How big could an Apple Intelligence services business be?
When it comes to Apple Intelligence, the biggest payoff for investors could be yet to come, and it’s not currently in any Wall Street spreadsheets.
Tiernan Ray for Fast Company:
Apple investors breathed a sigh of relief on June 10th when the company’s CEO, Tim Cook, and his deputies held a two-hour presentation about their intention to bring artificial intelligence to the iPhone, iPad, and Mac. Apple had been seriously lagging the giants of AI, Microsoft, and Alphabet’s Google, but they managed to turn things around sharply with a vision for AI assistants that actually offered some nice functionality.
Apple has emphasized the security aspects of its iCloud facilities for the purpose of protecting user data. That opens the door to a meaningful boost in Apple’s services revenue, its most profitable business and its fastest-growing.
Services, including sales of music and video and apps, was a fifth of Apple’s total revenue in the fiscal year that ended in September, at $85 billion, a staggering sum considering it was just $14 billion a decade ago… Services’s profit, moreover, is almost twice what it is for iPhones and iPads and Macs, at 75 percent of sales last quarter versus a profit of 37 percent for product sales.
Anything that contributes to services sales should be music to investors’ ears. AI could be a shot in the arm if Apple decides to broadly sell an AI predictions service in the cloud…
It’s conceivable Apple could offer a retail cloud computing AI service, not unlike the services offered by OpenAI, search engine Perplexity.ai, Google, and privately held Anthropic… All those services have coalesced around a price of $20 per month, which is the price for ChatGPT Plus, Perplexity.ai’s Perplexity Pro, Google’s Google One subscription, which includes its Gemini language model, and Anthropic’s Pro account.
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MacDailyNews Take: Apple currently has over a billion paying subscribers and that number continues to grow. As Ray writes in his – recommended – full article, if 10 percent of Apple’s 1+ billion paying subscribers add a privacy-focused “Apple Intelligence+” account, Apple Intelligence becomes a world leader in consumer AI virtually overnight (and its revenue gets another serious boost).
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