Apple’s AI race: is the tortoise finally catching the hares?

Apple’s ‘tortoise-like’ strategy focuses on a massive software overhaul rather than a Siri revamp. But is this slow and steady approach enough to catch rivals and secure the iPhone’s future?

Steve Jobs died 14-years ago yet his shadow looms large over Apple Park, the tech titan’s headquarters nestled in rolling native grassland and orchards in Cupertino, California.

There’s the Zen-like Steve Jobs Theatre, a circular structure with walls entirely made from glass that sits on a crest of the 174 acres of land, exemplifying his love of form and function that made Apple very rich.

But it is Steve Jobs the storyteller that continues to reverberate across the company. And the story that his successor Tim Cook told at Apple’s annual Worldwide Developers conference this week was Apple was more tortoise than hare in regard to winning the AI race.

Apple’s rivals have leapfrogged ahead of it in the artificial intelligence race – a technological onslaught that has hit hard quickly, sparking a scale of disruption bigger than the iPhone’s launch 18 years ago, which eventually killed dominant brands such as Nokia and Blackberry.

Now Apple is at risk of facing its own potential existential crisis. More than $US600bn has been wiped off its market capitalisation this year. It is no longer the world’s most valuable company. It is worth $US2.98 trillion, behind Microsoft ($US3.56 trillion) and Nvidia ($US3.54 trillion).

Apple chief executive Tim Cook’s strategy is more tortoise than hare in the AI race.

Investors were anticipating Apple to unveil a much-hyped upgrade of Siri to catapult the voice assistant into the AI era as it faces pressure not only its rivals but Donald Trump, who is pushing the company to end its 20-year-old “assembled in China” strategy as part of his ‘Make America Great Again’ trade war.

But at its developer conference, Apple announced an overhaul of its operating systems instead of an AI revamp.

Apple’s senior vice president of software engineering Craig Federighi said Siri needed “more time to reach a high-quality bar” and he looked forward to “sharing more about it in the coming year.”

Federighi said with the software upgrade – Apple’s biggest overhaul since the release of iOS 7 a decade enabled “the stage … (to be) set for something new that will enable great experiences”.

He said the updates would make Apple’s products easier to use together with a more unified look that is centred on what it calls “liquid glass” – a new material that makes app icons and menus appear translucent and 3D-like. This new look extends across iPhone, iPad, Mac, Apple Watch, Vision Pro and even Apple CarPlay – the mirroring tool that makes using a car infotainment screen as easy as using an iPhone.

“With the optical qualities of glass and the fluidity that only an Apple can achieve, it transforms depending on your content or even their context, and brings more clarity to navigation and controls,” Federighi said.

It is more design evolution than technical revolution.

But Apple’s strategy hinges on more of a longer term play, with some analysts saying the software upgrade effectively raises the walls of its walled garden even higher.

Apple announces a new design language for its operating systems called ‘Liquid Glass’ at its annual Worldwide Developers Conference at Apple Park headquarters.

‘Tight window’ to figure out AI

Carolina Milansi, a technology analyst with Creative Strategies, said the absence of an AI agent did not mean that people could not get value from Apple’s products.

In particular, she said Apple’s tightening of its ecosystem would make customers more sticky, which the market generally loved.

“That is what still (gives) Apple a great advantage over their competitors,” she said.

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

Citi analysts also praised the “major revamp” of Apple software designs, saying coupled with making its on-device foundation model that powers Apple Intelligence available to developers, would pay off in the longer term.

“We view it as a big step for Apple to better integrate Apple Intelligence across apps and devices, fasten its progress on Apple Intelligence for its mission of making AI for ‘the rest of us’, and further strengthen its ecosystem,” Citi wrote in a note to investors.

Apple is known for taking its time and not being first to market. But when it catches up in a particular category it becomes a dominant player – hence the tortoise and hare.

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.

Dan Ives of Wedbush Securities said while he has a “high level of confidence Apple can get this right” it has a “tight window to figure this out”.

While there was no Siri update, Apple announced several advances in Apple Intelligence at its Worldwide Developer conference, making the case for a more practical use of AI.

Saying goodbye to telemarketers

For example, if you’re fed up with “pesky telemarketers” still calling you – even when you’ve signed up to the government’s Do Not Call Register, Apple now has a solution.

Its new call screener is designed to combat spam callers, robocalls or telemarketers. Apple vice president of internet technologies Darin Adler said: “call screening helps you quickly … (understand) whether it’s something important or just another pesky telemarketer”.

“Call screening automatically answers calls silently in the background. Once a caller shares their name and reason for the call, your phone rings and you can view the response, pick up or ignore,” he said.

The National Do Not Call Register is also designed to eliminate unwanted calls but there are several loopholes, much to the chagrin of most Australians who have signed up.

The register primarily applies to telemarketers. Charities, political organisations – think Clive Palmer in the last federal election – and survey firms are generally exempt. Spammers and robocalls can also slip through the net by using unknown or ‘spoofed’ numbers to continue to contact those who have signed up to the register.

Live translator and ‘hold assist’

Another practical feature is an AI live translator that can work during phone and FaceTime calls and Messages. For example if someone wants to make a travel booking in another country, it can activate the function and both ends of the conversation are translated, thanks to AI. Apple envisages the feature to be popular among families that have moved to new countries and have children that may not speak their native language as fluently.

It also announced a hold assist feature that can keep your spot in a queue – for example when you’re calling a bank to check interest rates or a telco to get technical support – without you needing to stay on the phone.

Mac-like iPads and AI fitness coach

iPads have also been made more Mac-like, with Apple allowing multiple app windows to be displayed and resized on a screen.

And there is an AI-powered ‘Workout Buddy’ available on Apple Watch that analyses your personal fitness data and coaches you in real time during workouts from gym sessions to long runs – the catch is you need to run with an iPhone, with the Apple Watch not yet powerful enough to deliver the new feature on its own.

Apple Watch has now more AI features including a new 'workout buddy'.

Vision Pro upgrade

Citi analysts praised Apple for pushing on with making its Vision Pro spatial computer, which was launched last year. People can now watch a movie, play a game together or interact with 3D models – like Neil Armstrong’s space suit he wore on Apollo 11 – with someone else if you’re in the same room and have two Vision Pros.

My new and more photorealistic AI persona that enables me to perform FaceTime calls on Apple Vision Pro.

Other Vision Pro updates include a more photorealistic ‘Persona’ or avatar that allows a person’s face to be viewed without wearing the headset on FaceTime calls. Widgets like clocks, weather forecasts and flight arrival times have also become ‘spatial’ allowing people to integrate them into a particular space so they can reappear each time you put on a Vision Pro.

“Amid the scepticism surrounding Vision Pro, Apple continues to push forward with impressive updates such new spatial experience through widgets, spatial scenes, a significant improvement on Persona, new ways to create content and new partnerships in playback and adding supports for third party accessories like Logitech Muse, PlayStation VR2 Sense controllers,” Citi analysts said.

“We believe Vision Pro will remain to be Apple’s big push on spatial computing, with early stage use cases focusing more on enterprise uses.”

New 3D images

Spatial or 3D pictures can also be created with any photo and viewed not just on a Vision Pro but also an iPhone. On the iPhone, viewing angles on a spatial image changes depending on how you hold or tilt a phone, thanks to advances in computational photography.

A spatial image can even be used as a wallpaper for a locked screen.

Apple Intelligence is supported on iPhone 15 Pro and Max onwards, iPad mini (from A17 Pro), and iPad and Mac models with at least an M1 chip.

The author travelled to Cupertino as a guest of Apple.

Originally published as Apple’s AI race: is the tortoise finally catching the hares?