as partnerships with AI powerhouses like OpenAI and Anthropic, for product development.
