Apple's Slow AI Pace Becomes a Strength as Market Grows Weary of Spending

The golden goose is dead.

I certainly never heard anyone complain in real life.

A few months ago, MCP-style tool calling seemed like the clear standard. Now even Anthropic is shifting toward "code-mode" and reusable skills.

For Apple, reliable tool calling is critical because their AI needs to control apps and the whole device. My bet: Apple's AI will be able to create its own Shortcuts on the fly and call them as needed, with OSA Script support on Mac.

As Google integrates Gemini into their Google Assistant and Google Home products, if it starts to become leaps and bounds better than Siri, customers are going to start wondering why Apple is falling behind. If Apple can't achieve those things without AI and that could cause problems. Customers aren't saying "I want AI features", but they are indirectly asking for them because the features they want require AI to do what they expect.

(I realize Google and Apple have a deal happening to have Gemini integrated into Siri so this isn't the best example, but I think it illustrates the point I'm trying to make)

It's certainly been useful in my organization.

Apple Music is an ecosystem play.

now the tides are turning, so they can go back to scheming behind the closed doors without risking their top people leaving for meta for a bazillion dollars.

They roll out hardware to consumers they can use for AI once their service is ready, with users paying for that rollout until then.

Meanwhile they have started to deploy a marketplace ecosystem for AI tasks on iOS, where Apple has the first right-to-refuse, allowing the user to select a (revenue-share-vetted) 3rd party provider to complete the task.

So until Apple is ready, the user can select OpenAI (or soon other providers) to fulfill an AI-task, and Apple will collect metrics on the demand of each type of task.

This will help them prioritize for development of own models, to finally make use of their own marketplace rules to direct the business away from third parties to themselves.

My guess is that they will offer a mixed on-device/cloud AI-service that will use the end-users hardware where possible, offloading compute from their clouds to the end-users hardware and energy-bill, with a "cheap" subscription price undercutting others on that AI-marketplace.

> Magic Cue - Magic Cue proactively surfaces relevant info and suggests actions, similar to how Apple's personalized Siri features were supposed to work. It can display flight information when you call an airline, or cue up a photo if a friend asks for an image.

https://www.macrumors.com/2025/08/20/google-pixel-10-ai-feat...

Google shipped it, despite it not working.

Apple announced that the Siri uodate didn't work well enough to ship.

That's a selective list. High RAM Macs are available. MBPro goes up to 128GB. Mac Studio goes up to 512GB. Not cheap, but available.

The existential FEAR of the smartphone ecosystem players (Apple, Google) is, that another ecosystem (!) may come along, one that is tighter integrated into the daily lives, is more predictive of the users' needs, requires less interaction and is not under THEIR control.

Because this is not about devices, it's about owning the total userbase of that OS-ecosystem.

Replacing the Smartphone has been attempted numerous times in the past decade, but no device was able to replace it as a consumption device. Now technology has reached a level of maturity that Smart Glasses may have a shot at this. AND they come along with their own ecosystem as well.

Whatever happens, they won't replace all phones within 5 years. But it's possible that such a device would become a companion to an iOS/Android phone and within 5 years gradually eases off users of their phones into that other ecosystem.

And that's scary for Apple and Google.

Because this is not a device-war, this is an ecosystem-war.

I'm not sure how Apple is enabling anything interesting around AI right now.

That's what this bland article is not even touching on. Yes, having missed the boat is great if the boat ends up sinking. That doesn't make missing boats a great strategy.

Building huge models and huge data centers is not the only thing they could have done.

They had some interesting early ideas on letting AI tap app functionality client-side. But that has gone nowhere, and now everything of relevance is happening on servers.

Apple's devices are not even remotely the best dumb terminals to tap into that. Even that crown goes to Android.

I don't want to imply that this is their only play or that it will even work out.

The EU (and others) already identified this general scheme of stiffling competition by "brokering" between the consumer and the free market, so outside of the US I'm not even sure how much Apple will be able to rely on such a strategy (again)...

- Apple owns more than 50% of this market-segment, the annual sales of iPhones is roughly 200 Million units. In comparison, Samsung Galaxy S-series sits at roughly 20-25 Millions.

- Apple's is alone in the iOS ecosystem, while Samsung, Xiaomi and Oppo have to compete within the Android space every year. iOS is extremely sticky, which makes a certain volume of iPhones almost guaranteed to sell every year, at a lofty profit margin.

In comparison, Samsung always has to consider that the next BAD Galaxy-S might only sell a fraction of the previous one, because users might move horizontally to another Android brand (even to Pixel, a first-party product of their ecosystem provider). So Samsung cannot even make bets based on the sale of 20 million units, they are already at risk to make bets on the initial shipment-volume (~5 millions) because if the device doesn't sell they will have to PAY money to the carriers to get them into the market.

Apple has a much lower risk here. If the next iPhone is not catching on, Apple will likely still sell 200mn iPhones in that year, because the ecosystem lock-in is so strong that there is little risk of losing customers to anything else than ANOTHER (then more-profitable) iPhone.

So even when assuming a MASSIVE annual drop of 25% in Sales, Apple can still make development bets based on a production forecast of 150 MILLION units.

For their supply-chain that's still an average production output of ~400k units per DAY for each component. With that volume you can get entire factories to only produce for you.

That's why I can't think of any company in a comparable position. Apple can add hardware to their device and sell the resulting product to the consumer for profit before delivering any actual value with it.

If any competitor in the Android space attempts that, just the component costs alone will risk the device to be dead-on-arrival just because "some other Android device" delivers the same experience at lower cost.

The AI-capabilities of the devices will be pre-paid, as they will come with the product without delivering any significant value yet. The end-user will bear the cost for that before he is getting anything meaningful in return, because Apple's production volume is at such a scale that they can offset those investments without risking to lose any meaningful sales volume.

Other players can't do that because they don't sell 200mn units per year. If they would add on-device inference chips, they would have to significantly increase the device-price, risking to not sell any product

I mention this because , at least for the functionalities that you mention, I think the pixel watches are catching up nicely.

... but they still haven't been able to make me feel less stupid talking into a watch for phone calls like some off-brand James Bond wannabe, even if it works great.

Overselling abilities is for sure a lack of quality.