Apple’s AI strategy: Incremental innovation over quick wins – Dave Lee

As Apple prepares for its Worldwide Developer Conference, expectations are high for major AI advancements, especially concerning Siri. Despite investor pressure and competitive lag, Apple's focus should remain on careful, incremental AI enhancements rather than hasty, experimental integrations. This strategy will ensure the company's reputation for quality and privacy, providing users with meaningful innovations without compromising the iPhone's core values. AI-driven features might not be immediate game-changers, but their potential is immense..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..By Dave Lee.Lately, I've been seeing headlines like this one from the long-running tech news site CNET: "Will Siri Become More Like ChatGPT?" .___STEADY_PAYWALL___.If you're an iPhone user, I'll bet your instinctive answer to that question is: "I sure hope not." Or maybe: "I don't care — I don't use Siri anyway." Both are reasonable reactions. The iPhone is too important to our day-to-day lives to be bogged down with experimental AI that is just as likely to hallucinate as it is to help. .Regardless, the question is being asked because next week is Apple's yearly Worldwide Developer Conference (WWDC), the forum in which Chief Executive Officer Tim Cook is widely expected to detail his company's most significant moves in artificial intelligence to date..Read more: 🔒 Nvidia closes the gap to Apple with market value surge.This wouldn't be saying much. The company is seen as being drastically behind its peers, so much so that, if reports are correct, getting Apple up to speed will require some kind of partnership with OpenAI, or perhaps Google, to get cutting-edge functionality on to the iPhone in some shape or form..The desire to do all this comes less from users and more from Wall Street. With Apple's share price flagging so far this year compared with those of its tech rivals, investors hope Apple might flip the narrative by offering a grand vision of AI it has kept hidden (or didn't have) until now. There's an "AI driven iPhone 16 supercycle now on the horizon," according to analysts at Wedbush Securities, calling WWDC the most important Apple event in a decade. .Now, Wedbush is one of the more excitable tech watchers on Wall Street. Still, the level of broad expectation is palpable. Investors hope AI might give consumers a reason to upgrade their smartphones sooner than they might have otherwise — an antidote to faltering iPhone sales. .Front of mind, as that CNET headline suggested, is the hapless Siri. The voice assistant, which has long been a great idea in need of better execution, is set for an "overhaul," according to Bloomberg's Mark Gurman, "a move that will let users control individual app functions with their voice.".Will a smarter Siri send people rushing out to buy a new iPhone? I wouldn't count on it. According to a recent poll by Bloomberg Intelligence, just 7% of 568 US-based respondents said AI features were a factor in deciding their next device. The age-old headaches like battery life (45%) and price (40%) are still paramount. The same survey indicated that consumers are holding on to their phones for longer than ever thanks to "inflation and high product quality." On the plus side for Apple, when existing iPhone owners decide to upgrade, they overwhelmingly stay with the company — 94%, according to BI..This all means "there's no rush" for Apple to bring AI features to its users, says tech analyst Carolina Milanesi, from Creative Strategies. In fact, it could do more harm than good. A company built on "it just works" and promises around privacy could find that current AI applications run counter to both of those hard-earned pillars of their reputation. AI is often buggy, sluggish and, for the more sophisticated queries, requires sending data away for heavy lifting in the cloud. "Apple may have found that they're behind the market," concurred Ben Wood, analyst with CCS Insight. "But they don't need to have a knee-jerk reaction.".A knee-jerk reaction would risk looking a lot like Meta Platforms Inc.'s AI bot, crammed clumsily into apps like WhatsApp and Messenger and described by many as irritating. Or it could end up like Google's AI Overviews, rolled back just a week after producing what Google described as "odd and erroneous" results to search queries..Read more: Apple apologises for controversial iPad Pro ad, pulls it from TV.The launch of these products was motivated at least in part by the need to keep Wall Street happy, helping to justify copious levels of spending on new infrastructure. Google employees I've spoken to recently speak about a culture of near panic as the company worries its search dominance is threatened by AI. .Cooler heads must prevail at Apple, where such threats are not a concern — at least not on any near-term horizon. The iPhone is the competitive moat to end all moats, the "Hotel California" of tech products, joked Wood (antitrust regulators find it less funny). Users won't hurry to abandon years of loyalty to jump ship for AI. What is being offered so far by the likes of Google and Samsung is just not transformative enough to warrant the effort..So, Apple has the luxury of time, and it need not fall into the trap of rolling out half-baked ideas to protect its position. Instead, its priority should be careful and incremental AI updates to enhance existing features and use cases. There's no doubt the potential for AI on Apple products is immense. With a delicate touch, Apple can become the most important AI company in the world, bringing the innovation to the masses just as it did with the smartphone. Investors shouldn't rush the company just to get a quick victory..Read also:.🔒 Apple's tone-deaf iPad ad backfires, triggers darkest AI fears: Dave LeeApple's historic $110bn buyback sparks 7% stock surge, market cap soars to $2.86tn🔒 Apple's strong quarterly results propel record share buyback program.© 2024 Bloomberg L.P.

Apple’s AI strategy: Incremental innovation over quick wins – Dave Lee

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