Apple’s revamped AI and Siri strategy signals a clear recommitment to its proven core business model: selling premium hardware and the high-margin services that power it.
The company acknowledges that its in-house artificial intelligence technology trails well behind leaders like ChatGPT, Google Gemini, Anthropic, and others. With competitors advancing at a rapid pace, Apple faces no realistic near-term path to AI leadership.
That acknowledgment is driving its new direction, which is expected to be detailed at the Worldwide Developers Conference on June 8. Instead of chasing an expensive AI arms race, Apple is doubling down on its greatest strengths — delivering highly profitable devices and monetizing the services and ecosystem that run on them.
Mark Gurman for Bloomberg News:
Instead, Apple is pursuing a two-pronged strategy: embedding just enough AI into its operating systems to keep users from defecting to Android, while opening Siri and Apple Intelligence to third-party services. This approach leverages Apple’s hardware, makes its products more customizable and keeps the company in control of its ecosystem.
A cornerstone of this strategy is the upcoming iOS 27 Extensions feature, which will let users install third-party AI chatbots beyond ChatGPT and run them inside Siri. This feature will have its own dedicated App Store section, effectively creating an AI App Store. It will be a marketplace of sorts for third-party AI integrations.
A separate effort to use Google’s Gemini technology to revamp Siri and other AI functions allows Apple to offer in-house technology that’s usable and capable. But complementing those features with third-party offerings is the key next step. Apple can maintain sales of the iPhone and other devices while also generating revenue from AI-driven apps, via the App Store’s 30% commission.Apple will still need to offer its own services, both for marketing purposes and to provide a usable out-of-the-box iPhone experience. It’s the same approach the company has long used with built-in apps: Apple tries to make its offerings useful even when they lag behind rival fare. Moreover, the company needs in-house technology to enable the launch of new device categories: high-end AirPods, smart glasses, a pendant and smart home products. Delays to the new Siri have set back some of these plans.
Apple’s own artificial intelligence software may still be subpar, but its chips and hardware run AI well in general. That dynamic shows that the company’s future probably remains rooted in hardware, not AI software and advanced large language models…
Apple has effectively conceded the AI race. That means not developing a serious competitor internally while letting third parties innovate. The company had little choice. It got caught flat-footed by ChatGPT in 2022 and has lost AI talent to OpenAI, Meta Platforms Inc., Google and Anthropic PBC.
Yet it still has a potentially successful path — even if the company stumbled into it. The closest historical parallel is the App Store: Apple offers in-house apps while allowing users to install third-party alternatives and takes a cut of the revenue. Many customers stick with Apple’s defaults, but many others opt for superior options…
MacDailyNews Take: Imagine the AI world as a vast network of superhighways where powerful AI “vehicles” — like Grok, ChatGPT, Google Gemini, Anthropic’s Claude, and others — race forward at breakneck speed, constantly upgrading their engines and capabilities.
Apple isn’t trying to build the fastest or most powerful AI car. Instead, it has decided to own and control the toll roads that all those AI vehicles must drive on to reach users.
Competitors can pour billions into making their AI vehicles faster and smarter, but without Apple’s roads, they have limited access to the massive, high-value traffic of iOS users. Apple, meanwhile, collects steady revenue from every trip while focusing on what it does best: selling premium vehicles (hardware) and maintaining the profitable highway system (services and ecosystem).
This way, Apple doesn’t need to win the AI arms race which they lost long ago due to a rather appalling lack of vision at the top of its executive ranks — it just needs to make sure every serious AI player eventually drives through its gates.
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So Tim Cook continues his strategy of circling the wagons while others forge ahead. Siri was a revolutionary idea that took competitors by surprise. And then it was stuffed into a closet to die a quiet death. Jobs was no fool. He knew his company needed a steady handed caretaker upon his departure, however I doubt he intended that caretaker to preside over its funeral. It’s time for Cook to move on. Apple needs to get back to innovation and risk taking.
And in case you’re wondering about my credentials, I’ve been an Apple investor for 25 years now, and I’ve made a life changing amount of money over that time period, something like 36,000% profit, but I have now reached the point of bailing out if something doesn’t change.
I think it’s a smart move! Developing its own AI solutions where it’s a must for Apple and its customers and opening the field for those same customers where it creates the most value.
AI development is a tech bubble costing companies billions. If needed Apple can always step up its efforts in the future but this is a smart strategy.
Siri is modern day Apple’s version of Copland