Two days ago, Apple announced that it would integrate artificial intelligence deep into its mobile OS. They call it Apple Intelligence because, well, Apple has to be Apple.

The headline is that Siri will get some IQ points back and will eventually act like what we expect from a standard ChatGPT-like tool nowadays. The twist is that Apple will allow its AI to run (mostly) locally on our phones to extract personal context from our pictures, emails, calendars, etc. Asking Siri, "Show me the five best pictures from my last vacation that include both beaches and some of my friends," will generate a proper answer.

Apple Intelligence in action (source: Apple)

In this game, context is king. What strikes the most at the moment is that Apple might be regaining some of the upper hand on a market that was set into turmoil by OpenAI.

Hear me out. The two largest companies that will have access in the foreseeable future to the largest data sets possible after everyone has already sucked dry publicly accessible information on the internet (whether it was private or not because we're U.S. startups and we don't give a damn about laws and regulations if we want to reach billion-dollar valuations) will be Apple and Microsoft.

Microsoft has already aggressively moved to offer corporations ways to use LLM technology to digest their business data and deploy the first wave of solutions that will replace SAP and any other enterprise software solutions. This vast sea of data is clustered behind proper companies' firewalls, behind which Microsoft is now kindly invited through its Office suite and all its Azure stack. And Apple? Apple will be in the exact same position regarding our personal data, which we will gladly give them access to through our iPhones.

Two players posted to dominate B2B AI on one side and B2C AI on the other.

On paper?

This is brilliant for Apple, which once again might leave Meta and Google in the dust. (By the way, just like Meta is not trumpeting anymore about the Metaverse, watch as Apple starts to forget to mention so much Apple Vision Pro.)

There's one caveat, though... At best, this move will allow Apple to maintain a large chunk of its iPhone sales, which have been plateauing for the last few years and are always in imminent threat of a ban in China. Hell, they might even significantly boost sales for Q4 2024, as when Apple Intelligence rolls out, it will only be properly available on new models (*). However, Apple Intelligence is not fundamentally adding any new top-line source of revenue to Apple's business. And that's the fly in the ointment for them. Whereas Microsoft is going to get multiple sources of new income with AI, expanding into new services, new software, and eventually new hardware (yes, this is a prediction), Apple is just going to sell more iPhones at best.

As good as Apple Intelligence will be, this is not a huge winning proposition for shareholders. No Apple Car, no Apple Metaverse, and more or less iPhones over and over again? The word you're looking for is 'Ouch.'

All that being said, let's not bury Apple yet. They might have a huge trick to play with a key part of their AI technology they presented a bit swiftly. I'm talking about their App Intent API.

App Intents enables you to express your app’s actions, by offering an App Shortcut. People can then ask Siri to take those actions on their behalf, whether they’re in your app or elsewhere in the system. Use App Entities to expose content in your app to Spotlight and semantic indexing with Apple Intelligence. People can then ask Siri to retrieve information from your app, like asking Siri to pull up flight information from a travel app to share with a loved one.

Focusing on user “intent” might mean that their customers will more and more retrieve information and complete tasks directly through Siri, drastically reducing the need to perform web searches on Apple devices. For Meta and Google? Say bye-bye to a large chunk of your ad business model, whether you implement fantastic AI tools on your own sites or not.

What I found amazing in the short-lived promise of the Rabbit R1 might be delivered at the scale of an ecosystem of 1.334 billion active iPhone users worldwide... (**)

(*) Making AI works locally on your data is going to suck a lot of on-device RAM, and your current model of iPhone is probably not ready to absorb this load – not to mention how this will dry out your battery in just a few hours.

(**) Regarding my enthusiasm for the Rabbit R1, I asked, "Is it over for the iPhone yet?" and mention at the time that, " Probably not. Rabbit is only a startup, and the speed at which Apple or Amazon could decide to mimic this should be frightening for Jeese Lyu and his team."

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