Apple Backed Into an AI Corner
Mark Gurman
It's not that Apple has never been backed into a corner before – "Pray" and all that – it's that they've spent the vast majority of the past 15 years as the most profitable and valuable company in the world. Still, here we are again. As Tim Cook took the stage at the Steve Jobs Theater for a very special episode of all-hands:
The executive gathered staff at Apple’s on-campus auditorium Friday in Cupertino, California, telling them that the AI revolution is “as big or bigger” as the internet, smartphones, cloud computing and apps. “Apple must do this. Apple will do this. This is sort of ours to grab,” Cook told employees, according to people aware of the meeting. “We will make the investment to do it.”
I'm reminded a bit of King Théoden of Rohan. Apple has had years to answer this call and... well... they have kept flubbing it internally, in part due to drastic under-investing, clearly unsure up until now if “Apple must do this.” If “Apple will do this.”
But Cook struck an optimistic tone, noting that Apple is typically late to promising new technologies.
“We’ve rarely been first,” the executive told staffers. “There was a PC before the Mac; there was a smartphone before the iPhone; there were many tablets before the iPad; there was an MP3 player before iPod.”
But Apple invented the “modern” versions of those product categories, he said. “This is how I feel about AI.”
Cook loves to trot this out when needed. Not to be a dick, but these were all projects that Steve Jobs rallied the troops around. Can Tim Cook do this? He's been a great – arguably, the best given the results – leader when it comes to extending the lead going down the path laid out by Jobs. Can he actually lead in a time of war? To come from behind? I think it's a totally legitimate question.
Echoing comments he made during the earnings conference call, Cook told employees the company is investing in AI in a “big way.” He said 12,000 workers were hired in the last year, with 40% of the new hires joining in research and development roles.
This is good news, provided they're getting the best talent for the task. And, well, they're not paying the best, so these people really have to believe in the mission. Lest they get poached. And the mission, at least what we've heard to date, isn't really as inspiring as the one laid out by, say, Anthropic or OpenAI when it comes to AI.
Federighi explained that the problem was caused by trying to roll out a version of Siri that merged two different systems: one for handling current commands — like setting timers — and another based on large language models, the software behind generative AI. “We initially wanted to do a hybrid architecture, but we realized that approach wasn’t going to get us to Apple quality,” Federighi said.
Now, Apple is working on a version of Siri that moves to an entirely new architecture for all of its capabilities. That iteration is slated for as early as spring, Bloomberg News has reported, though Apple executives haven’t confirmed a timeline other than a release next year.
“The work we’ve done on this end-to-end revamp of Siri has given us the results we needed,” the engineering executive told employees. “This has put us in a position to not just deliver what we announced, but to deliver a much bigger upgrade than we envisioned. There is no project people are taking more seriously.”
Yeah but the problem here is that Apple should have known this would be an issue – Amazon had just run into the exact same one. And to a lesser extent, Google too. Any idiot could have predicted what would happen here. Especially since it seemingly kept happening. Apple employees, of course, are not idiots. This makes me worry about leadership. They shook it up because they had to, but does it go deep enough to instill the mentality shifts needed?
This is what all the M&A chatter is actually about: not necessarily tech, but talent. A way to signal a cultural shift internally and externally. And a way to actually gear up the culture to meet this moment.
In his speech, Cook also pushed employees to move more quickly to weave AI into their work and future products.
“All of us are using AI in a significant way already, and we must use it as a company as well,” Cook said. “To not do so would be to be left behind, and we can’t do that.”
Employees should push to deploy AI tools faster, and urge their managers and service and support teams to do the same, he said.
Cook is not the first major tech CEO to say this – in fact, he might be the last, which is the problem. Yes, it's true that Apple famously likes to enter markets later than others and they have a great track record of succeeding when they do that. But many people – myself included – feel like AI might be a different beast. If anything, it might still be too early for anyone – including Apple – to fully productize the technology because it's still shifting so fast underneath everyones' feet.
At the same time, they can't afford to sit back and wait. They tried that, then tried to jump in, and they failed. If they just wait longer, my bet would be that they fail even harder. It feels like a matter of not having the right experience and talent to compete if you're not in the trenches here. And that's not a position in which Apple is historically comfortable.
At the same time, if they fully retreat back to keep waiting, Wall Street is going to keep killing them. Cook will say he doesn't care about that. But he does. He must. It's part of the job. A big part when you run a company with a stock as important to the American economic ecosystem as Apple has become.
“The product pipeline, which I can’t talk about: It’s amazing, guys. It’s amazing,” Cook said. “Some of it you’ll see soon, some of it will come later, but there’s a lot to see.”
I hope so. It's the one thing that can keep Apple in this race. No one else has yet proven themselves capable of matching Apple's product prowess. Meta is trying like hell. Everyone is. OpenAI is spending billions to bring on Jony Ive. But Apple is still Apple, at least in this regard.
Steve Jobs, sadly, isn't walking through that door.
M.G. Siegler
M.G. Siegler
M.G. Siegler