AI: Apple Intelligence around the corner. RTZ #516

...Apple remains in an AI pole position over time

The short delay and wait for Apple Intelligence may be ending soon, with it launching October 28. Apple is expected to release some more AI features. As a reminder, Apple is doing ‘AI’ in its own imitable way, a strategy that I still view as bearing fruit vs its peers over the next two to three years. Especially given Apple’s formidable ecosystem and 2 billion+ global user base of its devices, software, apps and services. With the initial reviews likely being mixed in the short term, but bullish in the long term.

As Mark Gurman of Bloomberg reports in “Apple’s New iPad Mini Highlights the Company’s Secret AI Advantage”:

“The bigger obstacle is that the first Apple Intelligence features are underwhelming — with the more impressive capabilities coming later. In the iPad mini marketing on Apple’s website, the company spotlights four features; three of them aren’t launching until between December and March.”

“At the start, the signature feature will be notification summaries. These can be quite helpful — if they’re accurate — but they lack the wow factor of competitors’ offerings. Compared with the latest fare from Google, OpenAI and Meta Platforms Inc., Apple’s AI is still far behind.”

“Even some internal studies at Apple reflect this, I’m told. The research found that OpenAI’s ChatGPT was 25% more accurate than Apple’s Siri, and able to answer 30% more questions. In fact, some at Apple believe that its generative AI technology — at least, so far — is more than two years behind the industry leaders.”

But those near term issues could be mitigated in the longer term:

“That said, it’s hard to count Apple out. It has a cherished brand, nearly limitless resources, and a history of coming from behind and being successful (see Apple Maps). At some point, Apple will either develop, hire or acquire its way into the top tier of AI companies.”

“Apple has another advantage as it tries to catch up: the ability to roll out features to a massive base of devices. As showcased with the iPad mini, Apple can quickly equip its current products with the technology needed to run new software. We’ll see this again soon with the M4 Mac rollout, which will further speed up AI tasks.”

“When Apple announced its AI features in June, the software was only compatible with two iPhone models and a couple of iPads, as well as Macs with its in-house silicon. Now, the four newest iPhones, almost every iPad and all the Macs can support it. By 2026, nearly every Apple device with a screen will run it: The iPhone SE will gain the features in March, and the entry-level iPad will probably get updated later in the year.”

Particularly given Apple’s formidable, global ecosystem vs competitors, and its distribution local reach, with its billions of devices:

“When Apple becomes a true player in AI, Google and Samsung Electronics Co. will be hard-pressed to roll out new features and upgrades at the same speed. They have more fragmented operating systems, and their hardware, software and services aren’t as tightly integrated.”

I’ve long maintained that software innovation typically lags hardware in most tech waves, and this AI Tech Wave is likely no different. We may have to wait a bit longer for the cooler AI products and services from Google, Apple and many others, but Apple remains in the pole position in AI over the longer term, in my view. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)