This year’s show was definitely worth the wait. A year and a half after OpenAI launched ChatGPT and shocked the world, Apple has finally thrown its hat into the artificial intelligence ring.
The unveiling of “Apple Intelligence” at Apple’s Worldwide Developers Conference wasn’t an overtly mind-blowing event. It lacked the wow factor of Steve Jobs’ early presentations, when we saw the first iPhone or iPad. And it failed to match OpenAI’s stunning launch of ChatGPT version 40 a month earlier, which seemed to bring human-like AI closer to reality.
Apple’s late arrival in the world of artificial intelligence should reassure us a little. After all, if even one of the world’s most innovative and richest companies were blindsided by generative AI, perhaps we could be more lenient with the leaders of our regional bank or system hospital. Executives at food and beverage companies, pharmaceutical companies and SMEs are struggling to adapt to the most transformative new technology of our time.
Some business leaders have responded with procrastination. They know AI is important, but they aren’t treating it with the urgency and focus needed to make the biggest impact. Some cite legitimate concerns about privacy or intellectual property as reasons to do nothing at all. It’s the same mindset that led many retailers to underinvest in e-commerce in the early days of the internet, giving Amazon a head start.
Other leaders take a scattershot approach. They demonstrate the right level of urgency, but don’t really have a plan. As a result, they try to sprinkle a little AI magic dust on everything in the hopes that something will stick. And while it’s not a bad idea to start playing around with Midjourney or adding a chatbot to your website, these experiments can end up being distractions with no real benefit to the business.
The third approach has been to bet the house. These executives are pouring so much resources into AI that it threatens to crowd out other initiatives that are critical to the long-term health of the company. Innovation isn’t just about adopting the latest thing; it’s also about keeping the company from going bankrupt. AI may be what kills you, but a few other threats that demand just as much attention could do the same.
Apple didn’t do any of these three things. Its entry into AI got the important things right. More importantly, it offered valuable lessons to any executive struggling to figure out what their company could do, too.
An AI strategy that highlights your strengths
Apple’s approach to artificial intelligence is not a carbon copy of Microsoft’s or Google’s. His approach draws on a handful of the company’s unique strengths.
First, Apple has more devices in the hands of more people than anyone else. By building its version of AI into macOS and iOS, the company is building on that installed base. Apple’s AI will run on iPhones, iPads, and Macbooks to allow users to work seamlessly from any device.
Second, Apple is leveraging its unique strengths to create great user experiences. As CEO Tim Cook has said, the overarching goal is to make “your most personal products even more useful and delightful.” The system will summarize and prioritize messages and offer rewriting tools for emails and other text. This should help ensure faster adoption by mainstream consumers who have no desire to become fast, skilled engineers.
Third, Apple has acquired unique skills in designing its own hardware, including its own processors. The company said the new AI capabilities would leverage these chips, first on local devices and then in a proprietary cloud powered by Apple processors. This should give it a leg up on its competitors and avoid reliance on dominant AI chip maker Nvidia.
Fourth, and perhaps most importantly, Apple has differentiated itself in recent years by being the rare technology company that appears to genuinely care about consumer privacy. Much of the presentation was spent explaining how Apple’s version of AI will protect users’ personal data. Much of the processing will be done on the device and even Apple won’t know the details of the more power-intensive requests that need to be sent to the cloud.
Like Apple, companies would do well to take a moment to clearly identify the strengths and capabilities they bring to the table when formulating their AI strategy.
An AI strategy that helps solve strategic challenges
By leveraging what makes the company great, Apple’s approach to artificial intelligence also helps solve critical business challenges.
One of the brand’s biggest challenges has been declining sales of new iPhones. Sales of its flagship device fell 10% year-over-year in the quarter ended March. This is largely because users don’t have a good reason to upgrade to the latest model. Sure, the iPhone 15 has a great camera, but the ones on the iPhone 14 and 13 are also pretty good. Since Apple’s AI strategy focuses on processing on your local device, its new features won’t work on older devices. Consumers will finally have a reason to upgrade.
Apple has also struggled to connect with consumers beyond a screen. Its virtual assistant Siri has been in a slump for years, even as rivals like Amazon have used its Alexa interface to push into more and more people’s homes. As part of its new strategy, Siri is getting an artificial intelligence brain transplant that lets it respond to commands and act based on the user’s “personal context.” That should help level the playing field.
The company has also struggled to attract and retain technical talent in this area. It turns out that many AI researchers have the mindset of academics and enjoy sharing and publishing what they discover. This doesn’t fit with Apple’s notoriously secretive culture. Apple is trying to solve the problem by partnering with OpenAI and a host of other yet-to-be-named players. Of course, it is unclear how effective this approach will be. But it’s a start.
Of course, the biggest challenge Apple faces is in the public markets. For the past year and a half, investors have been asking what Apple’s plan was. Any strategy that looked like a copycat approach to OpenAI or Google would only show how late Apple was to the game. Instead, the company reframed AI as “Apple Intelligence” and focused on more immediate (and admittedly smaller-scale) solutions that are more about helping you write an email than developing true general artificial intelligence. That said, I have no doubt that there is a team working at breakneck speed within Apple to catch up with OpenAI, Google, Anthropic, and the rest. That’s just not part of the public strategy. And the public strategy seems to be working. Within hours of the AI launch, Apple’s stock price hit an all-time high.
When creating an effective AI strategy, the most important thing business leaders can do is define the problems to be solved. These are not technical challenges, but business challenges.
Enter the game
Ultimately, Apple’s first big foray into AI is a tall order compared to what it might do in the years to come. But the important thing is that rather than dithering, getting sidetracked, or going all-in on AI, it went into the game with a great initial strategy based firmly on what makes it great and the biggest challenges it faces. That’s a lesson every CEO and strategist can learn.
Dev Patnaik is the CEO of Jump Associates.
