Obviously,$Apple (AAPL.US)$Investors were disappointed with the long-awaited AI global strategy announced by the company at Monday's global developer conference, but they may not realize that slow and steady often wins the race.
On the day of the WWDC keynote speech, Apple's stock price fell about 2%, the worst performance on a WWDC keynote day in at least 11 years. As of pre-market trading on June 11, Apple has fallen 0.6%.
Disappointingly, Apple's AI, named Apple Intelligence, will only be available on one existing device, the iPhone Pro 15, and the iPhone 16, expected to be released later this fall, because it requires more processing power. Some investors had hoped that Apple's AI product would be limited to iPhone 16, which would drive significant growth in sales of the new phone.
However, Amit Daryanani, an analyst at Evercore ISI, said that including the iPhone Pro 15, sales of the iPhone starting this year will still drive a "super cycle." In a report after the Apple keynote, he said: "Limiting Apple Intelligence to iPhones sold last year makes us more confident that AI can help kick off the iPhone's super cycle."
Another complaint is that Apple has not invested billions of dollars in graphics processing units (GPUs) to build AI infrastructure. However, Apple says it will provide customers with its so-called private cloud computing, powered by Apple-designed silicon chips, which will handle such requests when the computing power needed to run the query exceeds the user's device.
Apple's hardware and software integration will be the key for users looking for quick information, most of which is already buried in their own devices. Consumers may not need AI that really helps them on a daily basis outside their own ecosystem.
IDC analyst Francisco Jeronimo said in an email: "The fewer applications needed for AI, the better the phone can use data contextually to assist users. Apple's complete control over its ecosystem, hardware and software, as well as seamless integration, gives it a significant advantage over its competitors."
Daryanani also agrees, saying he is confident in Apple's AI strategy and its ability to provide generative AI to users without spending billions of dollars in capital. Apple did not discuss any pricing issues, mentioning only its collaboration with OpenAI and the use of ChatGPT. Apple users will control when to use ChatGPT on their devices and will be asked for permission before sharing any account information. The feature will be free for Apple users, but ChatGPT subscribers can also connect their Apple accounts to access their paid features.
"One of the cornerstones of Apple Intelligence is on-device processing, where many of the models driving it run entirely on the device," Apple said in a statement.
If users are satisfied with the functionality on their devices, Apple will have a whole new appeal and charm for consumers.
Jeronimo of IDC said: "By reducing the need to navigate multiple applications, Apple's AI-supported devices will provide a smoother, more intuitive, and more intelligent experience."
In the age of AI, one of the biggest issues is user privacy and not wanting personal data to be harvested and used by AI datasets. And this is where Apple's closed ecosystem and privacy focus can truly set itself apart. Although it is still early because investors only saw the feature demos, Apple's entry into the AI field could bring much-needed positive momentum to the company.
Edited by Jeffrey