Well, as we speak, Apple is still one of the most valuable companies in the world, shareholder-value-wise and (most importantly) consumer-preference-wise.
So, being an absolute Apple-skeptic, I don't blame them for not having a crystal-clear future direction right now. VR/AR? Nah, probably not happening. AI? Probably huge, but in which direction? Who knows? And they've got products in all these markets, just not obviously compelling ones.
So, a holding pattern is more than warranted at this point. Will this allow anyone to bypass Apple? Possibly, but the chance/hope of Apple front-running everyone else is definitely still alive.
> AI? Probably huge, but in which direction? Who knows?
This is a really cool take that actually aligns with Apple's walled garden. They've built the garden wall (their hardware), they've prepped the soil (marketing, sometimes not great), and now it's time for them and their partners to start releasing local apps that take full advantage of the M2/M3's power to execute LLMs locally.
Apple has made bets like this before, both on the CPU and peripheral side. Historically, for better or for worse, they've done the whole "build the hardware (AltiVec, Thunderbolt, even USB-A) and the software will come" thing. With their latest ARM CPUs they're doing that with AI & LLMs, and it's a huge chance to change the direction of this tech from SaaS centric to user-owned. I too am not an Apple fan but I think they are going to come out of this looking pretty good.
Edit: I didn't mean to imply that Apple "built" USB-A, just saying that when they released the iMac it relied heavily on USB-A and people were pretty surprised at the investment they made in that tech.
I think the key here is the ability to focus on the privacy-first nature of local LLMs. A cloud-based service will always be more powerful (and markedly so), but Apple is very cautious about pursuing cloud-based solutions when user data is involved - privacy is a selling point of their products, after all. This is a double-edged sword, as you get to sell your services as privacy-friendly, but your offerings can be significantly less capable than your competitors' (see the iOS messages summary debacle, for example). The advantage of waiting is that smaller AI models are becoming much more powerful all the time.
Of course, Microsoft is also at this with its Copilot programme for laptops, where an onboard Neural Processing Unit has to be a particular speed to qualify. This lets you do local AI things like content-aware image snipping, text summaries and...er, Recall.
As to whether Apple will come out of this looking good or not, I think they're currently regretting rolling out a shitty initial AI offering, and will get better with the next release. It'll be like Apple Maps. Or the butterfly keyboard. Or any number of other broken version 1 Apple things.
An interesting question is to whether Apple Intelligence can be cancelled or pared back now the landscape is so AI dominated, i.e. will the lack of AI offerings be seen as a competitive disadvantage, or are people so sick of AI by now that it isn't a factor.
Doing AI just because everybody else is doing AI is not exactly a strategic vision. Going into AI without a clear plan is exactly what they should NOT be doing.
I’m satisfied with the very subtle AI implementations in their products.
Take the Photos app. I can type any object like “car” and it generally locates photos containing a car. This is far more useful to me than a LLM to generate paragraphs of text on a phone.
There are a few hiccups, but everyone'e acting like Apple Silicon wasn't one of the most wildly successful overnight improvements in laptops in the last 50 years and that airpods aren't so popular that even Android phone users buy them.
But has Apple Silicon justified the investment? I don't doubt it's good tech, but the market share hasn't necessarily reflected it. In 2024, total shipped units dropped quite a bit. Judging by the available data, I wouldn't use the term "wildly successful" just yet (particularly if we account for pre/post pandemic sales).
And the innovative part was basically going system-on-chip, as even Microsoft had tried to change to ARM architecture before. It was a natural consequence of designing for mobile devices, and a massive marketing campaign to sell it as something brand new.
I was wondering how long laptop computers have existed. The Epson HX-20 (1981) and Grid Compass (1982) seem like good early examples - the latter introducing the clamshell design used in many subsequent laptops such as ThinkPads.
Airpods were many years ago, as was the MacBook pro redesign.
CEOs are judged on today. Past achievements are past achievements and he was paid handsomely for it.
Tim Cook is a money guy. Saving money by reducing per device licensing costs via creating own chips and also now their own modems is a money guys domain.
Hardware and software innovation is another skill.
Tim Cook wasn't appointed on his ability to innovate. But he needs to ensure he has individuals who can do so, and that there aren't layers of management or himself obstructing them.
Apple Silicon was only an improvement in battery life. AMD and Intel still made more powerful processors coupled with Nvidia and AMD GPUs that blew Apple Silicon out of the water. Also depends what you consider successful since Macbooks are still a small fraction of the laptop market.
Airpods being dominant is something from many years ago. Sony, Bose, even Samsung caught up quickly and offer much better integration since half the features are locked to iPhone only. Airpods were early to market and assisted by forcing users to buy them since their phones no longer had headphone jacks. Which boosts their word of mouth marketing.
I don’t see a compelling reason for Apple to jump into the AI game. The MacBook Pro M4 is a dream to work with, and it works great with Claude Code. Creating quality products is a niche market, but that strategy still has merit.
I'm convinced that Tim Cook's biggest mistake was not creating an EV. Just look at how Chinese manufacturers like Xiaomi and BYD have moved into the EV space and have created amazing experiences for their customers. CarPlay paired with American cars is simply few generations behind from what the Chinese companies have done. Yet Apple was early enough and had an EV team but Cook killed it. Even if the 1st gen was crap and didn't live up to the Apple's standards, they should have kept iterating. Now they have nothing new and are just iterating current product lines. Which is fine but it doesn't create new growth. You need new markets to do that.
Cook's mistake is that they didn't make an Apple Internet, a version of the Internet that exists entirely within the walls of Apple's walled garden. Think of the 30% tax that could be collected from online shopping!
They put the manufacturing and supply chain expert in charge, and that’s what they excel at now. But they lost Jobs and Ive, so now they don’t have the imagination, vision, and design expertise anymore.
They did make an attempt with the vision glasses, but it obviously flopped.
They succeeded for so long with top-down direction because the top had ideas. I think the best move would be to allow for more bottom-up direction. Give the engineers and designers license to run wild a bit.
Apple has a great chance of being the personal AI machines.
If they managed to add inference chip that competes with Groq and similar hardware, they would make much bigger wins comparing to main their own models.
Imagine being able to run 32B reasoning models with hundreds of tokens per second on your local laptop.
I find it very strange to make this judgement by comparing Apple to Microsoft, nvidia, Meta. None of those companies are in the same business as Apple. If Apple fails to “beat” these companies they will still have incredibly popular consumer products and successful services.
The competition is only in the mind of business writers and pundits; it maybe matters for the stock market but Apple has never made their stock the main driver of their efforts.
The author compares Apple to Alphabet, Amazon, Meta, Microsoft, Tesla, and Nvidia. Broadly speaking, each company is in "tech", but looking more specifically, they are fundamentally in very different categories of tech.
Apple is a hardware company. Its primary products are smartphones, laptops, desktop computers, and tablets. That's always been true, since they were "Apple Computer". On the other hand, Alphabet and Meta are advertising companies. Their primary products are ads. Does the author suggest that Apple become an advertising company? How would that even fit with Apple's hardware portfolio? Tesla sells automobiles; Apple could try to sell automobiles too, but... why? Apple has no experience in automobiles. Nvidia is kind of a one trick pony: it sells GPUs, which are currently in massive demand. But is anyone saying, well, Tim Cook has no vision, because Apple didn't make GPUs? Surely Steve Jobs wasn't going to make GPUs either. That's not what Jobs was all about.
Apple is the most successful and profitable consumer computing hardware vendor in the world. They kick their direct competitors asses. Perhaps that market is somewhat saturated and doesn't have as much room for growth as other markets. But so what? It seems like critics just want "growth" without any purpose behind the growth. Steve Jobs always had a purpose and wasn't just looking for money, money, money. The innovation was oriented toward consumer computing hardware.
Meta tried to pivot to the so-called "metaverse", and that got them nowhere. They're still throwing billions at it every year with hardly any return. Nonetheless, Meta is still kicking ass at its core business: selling ads on social media. Now Meta is trying to pivot to AI, throwing a ton of money at it, but who knows how that will pan out for them. Nothing yet. We're supposed to be impressed by 9-figure pay packages for individual engineers, and that is impressive in a way, but it's not impressive in the sense of, look how that paid off for Meta.
It's not clear that even Apple and Microsoft are direct competitors. There's still macOS vs. Windows, which is more or less at a stalemate, but that's not the biggest piece of either company's revenue anymore. And again, nobody is out there saying that Tim Cook lacks vision because Apple is not winning desktop OS market share. None of the critics in the media even care about desktop OS market share.
It seems like the company has stagnated and Cook seems to consistently makes questionable decisions - fighting the app store rulings, doubling down on vision pro, focusing on OS redesigns instead of generative AI.
Maybe they've just calcified - the youngest person on their board is 63. At the end of the day they haven't had a credible threat in over a decade.
I think Apple is doing fine and is reasonably well positioned. The pre-Cook years basically established the skeleton of the company and Cook has fleshed it out with flesh and muscle. Now the company is far more of a Goliath with vast resources to help it weather strategic pivots, in addition to a loyal and trusting customer base.
Looking ahead to the next decade or so I believe what we're likely on course for is some sort of AI OS. AI will be able to vibe-code apps for you and you'll be able to manage and dispatch individual agents to do tasks. There will be a messy transitionary period that lasts a while from today's software.
Apple has a trusting customer base, they have tremendous hardware prowess, they have cross-platform cloud services, and they have design sense to figure out how to establish these new models. I think if a new form of computing emerges Apple basically gets a free first swing at it, in terms of consumer trust. We've seen that with their VR headset, that while a dud was given far more interest and attention than Facebook's and Microsoft's offerings.
I do think they show signs of vulnerability as well, even if I think they're less than their strengths. Apple's famously design focused culture seems to be cracking a bit and giving way to more Microsoft / Google style PM-led culture. That can be OK, but I think PM led cultures are sometimes almost too strategic for their own good, like someone you can tell is a salesmen not a friend, and that can result in gradual brand erosion.
A simple example of this happening is Apple's website. Like Microsoft the tabs at the top of their website now reflect the company's internal organization, not what makes the most sense to the user. In the Jobs era they insisted that there would be no separate "store" tab, a redundancy because the whole website was a store, but I suspect that changed because the "Store" division within Apple wants that extra prominence.
If Apple isn't careful with enough missteps they may dilute their brand and Google / Microsoft may seem just as appealing for early adopters of emerging AI OSs.
Wow. This whole comment section is full of armchair CEOs saying how the iPhone, ARM laptops. tablets, and AirPods are just inevitable outcomes.
Yet nobody else was able to do it. Microsoft, for all its power and money, couldn’t make it happen. Samsung+Google have come closest, but even then, Apple dominates the profits.
Sony is the closest company to Apple (and the original inspiration for it), but they can't do anything like it because they have no taste and no internal standards for simplicity.
AirPods in particular really are that good, and compared to them essentially every other audio product is a scam. Japanese companies instead invented something called "hi-res audio" which is just a pledge to only focus on useless features.
(The scam prevention systems like rtings' objective headphone reviews are themselves scams because they don't measure actually useful scenarios.)
When you're that big, you're allowed to make mistakes without major damage. Microsoft did it for ages. Remember Zune?
But it also means that any strategic maneuver is market-changing. Steve Jobs had the intuition and deep read of what people really wanted rather than what they said they want. There is no Steve Jobs any more. People are trend-following and mania-following. The problem is that the people moving tech also have no vision. They have a solution desperately seeking a problem.
And in doing so, the early winners are sociopaths and scam artists who destroy jobs and rewrite code overnight with no guardrails for the product/reputation damage or who just spam and spearphish. Move fast and break things. "We'll patch that later"
As for Apple, along with there are many alternative paths. One that worked is revitalizing the dead tablet market by "doing it a lot better" and making it part of their ecosystem. We'll see how glasses and autos work out, or don't work out. AI is immature for a company that prides itself on "doing things right". Some situations have no room for gaffes. Your guess is as good as mine.
"Now, for something completely different?" That's the 64 billion dollar question.
Apple's "strategic vision" for AI is to add a computer use agent (AI assistant) to the OS to perform tasks on behalf of the user, plus contextually surface AI capabilities in many specific contexts they've got utility (copy editing, image generation, photo organization, translation, coding).
What's missing here? What else should they be doing? What are their competitors doing, in any space relevant to their markets, that's much different? None of these critiques ever seem to say.
If AI ends up being another 'normal' technology, Apple's advantages in distribution (~2B active devices, with a user base that installs updates pretty reliably), ability to give their AI tools access to your existing data and apps, and general facility with packaging tech so consumers actually understand what it's good for, put them in an extremely strong position to capture value from it.
If AI ends up being something other than a 'normal' technology, if we really are a few years from building the sand god, well, all bets are off, and it's a little silly to evaluate the strategic planning of an individual company against that backdrop.
48 comments
[ 5.2 ms ] story [ 59.4 ms ] threadSo, being an absolute Apple-skeptic, I don't blame them for not having a crystal-clear future direction right now. VR/AR? Nah, probably not happening. AI? Probably huge, but in which direction? Who knows? And they've got products in all these markets, just not obviously compelling ones.
So, a holding pattern is more than warranted at this point. Will this allow anyone to bypass Apple? Possibly, but the chance/hope of Apple front-running everyone else is definitely still alive.
This is a really cool take that actually aligns with Apple's walled garden. They've built the garden wall (their hardware), they've prepped the soil (marketing, sometimes not great), and now it's time for them and their partners to start releasing local apps that take full advantage of the M2/M3's power to execute LLMs locally.
Apple has made bets like this before, both on the CPU and peripheral side. Historically, for better or for worse, they've done the whole "build the hardware (AltiVec, Thunderbolt, even USB-A) and the software will come" thing. With their latest ARM CPUs they're doing that with AI & LLMs, and it's a huge chance to change the direction of this tech from SaaS centric to user-owned. I too am not an Apple fan but I think they are going to come out of this looking pretty good.
Edit: I didn't mean to imply that Apple "built" USB-A, just saying that when they released the iMac it relied heavily on USB-A and people were pretty surprised at the investment they made in that tech.
Of course, Microsoft is also at this with its Copilot programme for laptops, where an onboard Neural Processing Unit has to be a particular speed to qualify. This lets you do local AI things like content-aware image snipping, text summaries and...er, Recall.
As to whether Apple will come out of this looking good or not, I think they're currently regretting rolling out a shitty initial AI offering, and will get better with the next release. It'll be like Apple Maps. Or the butterfly keyboard. Or any number of other broken version 1 Apple things.
An interesting question is to whether Apple Intelligence can be cancelled or pared back now the landscape is so AI dominated, i.e. will the lack of AI offerings be seen as a competitive disadvantage, or are people so sick of AI by now that it isn't a factor.
Take the Photos app. I can type any object like “car” and it generally locates photos containing a car. This is far more useful to me than a LLM to generate paragraphs of text on a phone.
Technology is changing rapidly. Apple can easily afford to wait a few years for markets to appear.
CEOs are judged on today. Past achievements are past achievements and he was paid handsomely for it.
Tim Cook is a money guy. Saving money by reducing per device licensing costs via creating own chips and also now their own modems is a money guys domain.
Hardware and software innovation is another skill.
Tim Cook wasn't appointed on his ability to innovate. But he needs to ensure he has individuals who can do so, and that there aren't layers of management or himself obstructing them.
Airpods being dominant is something from many years ago. Sony, Bose, even Samsung caught up quickly and offer much better integration since half the features are locked to iPhone only. Airpods were early to market and assisted by forcing users to buy them since their phones no longer had headphone jacks. Which boosts their word of mouth marketing.
For a company selling huge quantities of mobile computing devices, that's paramount.
The rules for iPhone software are almost unchanged since 2009!
What they’re lacking is quality control. They need a hard-ass that will scream at them when they try to release stuff like liquid glass.
It’s been too long since Jobs death and they’ve gotten comfortable pushing out poor quality features.
They did make an attempt with the vision glasses, but it obviously flopped.
They succeeded for so long with top-down direction because the top had ideas. I think the best move would be to allow for more bottom-up direction. Give the engineers and designers license to run wild a bit.
If they managed to add inference chip that competes with Groq and similar hardware, they would make much bigger wins comparing to main their own models.
Imagine being able to run 32B reasoning models with hundreds of tokens per second on your local laptop.
The competition is only in the mind of business writers and pundits; it maybe matters for the stock market but Apple has never made their stock the main driver of their efforts.
Apple is a hardware company. Its primary products are smartphones, laptops, desktop computers, and tablets. That's always been true, since they were "Apple Computer". On the other hand, Alphabet and Meta are advertising companies. Their primary products are ads. Does the author suggest that Apple become an advertising company? How would that even fit with Apple's hardware portfolio? Tesla sells automobiles; Apple could try to sell automobiles too, but... why? Apple has no experience in automobiles. Nvidia is kind of a one trick pony: it sells GPUs, which are currently in massive demand. But is anyone saying, well, Tim Cook has no vision, because Apple didn't make GPUs? Surely Steve Jobs wasn't going to make GPUs either. That's not what Jobs was all about.
Apple is the most successful and profitable consumer computing hardware vendor in the world. They kick their direct competitors asses. Perhaps that market is somewhat saturated and doesn't have as much room for growth as other markets. But so what? It seems like critics just want "growth" without any purpose behind the growth. Steve Jobs always had a purpose and wasn't just looking for money, money, money. The innovation was oriented toward consumer computing hardware.
Meta tried to pivot to the so-called "metaverse", and that got them nowhere. They're still throwing billions at it every year with hardly any return. Nonetheless, Meta is still kicking ass at its core business: selling ads on social media. Now Meta is trying to pivot to AI, throwing a ton of money at it, but who knows how that will pan out for them. Nothing yet. We're supposed to be impressed by 9-figure pay packages for individual engineers, and that is impressive in a way, but it's not impressive in the sense of, look how that paid off for Meta.
It's not clear that even Apple and Microsoft are direct competitors. There's still macOS vs. Windows, which is more or less at a stalemate, but that's not the biggest piece of either company's revenue anymore. And again, nobody is out there saying that Tim Cook lacks vision because Apple is not winning desktop OS market share. None of the critics in the media even care about desktop OS market share.
Maybe they've just calcified - the youngest person on their board is 63. At the end of the day they haven't had a credible threat in over a decade.
Looking ahead to the next decade or so I believe what we're likely on course for is some sort of AI OS. AI will be able to vibe-code apps for you and you'll be able to manage and dispatch individual agents to do tasks. There will be a messy transitionary period that lasts a while from today's software.
Apple has a trusting customer base, they have tremendous hardware prowess, they have cross-platform cloud services, and they have design sense to figure out how to establish these new models. I think if a new form of computing emerges Apple basically gets a free first swing at it, in terms of consumer trust. We've seen that with their VR headset, that while a dud was given far more interest and attention than Facebook's and Microsoft's offerings.
I do think they show signs of vulnerability as well, even if I think they're less than their strengths. Apple's famously design focused culture seems to be cracking a bit and giving way to more Microsoft / Google style PM-led culture. That can be OK, but I think PM led cultures are sometimes almost too strategic for their own good, like someone you can tell is a salesmen not a friend, and that can result in gradual brand erosion.
A simple example of this happening is Apple's website. Like Microsoft the tabs at the top of their website now reflect the company's internal organization, not what makes the most sense to the user. In the Jobs era they insisted that there would be no separate "store" tab, a redundancy because the whole website was a store, but I suspect that changed because the "Store" division within Apple wants that extra prominence.
If Apple isn't careful with enough missteps they may dilute their brand and Google / Microsoft may seem just as appealing for early adopters of emerging AI OSs.
Yet nobody else was able to do it. Microsoft, for all its power and money, couldn’t make it happen. Samsung+Google have come closest, but even then, Apple dominates the profits.
AirPods in particular really are that good, and compared to them essentially every other audio product is a scam. Japanese companies instead invented something called "hi-res audio" which is just a pledge to only focus on useless features.
(The scam prevention systems like rtings' objective headphone reviews are themselves scams because they don't measure actually useful scenarios.)
But it also means that any strategic maneuver is market-changing. Steve Jobs had the intuition and deep read of what people really wanted rather than what they said they want. There is no Steve Jobs any more. People are trend-following and mania-following. The problem is that the people moving tech also have no vision. They have a solution desperately seeking a problem.
And in doing so, the early winners are sociopaths and scam artists who destroy jobs and rewrite code overnight with no guardrails for the product/reputation damage or who just spam and spearphish. Move fast and break things. "We'll patch that later"
As for Apple, along with there are many alternative paths. One that worked is revitalizing the dead tablet market by "doing it a lot better" and making it part of their ecosystem. We'll see how glasses and autos work out, or don't work out. AI is immature for a company that prides itself on "doing things right". Some situations have no room for gaffes. Your guess is as good as mine.
"Now, for something completely different?" That's the 64 billion dollar question.
What's missing here? What else should they be doing? What are their competitors doing, in any space relevant to their markets, that's much different? None of these critiques ever seem to say.
If AI ends up being another 'normal' technology, Apple's advantages in distribution (~2B active devices, with a user base that installs updates pretty reliably), ability to give their AI tools access to your existing data and apps, and general facility with packaging tech so consumers actually understand what it's good for, put them in an extremely strong position to capture value from it.
If AI ends up being something other than a 'normal' technology, if we really are a few years from building the sand god, well, all bets are off, and it's a little silly to evaluate the strategic planning of an individual company against that backdrop.