Apple will help normalize the most controversial part of the consumer AI revolution: deeper and more personal data collection and utilization.
Apple $(AAPL)$ has taken the wraps off one of the worst-kept secrets in the technology space: its plans for integrating AI into its consumer products. Everything from the Mac to iPad and iPhone (but oddly not the recently released Vision Pro, or the aging HomePod, or the Apple TV) will integrate some facets of the "Apple Intelligence" features slated for late this fall.
While it might seem counterintuitive, the whole of the AI PC and AI smartphone ecosystem is rooting for Apple to succeed. AMD $(AMD)$, Intel $(INTC)$ and Qualcomm $(QCOM)$ need Apple's effort to work so they can sell chips, while OEMs including Samsung (KR:005930), Dell Technologies $(DELL)$, HP $(HPQ)$, and Lenovo (HK:992) need it to work so they can sell devices and services to those consumers. Why are so many competitors keeping an eye on Apple in this space? It comes down to AI becoming something consumers want - rather than something they fear.
How will Apple help make this happen? The tagline for Apple Intelligence directly targets where Apple believes the rest of the consumer market has failed: simplicity. Described as "AI for the rest of us," Apple looks to take advantage of its completely vertical product integration (from silicon to devices to software and even the most popular apps on those platforms) to create the most robust and directly applicable AI feature set for consumers.
No one markets quite like Apple does.
No one markets quite like Apple does, and even though the features of Apple Intelligence are available to consumers today through various services including OpenAI ChatGPT, Microsoft Copilot, and Google Gemini, Apple can make them mainstream and part of the everyday workflow of iPhone and Mac users.
None of this is earth shattering if you have been following AI advancements over the past six months. For everyone else, Apple can be the gateway to understanding and accepting AI for a much larger, and more financially beneficial, audience.
Apple is doing what it always seems to do: paint the clearest picture of customer benefits to a feature and technology that it might not have invented or brought to market first. The demonstrations and descriptions of how Apple Intelligence will change the usage of iPhones and MacBooks have been on point and paint a picture of how AI can start to improve the computing experiences across all consumer devices. It's something Apple has perfected over decades of iPhone releases: molding technologies and features that might have been introduced by the likes of Samsung or Microsoft $(MSFT)$ into something just interesting and different enough to rile up the massive audience it has in consumer technology.
It would be easy to say that Microsoft Windows or Alphabet's $(GOOGL)$ Google Android has already "lost" the battle for consumer AI, but in fact Apple's normalization of these kinds of features and new methods of interacting with users helps improve the odds for everyone. I have been a proponent of what Microsoft has been doing with its Copilot+ PCs, bringing AI functionality and minimum standards for AI performance to the PC segment, and I still believe that this will create a PC upgrade supercycle over the next 12 months. Apple getting into the game, with similar features and similar messaging, means less criticism or dismissiveness of what the competition is doing.
Apple also will help normalize the most controversial part of the consumer AI revolution: deeper and more personal data collection and utilization. Apple Intelligence depends on a significantly more robust understanding of the user, including likes and dislikes, schedules, messages, emails, friend groups, purchases, just as Copilot+ PCs do. If you want a truly useful and compelling AI assistant, the AI needs to know all about your events and relationships.
Once the mass audience gets past this concern - similar to how we grew to trust giving credit card and Social Security information online - and prove that security and privacy can be maintained reasonably, then consumer AI will take off and boost sales and revenue for makers of laptops and smartphones.
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