Late-to-the-game Apple largely doesn’t have control of its AI destiny- Gene Munster
Gene Munster, Deepwater Asset Management managing partner, joins ‘Squawk Box’ to discuss Apple’s recent rally following a rocky start this year, what to expect from Apple’s product pipeline this year, impact on the tech sector, and more. Munster says that Apple doesn’t have control of its AI destiny and that is why the company is resigned to inking partnerships with the likes of OpenAI.
Apple has obviously been late to the game when it comes to AI… [But] Apple has a unique asset: that, of course is the 2.2 billion active installed devices, those are monthly devices, and that is the window [through which] 20% of the world is going to experience AI.
They can quickly bring those to market with a partnership, most likely with OpenAI, improve Siri and ultimately start to inch back towards revenue growth… For the last two years revenue has been flat; it’ll be up a couple percent in June, 4% in September, and 6% in December, so a combination of what we’re going to see next week [at WWDC] along with improving revenue growth is what get us back to a better place for Apple shares…
I expect a new chip architecture from Apple – not this year, probably in 2025 – think of a GPU for a smartphone. This will be used to run small language models, so I think Apple is going to increasingly rely on silicon as a competitive advantage…
We’re not talking about a business going from 2% to 30% growth, this is 2% to 5% and sustained…
The shiniest things we’re going to see next week for consumers is going to be Siri… Siri has been around since 2011 and they’ve just lost the confidence of consumers… Of course a deal with OpenAI… potentially allowing you to have a conversation [with Siri] potentially opens up a whole different use case for Siri… Keep in mind that when it comes to Siri, all of Apple’s devices, with the exception of AirPods, have the ability to summon Siri… [It’s[ a big opportunity. They’d better nail that piece… People are going to give it one more try, but if they miss this, they’re in trouble, but if they nail it, I think the view of Siri is going to change materially.
If you think about the scope of what Apple can do over the next five years – we’ve talked about just injecting AI into the business – still is this other piece that they haven’t tapped into that is related to bringing the world to us in a more seamless way… Vision Pro has not been a success, they’ve been struggling to get adoption of that, but… if you play that forward and think about the next generation of devices that are going to be more AI-enabled, I think Apple’s at a great place that’s going to put it at the top of the list of tech companies.
The one piece, it’s work noting, is that Apple, Microsoft largely don’t have control of their AI destiny and I think they’re going to be doing these partnerships. Google and Meta are in a different camp… so that is one reason why I just can’t definitely say that Apple’s at the absolute top because where that soul of their AI strategy is could be in someone else’s hands like OpenAI.
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MacDailyNews Take: And why is Apple not in control of its AI destiny? Because the company is hamstrung by distracted, mediocre leadership that’s basically been iterating products created under Steve Jobs while throwing spaghetti at the wall in search of The Next Big Thing which they cannot see because they’re not visionaries, they’re glorified parts orderers.
Tim’s not a product person, per se. – Steve Jobs
Beyond the fact that Cook can’t even execute a compelling live keynote address, his big send off, the “Apple Car,” [the idea of which was also germinated under Jobs] fizzled in ignominious failure.
See also:
• Scrapped Apple Car ‘a massive disappointment that will alter the course of the company’s history, perhaps for decades to come’ – Gurman – March 11, 2024
• Apple employees referred to doomed Apple Car project as ‘The Titanic Disaster’ – February 29, 2024
So, despite myriad misgivings and protestations inside Apple, Cook pulled the trigger early on the Vision Pro. Knowing that the laughably mismanaged cash-incinerating Project Titan was doomed to failure, he had to have something to point to that would buy him some time or even Apple’s rubber-stamping board of lackeys might wake up and start asking questions.
While Cook is hemming and hawing when faced with shareholders (virtually, of course, never again in person for as long as Cook remains), Apple is currently in scramble mode trying to catch up to rivals — including the world’s most valuable company, Microsoft — in generative AI, a technology the company seems to have completely missed while focusing instead on the not-ready-for-primetime Apple Vision Pro, visionOS, its now-canceled decade-long multi-billion-dollar electric vehicle boondoggle, replacing leather in iPhone cases and Apple Watch bands with overpriced junk in a quest to “save the planet,” forcing employees to endure a constant barrage of time-wasting zero-productivity DEI sessions, and myriad other various and sundry “initiatives” which Cook deems of import. – MacDailyNews, February 28, 2024
When you lose your visionary CEO and replace him with a caretaker CEO, this is the type of aimless, late, bureaucratic dithering that ensues. – MacDailyNews, November 21, 2017
The good news is that the average age of outgoing CEOs across the S&P 1500 is 61.6 and Tim Cook will turn 64 on November 1st. – MacDailyNews, May 7, 2024
“Change is the law of life, and those who look only to the past and present are certain to miss the future.” – John F. Kennedy
The new “AI features” for iOS, iPadOS, and MacOS to be revealed at WWDC is mainly a marketing exercise. The pressure is on Apple’s marketing team to position the company as an innovator in the space (“only Apple does so much on-device AI which enhances users’ privacy to ‘stunning’ effect,” etc.) that also makes “smart partnerships” with other AI companies (OpenAI, for example; even though it’s currently forced to partner if they want to offer any real GenAI features). Now, more than ever, finding themselves so far behind, Apple needs to sell, sell, sell! – MacDailyNews, May 28, 2024
Apple was caught flat-footed, due to a lack of vision on the part of leadership… So, the only solution is to partner with a [Google, OpenAI, Baidu, etc.] for the real GenAI stuff while pretending (marketing) really hard that some on-device AI Apple has whipped up in a few months is “insanely great Apple innovation” that’s at the heart of Apple’s 2024’s AI announcements when it’s really just an adjunct… Watch Apple make a big show of its on-device AI at WWDC and run many ads touting it from June onwards.
Apple hopes to buy time for the data center buildouts and investments that will be required for them to someday own their own AI technology and not have to license it from the likes of [Google, OpenAI, Baidu, etc.].
This is what happens after a decade plus with a caretaker CEO at the helm after he hits the last page of his iteration playbook, yet attempts to stay in the game for too long. – MacDailyNews, April 1, 2024
Clearly, Apple is not as innovative as it was under Steve Jobs who even started the company’s work on Apple Silicon, Apple Watch, and Apple Vision Pro, but, thanks to Jobs and Cook’s subsequent management of iterations of products and services conceived during Jobs’ tenure, including the retail store buildout which is responsible for a significant portion of Apple’s growth, the company now has more than enough money to make up for Cook’s lack of vision. – MacDailyNews, April 23, 2024
Until it gets another visionary leader (fingers crossed; Apple’s history has shown – cough, Sculley, Spindler, cough – that the next CEO could be far, far worse than the very competent caretaker Cook), Apple can afford to miss things like generative AI – which they clearly did – and then use its huge war chest to catch up – which they’re doing right now (fun times and 80-hour weeks inside Apple Park!) – and, hopefully, [someday] surpass rivals (or at least be as good). Apple will very likely unveil their catch-up work within months (this June at WWDC 2024) in iPhones (and iPads, Apple Watches, etc.) with built-in on-device generative AI and other new AI-driven features. – MacDailyNews, February 14, 2024
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