Apple’s AI gamble: is it too late?

Apple’s big reveal was short on the AI comeback investors hoped for, while Siri’s much-hyped upgrade is still months away. But analysts say the iPhone maker hasn’t lost its lustre.

Apple revealed its biggest operating system overhaul in a decade at its annual Worldwide Developers Conference in Cupertino. Photo: Josh Edelson, AFP.

Apple has released what it says is its biggest software upgrade in a decade, unveiling a raft of features including call screening, live translation and a new “workout buddy”.

But the big reveal at Apple’s annual Worldwide Developers Conference in Cupertino was short on the artificial intelligence comeback that investors had been hoping for.

A much-hyped upgrade of Siri to catapult its voice assistant into the AI era is still a work in progress. Software boss Craig Federighi said it needed “more time to meet our high quality bar” as rivals Microsoft, Amazon and Google leapfrog ahead of it in the AI race.

Apple’s shares dipped 1.2 per cent following the conference’s keynote presentation, as it instead focused on how its upgrades would make its devices, including iPhone, iPad, Apple Watch and Mac computers, work more seamlessly together via more unified operating systems.

Carolina Milansi, a technology analyst with Creative Strategies, said this tightening of Apple’s ecosystem should be viewed as a positive from the world’s most valuable company.

“It really brings all the devices closer together and that creates more tightness and engagement. That is what still (gives) Apple a great advantage over their competitors. It’s the fact that they are able to control all that,” Ms Milansi said, adding people needed to think more broadly than AI agents.

“I think what Siri will deliver is a more personal experience but it doesn’t mean that Apple doesn’t have intelligence now.”

“There was a lot of intelligence that was delivered today, it’s just not all packaged into (AI) agent or assistant in the way people think about Siri. That’s where there is a disconnect in what Apple is delivering and the expectation that people have. It doesn’t mean that you’re not going to get value from Apple Intelligence in your day-to-day life.”

Apple senior vice president of software engineering Craig Federighi says its Siri overhaul needs ‘more time to meet our high quality bar’.

Still, Apple is under pressure to make inroads in AI as it appears to lag rivals amid flat smartphone sales. Its shares have fallen more than 17 per cent since the start of the year, wiping more than $US600bn from its market value, as rivals advance their own AI offerings.

Gadjo Sevilla, senior analyst for Emarketer, said “the delays to Apple’s in-house AI efforts will continue to draw scrutiny”.

“Especially since rivals like Google and Samsung are moving ahead by introducing new on-device AI capabilities, or partnering with AI start-ups like Perplexity (in Samsung’s case) to provide users with AI features”.

Further intensifying competition, ChatGPT maker OpenAI has also acquired LoveFrom, Jony Ive’s design firm, for $US6.5bn ($9.97bn). Mr Ive – the iPhone’s chief architect – has now taken over creative design at OpenAI as it develops consumer devices to shape AI’s future, although it’s unclear what those devices will be.

But Apple is known for taking its time not being first to market – like in personal computing, smartphones and music streaming – and when it catches up in a particular category it becomes a dominant player.

That is the strategy investors are hoping chief executive Tim Cook – who steered the company’s market value to top $US3 trillion in 2022, making investors on average more than $US700m a day since he took over from Steve Jobs in 2011 – can deliver again.

“We have a high level of confidence Apple can get this right, but they have a tight window to figure this out,“ said Dan Ives of Wedbush Securities.

Apple CEO Tim Cook has made investors a fortune, and they’re hoping he can do it again as it catches up in the AI race. Photo: Josh Edelson, AFP.

Apple’s Worldwide Developers Conference lasts several days at its headquarters in Cupertino, California, allowing developers to test its new software upgrades to build or enhance various apps.

Software boss Craig Federighi said the operating system overhaul was Apple’s biggest in more than 10 years.

“It’s the kind of project that only comes along about once per decade. It’s a gorgeous new design that feels effortless to use,” Mr Federighi said.

“Our last major redesign was iOS7 (in 2013). Back then, we were inspired by the recent emergence of retina displays and the amazing power of our Apple Silicon.

“Well a lot has changed. Apple silicon has become dramatically more powerful enabling software, materials and experiences we once probably dreamt of and our devices have become even more vital to our daily lives. Our products are also more frequently being used together as you move across them throughout your day, the stage is set for something new that will enable great experiences.” With AFP.

The author travelled to Cupertino as a guest of Apple.

Originally published as Apple’s AI gamble: is it too late?