Apple’s foray into artificial intelligence (AI), unveiled at the Worldwide Developers Conference, aims to transform how consumers interact with their devices and, more importantly, how they shop.
Imagine a world where your iPhone knows your shopping preferences and predicts your next purchase. Apple Intelligence will be able to analyze your browsing history, purchase patterns, and social media activity. Experts say the company is also looking to change how businesses interact with customers. With the integration of ChatGPT, Apple devices will soon be able to handle customer inquiries, process orders and even provide product recommendations.
“As consumers become accustomed to AI handling more tasks, their reliance on AI for daily activities and decision-making will likely increase. This could shift consumer expectations toward more automated and intuitive services,” Yi Fang, associate professor of Computer Science and Engineering and director of responsible AI in the School of Engineering at Santa Clara University, told PYMNTS.
AI Dominance?
Apple’s position in the U.S. phone market gives it a significant advantage in rolling out AI functionality. “Apple’s dominant position, with a 60% market share in the U.S. phone market, gives it a massive advantage in rolling out AI functionality that seamlessly improves the core product and user experience,” Sunil Rao, CEO and co-founder of Tribble, told PYMNTS. “This integration will significantly influence consumer behavior and market competition.”
As AI integrates into the OS, consumers may prefer this approach rather than using specific AI apps. “This sets strong competition for some specific apps but still provides the possibility to handle complex tasks with Siri through third-party apps. From the perspective of the foundation model, only GPT integration was announced, but there is hope to see Gemini this year,” Bohdan Khomych, head of R&D commercialization at software development firm SoftServe, told PYMNTS.
However, the integration of AI tools like ChatGPT into Siri comes with its own set of challenges. “If you opt into ChatGPT, these queries will simply be sent to ChatGPT instead, which I think will be a nice improvement (assuming you don’t have to give permission to use ChatGPT each time),” Justin Uberti, co-founder and CTO of Fixie, told PYMNTS. He cautions that “the query sent to ChatGPT will be provided as text rather than speech, meaning that ChatGPT won’t be able to detect your tone of voice when processing the query (at least not in the initial version).”
Uberti believes the potential game-changer is Siri’s ability to tap into iOS app actions, but acknowledges this is a well-known hard problem. “When you have hundreds of apps on your phone and they all expose multiple actions, figuring out the right app to use is really challenging, and Siri already struggles with this … try ‘play <TV show>’ and see if the right app pops up,” he said.
Monday’s announcement emphasized that a focus on smaller, on-device models for small tasks greatly improves the speed and quality of the user experience. “A key differentiator is being able to not only jump to a private compute cloud for more advanced tasks while retaining privacy and security but also providing the opportunity to offload from device to cloud to GPT as needed, with user permission,” Tobias Dengel, president at WillowTree, told PYMNTS. “AI isn’t the product — it’s built into a product consumers already want, which makes it better and easier to use and doesn’t sacrifice quality and privacy.”
Privacy and New Revenue Streams
Apple’s emphasis on privacy, by performing processing on the device and using a private cloud network with Apple semiconductors, may attract users who prioritize data security over competitors. “By emphasizing privacy and on-device processing, Apple could set new standards for data security in AI applications. This could influence industry norms, pushing other companies to adopt more stringent privacy measures,” said Fang.
The integration of AI could also unlock new revenue streams for Apple. “Enhanced AI capabilities may drive higher sales of iPhones and other Apple devices by highlighting AI features as key selling points. Moreover, these AI functionalities can boost investor confidence, positioning Apple as a serious contender in the AI race against competitors,” Fang added. However, she cautions that Apple’s reliance on OpenAI’s ChatGPT, coupled with its closed research model, which limits the publication and sharing of AI advancements, may hinder its ability to attract top AI talent and constrain its AI development in the long run.
Khomych suggests that new on-prem AI provides an additional reason to buy new Apple devices, and the improvements of the M-series chip make it more reasonable, as it can unlock new powerful software features. “This should increase sales of flagship devices that support these features. A potential revenue-sharing model with OpenAI for using ChatGPT via Apple devices could also be a new stream,” he said.
While there is skepticism around privacy from industry thought leaders like Elon Musk, Khomych believes that it definitely drives the industry toward a native interface that helps get data insights, operates as an assistant and helps generate content. “It’s already a competition in OS among big players to find the right use cases to bring value for users, but it also creates a gap for smaller players as well. Ultimately, there is a trend that will influence the consumer market. Is it enough to drive toward highly regulated industries or use cases? Let’s see,” he concludes.