Apple Claps Back

There are four words that Tim Cook uttered in a feature by Ben Cohen for WSJ Magazine this week. But they aren’t the four words that Apple clearly wanted us to take away from the puffy piece. Anyone who has followed Apple long enough already knows the concept of “not first, but best” and it’s hardly surprising that Apple is trying to frame narratives around such words right now. But more interesting to me were the four words that Cook utters earlier on in the piece, “every day, every product.”

That’s Cook talking about his own usage of Apple products. And while it’s also not surprising on the surface, it is a bit surprising, assuming he’s telling the truth. For example, is Cook really, honestly, using the Vision Pro every day? I’d find that pretty surprising given my own usage is closer to once every few weeks, and that's if there’s a bit of content I want to watch. And while I’m an Apple die-hard product user — I just bought the new iPad mini on day one despite already owning two other iPads, not to mention two Macs, an iPhone, and basically every other Apple product, including, yes, the Vision Pro — I’m still just one person. But I happen to know about a dozen people now who also own a Vision Pro, and all are in the same general boat as me with regard to usage of that device. Which is apparently not the same boat that Cook is in. If nothing else, the Vision Pro is too much of a pain in the ass to use on a regular basis. But I guess if you have a $3T+ company you’re running riding on it, even just in part, you’re going to use it. And, to Cook’s credit, there are plenty of CEOs of companies that don’t use their products at all!

This interview, in part, would seem to be Apple clapping back to a WSJ report last week that talked about the sad state of third-party development around the Vision Pro. And yes, also likely sales, based on third-party projections (which Cook indirectly confirms with the admission that "it's not a mass-market product"). New products and platforms take time, is the Apple talking point. And they’re not wrong, but the Vision Pro is clearly also going to be the most trying test of that notion yet. I tend to think Apple made some very real strategic errors with the release and those are now exacerbated by rivals showing off other, more AR-focused paths down the XR road which would seem to be more in-line with Apple’s, well, vision.

Yeah, yeah, those are a ways off. And Apple doesn’t talk about products that are a ways off. Unless those products are called Apple Intelligence, apparently.

That product, it seems, is the real reason for this particular piece. While it infamously is not widely available yet, the first part of it is apparently coming next week. And with many poking fun at Apple for shipping products touting the features without the actual features, Cook may be correct that this won't even be a footnote in the history of the company if they can nail the execution of Apple Intelligence. “Not first, but best.”

The problem there, of course, is that Apple is neither first nor best. I’ve been using this first version of Apple Intelligence in beta testing for a few months now. Honestly, beyond the notifications summaries — which are fine, nothing too game-changing — you barely even notice it’s there. Yes, there are email summaries and web page summaries too — but they’re not as good as the ones Gmail has for email or the ones Arc offers for the web. There’s a new UI for Siri — which is lovely! — but Siri herself remains largely unchanged, with much of her upgrades coming well into next year, it seems. The fun-looking 'Genmoji' feature is nowhere to be found. Ditto with 'Image Playground'. I wrote about all of this three months ago — I guess these features are a little more polished now, but nothing much has changed.

Look, my general take from the get-go has been that I think it’s both fine and perhaps prudent for Apple to take it slow with regard to AI. The entire space is moving far too fast for most companies to build anything lasting. We need things to calm down before the stable products can come. And that, in part, is what Apple is doing with Apple Intelligence. The question is if and when the music slows enough with the underlying technology, if Apple will be poised to take advantage of it? What they’re doing right now is table-stakes stuff. Will they be able to build actual breakthrough products or even just revolutionary functionality with AI?

Mark Gurman’s newsletter this week cites unnamed people inside Apple believing they’re "more than two years behind" with regard to AI. While others — including, undoubtedly, Tim Cook — would dispute this notion (and how would you measure such a thing anyway?), it feels at least sort of directionally accurate right now given the features Apple is about to launch as a part of Apple Intelligence. Again, that’s probably fine for right now. But the reality is that at some point, they’re going to need to “catch up”. Maybe an overall slowdown allows for that to happen, but it’s at least just as likely that their main competition doesn’t slow down and maintains the two-year advantage. Or increases it?

This hasn’t mattered yet in these early days of AI. But it might in the not-too-distant future. And if that in some way leads to fewer iPhones being sold as a result, that’s a real problem for Apple, obviously.

Is that likely? Hard to say right now. Google is clearly ahead of Apple in AI — could anyone possibly dispute that, even Cook? — and it’s already more baked into their Pixel phones right now. But I think the more interesting differentiator is form-factor rather than AI at the moment. But you can see how that switches, fast.

I think Apple is going to have to buy someone to “catch up” in AI. They already make acquisitions from time-to-time as we’re all well aware. And many of these are in the AI space, of course. But I think they’ll likely need to make a bigger, splashier one in the next year or so. A deal like the one for Beats for Apple Music. Or PA Semi for Apple Silicon. Or yes, even Siri herself, back in the day. Something that accelerates an effort. But with AI, it’s undoubtedly going to be even more expensive than any of those...

While they have the partnership with OpenAI, it feels like that relationship is getting complicated before it even really starts,¹ given the board switcheroo by OpenAI and the subsequent dropping out of the investment by Apple. More likely would be one of the other players. Perplexity could be interesting if Apple really does want to dive into search in a post-Google default payment world (but how much is there, under-the-hood?). Anthropic seemingly has the technical and product chops that Apple would appreciate (but is potentially complicated by investments from Google and in particular, Amazon). Mistral could be a good use of overseas cash for Apple, and perhaps buys them some goodwill with the EU, quite literally (or just the opposite!).

Regardless, given how Apple Intelligence is going to be baked into Apple's devices at the OS-level, it's clearly going to be one of those "every day" products. That just makes the stakes even higher to be the "best". And you'll forgive my skepticism there, but I've been living with Siri on my iPhone for the past 13 years. Each and every year we're told this is the year that she "just works" and every year we're disappointed. Not just tech nerds. Larry David too. That joke works because Siri has largely become a joke. A frustrating punchline of a product.

And so in profiles pre-launch Cook can get away with saying things like "It's changed my life. It really has." and talking about Apple Intelligence in the same breath with the iPad click-wheel and iPhone touch interface. But those words now need to be backed up, faster than Apple might like.

¹ To Apple's credit, it's better to have a complicated relationship without a $14B investment...