The video explores Apple’s entry into artificial intelligence, highlighting its current strategy of offering AI features for free to users of compatible devices while hinting at potential future monetization. Apple’s focus on leveraging AI to boost hardware sales, particularly for the iPhone, and its cost-effective processing methods position it uniquely in the competitive landscape, with opportunities for increased App Store revenue through developer integration.
The video discusses Apple’s recent foray into artificial intelligence (AI) and the implications for its business model. Currently, Apple is offering AI features for free to users with compatible devices, such as the iPhone 15 Pro and newer Mac computers. However, analysts speculate that this may not last long, and Apple could eventually start charging for some of these AI features, potentially around $20 a month, similar to competitors like IBM and Anthropic.
Apple’s strategy appears to focus on leveraging AI to boost hardware sales, particularly for the iPhone, which has seen a decline in sales over the past few quarters. During a recent earnings call, CEO Tim Cook emphasized that AI could be a compelling reason for customers to upgrade to the new iPhone, especially with the upcoming iPhone 16 launch. This aligns with the competitive landscape, as other companies, including Google, are also releasing AI-enhanced phones.
One of the key advantages for Apple is its ability to train AI relatively inexpensively. Unlike other companies that rely on costly cloud services from partners like Google, Amazon, or Microsoft, Apple utilizes its own processors and chips for AI processing. This cost-effective approach allows Apple to maintain its pricing strategy without needing to pass on expenses to customers immediately.
The video also highlights the potential for Apple’s AI tools to drive sales in the App Store. As developers gain access to these AI capabilities, there is an opportunity for increased integration, which could lead to more app purchases and subscriptions. This could further enhance Apple’s services revenue, which has been performing well independently of the AI initiatives.
In summary, while Apple is currently offering AI features for free to users with the right hardware, analysts predict that monetization may come in the future. The company’s focus on driving hardware sales through AI, combined with its cost-effective processing methods, positions it uniquely in the market. Additionally, the integration of AI tools by developers could bolster Apple’s services revenue, making it a critical area to watch as the company continues to evolve its AI strategy. CNBC’s Steve Kovach joins 'The Exchange to discuss the latest news on Apple, as the big tech company shared its artificial intelligence playbook for its iPhone service.