Discussions do not mean a deal.
- A deal with Google to provide generative AI services for the Apple ecosystem would be a desperate move because Apple would be at risk of ceding more of the value in its ecosystem to Google which will not be easily taken back.
- The New York Times has added its voice to Bloomberg’s in terms of publicising the story which increases my confidence that this is more than just a wild rumour.
- Hence, I think it likely that the discussions have been had but whether anything comes of it remains to be seen.
- It is no secret that Apple has a gaping hole where its AI products are supposed to be.
- Siri is widely considered to be the worst digital assistant available today, and I would be more than happy to delete it from my iPhone as it is of no use to me and mistaken activations are annoying.
- Furthermore, it has no foundation model that we know of, has underinvested in generative AI, and has instead focused its efforts on specific use cases such as battery life management and computational photography.
- These functions work well but this is not what the market is currently demanding and does not help Apple with this issue.
- With ChatGPT coming out of nowhere, Apple was caught with its trousers down and now it needs to announce something at WWDC in June or at iPhone 16 launch in September.
- The problem is that I am not convinced that it has anything which is what has forced it to consider the unthinkable and become more beholden to Google than it already is.
- The one thing that most iPhone users would consider switching to Android for would be if Google services were not available on iPhone and using Google’s generative AI product would only increase Google’s influence in the iOS ecosystem.
- Furthermore, being default on iOS would give Google a vast advantage in the coming battle for the AI ecosystem over all of its competitors.
- Google is already the default search provider to both Android and iOS and this is what underpins its 90% market share in search.
- A similar position in generative AI on mobile devices would make it very difficult for others such as Anthropic, Mistral, Meta Platforms, Microsoft and OpenAI to get any traction with consumers.
- The ecosystem for AI in the enterprise is a very different proposition but Apple has clearly demonstrated that it is possible to get into the enterprise if your product is already very popular with consumers.
- Consequently, a deal with Google would give Gemini a chance to become the go-to place for generative AI which I expect would be first manifested through things like photo editing, message replies and general research.
- By most objective measures, Gemini is just as good as GPT-4, Claude 3, LlaMa 2 and so on meaning that this is just the leg up Google needs following a year of horrible PR bungling.
- The best option for Apple would be to take the foundation model but brand it as something else as I suspect that most people will not be able to tell the difference from one foundation model to another.
- However, it will be Google that gathers all of the usage data meaning that it would be in a position to fine-tune its future products to make them better than those with much less usage.
- This would make it more popular and more sticky, further increasing its power over the iOS ecosystem.
- Hence, I think that Apple will have to be pretty desperate to go down this road and I think that it would be better to acquire one of the many generative AI start-ups that are now present in the market most of whom will run out of money pretty soon.
- If it makes an acquisition of this nature, then the market will know that it does have something in the works, and this would greatly relieve pressure on the company to pull a rabbit out of the hat.
- Apple has said it will deliver something this year and time is running out for WWDC to be the great reveal.
- Apple remains expensive for a company facing the multiple challenges of no growth, China and AI weaknesses and so I remain unexcited about taking a position.
