ForefootApple is preparing to stop selling the Apple Watch S9 and Apple Watch Ultra 2 in the U.S. due to a long-running patent dispute with medical technology company MasimoOn the back foot, Apple was downgraded by the investment bank Barclays from "hold" to "** The stock price in the secondary market has fallen sharply.
The iPhone 15 has not performed well in China, with sales of Mac, iPad and other smart hardware declining year-on-year.
At this time, the news of Apple's deployment of generative AI continued to spread, investing a billion dollars a year and buying news data to train the model. Generative AI and Apple, the "King of Machines", can the "marriage of the century" be achieved?
Quietly train a large model?
Apple, still shot.
At the end of 2023, ChatGPT has just passed its first birthday, and there is news that Apple is developing a generative AI model. According to the Associated Press, Apple is in discussions with some major news publishers to license their news materials and use the information to help train its own generative AI system. According to the report, Apple is discussing a multi-year partnership agreement worth at least $50 million, "approaching Condé Nast Publications Inc, NBC News and IAC to license their past news articles."
In fact, this is not the first time that Apple has revealed its news about the research and development of artificial intelligence. Bloomberg reported that in July 2023, Apple built its own large language model AJAX and launched an internal chatbot codenamed "Apple GPT" to test the functionality of AJAX. The main purpose of the test is to see if the technology can compete with similar large-scale products on the market, and how it can be applied to Apple's existing product lineup.
John Giannandrea and Craig Federighi are leading the development of large models at Apple's senior vice president of artificial intelligence and software engineering, and Eddy Cue, Apple's senior vice president of services, is currently spending about $1 billion a year on the project.
Apple and Microsoft have been full of drama-for-tat in the era of Steve Jobs and Gates, and after many years, Apple will compete with Microsoft in the field of AI?
In fact, Apple's initial layout of AI was not later than Microsoft's.
In 2010, Apple acquired Siri, a move seen as Apple's first step in opening the door to AI. Consumers were pleasantly surprised by the combination of Siri and iPhone hardware. However, 13 years have passed since Siri was first launched in the iPhone 4s this year, and smartphone voice assistants have been running all over the place, and Apple's Siri is still the same Siri.
An important reason for Apple's hesitation in AI is that Apple's internal strategic positioning in the direction of AI has never been unified. Apple's main business is hardware products, and compared with companies like Microsoft and Google, whose main business is cloud, software, and search engines, the combination of hardware and AI is still a layer apart. So for Apple, it's a question of whether to study search engines or continue to work on voice assistants in AI.
Another problem is that large models need to be open source, and the more open source they are, the more people will access and use them, and the more they can "feed" large model products better and more accurately, which is contrary to Apple's R&D routine from beginning to end.
The disagreement over the path of AI products has also cost Apple important management talent. Bill Stasior, who has been in charge of Apple's Siri technical team for seven years, has experienced two direct bosses, the first is Eddy Cue, who is in charge of Internet business, the person in charge of user experience, user growth, and business value is not good at technology itself, and it seems that he has not made up his mind whether to make Siri an operating system or a voice assistant. The second leader, Craig Federighi, advocates a focus on the operating system.
In 2019, Bill Stasior, who experienced Apple's executives' vacillation about the AI business path plan, finally left and went to Microsoft as vice president of technology to help Microsoft integrate AI product business lines. Dramatically, 2019 was the year Microsoft invested in OpenAI, and it was also the year that Microsoft made AI a strategic priority and recruited technical talent on a large scale to develop the Azure AI platform.
**Character: Bill Stasior
So far, on the road of AI, Microsoft and Apple have stepped into different rivers.
In 2023, when Apple re-emphasizes artificial intelligence, it has also made changes, such as Apple's rare addition to open source. In October, Apple partnered with researchers at Columbia University to release an open-source multimodal LLM called Ferret.
In the third quarter of 2023 earnings conference, when asked about the research and development of generative AI, Apple said that among the features of iOS 17, personal voice, real-time voice mail are all supported by artificial intelligence technology, and for generative AI, Apple said, "We're obviously working on it, and I won't go into detail about what it is, but we're investing quite a bit of money, and over time you'll see the product with these technologies at its core." ”
Apple, also in a hurry
Apple, the king of value investing, has not had a good time lately.
In terms of products, the performance of the iPhone 15 is not satisfactory. In the third quarter of 2023, iPhone revenue increased by 28%, the third quarter has been the time for Apple to launch new iPhone products, compared with the year-on-year growth of iPhone in the third quarter of 2020-2022, except for the launch of iPhone 12 in the third quarter of 2020, which decreased by 20 year-on-yearIn addition to 75%, in the third quarter of 2021 and 2022, iPhone revenue increased by 47% and 9%, respectively7%, which is a larger increase than this quarter.
Longbridge Dolphin Investment Research
The Chinese market, which has always been a major consumer of iPhone, has also seemed to have a mixed response to the iPhone 15. From the perspective of fiscal year 2023 (the third quarter of natural year 2022 to the third quarter of 2023), Apple's revenue in the entire Greater China region decreased by 2. year-on-year2%。
The most intuitive feeling of consumers is that the scalpers of the iPhone 15 are very crazy. "iPhone15 on the day of the launch of the scalper contacted me, from the subsidy of 100 yuan to the subsidy of 300 yuan backwards shipping one-hour delivery, etc., I can feel that the iphone15 is more difficult to grab, it is better to say that the scalper is a little afraid of smashing in their own hands. iPhone user Chu Chu recalled, "On the day I entered the store, I went to the directly operated store in Sanlitun, Beijing, after work, and it was very outrageous that the scalpers took the spot and shouted at the door of the store." In the past, I didn't think iPhone scalpers were so 'crazy'. ”
What is worth buying
And the iPhone, as the "king of machines", has not been criticized for innovation. Xiao Li, who switched from iPhone to Android, bluntly said, "The focus of iPhone innovation does not seem to be on the user's feelings, and the user experience is very poor." For example, Xiao Li said,Rainy days crowded subway entrances their own iphone often has no signal to swipe into the subway station,Android in the address book search、Harassment ** interception and other details are also better than the iPhone,"Many people use the poor signal and poor user experience of the iPhone to play memes, and it is undeniable that Apple is a great company, but as a TOC product, it is too 'arrogant' for me as a consumer to only pursue the pattern and not the details. ”
The iPhone 15 did not unexpectedly have "explosive" sales, which directly affected Apple's stock price in the secondary market. On January 3, investment bank Barclays revised Apple's rating to "hold" from "hold" and lowered its price target by $1 to $160, implying that Apple's share price will be 17% in the coming year. As soon as the news came out, Apple's stock price responded**358% at 185 per share64 US dollars, the market value evaporated 107.1 billion US dollars (about 766 billion yuan) overnight, the largest one-day decline since August 4, 2023, and a new low since November 9, 2023.
***wind
In addition to the iPhone, Apple's other smart hardware sales are even more miserable. In the third quarter of 2023, Mac, iPad, and wearable device revenue declined year-on-year, respectively. 2% and 34%。At the end of 2023, there is news that Apple's iWatch will be discontinued in North America.
There is no doubt that Apple is in dire need of growth.
Of course, Apple has its own answer to the question of what it wants to grow.
In terms of the market, Apple is targeting IndiaBefore 2020, smartphones over $400 accounted for only 4% of shipments in the Indian mobile phone market, and this data has risen to 10% in the last six months.
**Content: Apple's first directly operated store in India opens, and Apple CEO Tim Cook greets users
In terms of products, Apple is pinning its hopes on the Vision Pro. The news of mass production of the Vision Pro has come not long ago. Hou Liang, a senior practitioner in the XR industry, put forward such a point of view, "Vision Pro is gradually replacing iPad and Mac products when it is mature enough. He notedSmart hardware devices compete for the amount of time users spend on the screen, "which kind of screen is in demand, which product is popular." "In the past, after the emergence of PCs, entertainment and office screens were contracted, and later Apple launched iPad series products, which brought out the screen needs in some scenarios such as reading e-books, watching movies, and designing, forming a more portable product. The launch of Vision Pro is to launch a more versatile, thin, and portable screen.
If Vision Pro can achieve virtual reality effects in remote, file transfer, calling, entertainment and other scenarios shown at the press conference, then the most beneficial are migrant workers who often travel, and they can complete these basic office needs without carrying a computer and a headset in the future. ”
On the other hand, if the Vision Pro is successful, it will also promote the improvement of Apple's content ecosystem, and the new hardware will create new content and software opportunities. Apple can also charge software service fees based on the user base of the hardware, killing two birds with one stone. Therefore, Vision Pro is responsible for Apple's two businesses: smart hardware and software services.
However, judging from the current order situation, VisionPro's sales are not optimistic.
AI iPhone is coming?
In addition to the market and new products, the news of Apple's investment in AI also makes people wonder whether generative AI phones will become Apple's next growth point.
At the recent Samsung AI Forum 2023, Samsung officially unveiled its self-developed generative AI model "Samsung Gauss". And the official news said that Samsung will introduce Galaxy AI in its Galaxy flagship phone.
The Gaussian model is self-developed by Samsung Research Institute, mainly including Samsung Gausss Language, Samsung Gausss Code and Samsung Gausss Image, which correspond to AI chat, AI**, AI** and other fields in application scenarios. On smartphone hardware, Gaussian large models can provide several aspects of functional optimization: simplifying emails, summarizing document writing, and translating copywriting contentProgramming assistants make it easier for developers to write on their smartphones, supporting descriptions, test case generation, and moreGenerate and edit creative images, convert low-resolution images to high-resolution, and more. Samsung also highlighted its "Al Live Translate Call" feature, which displays audio and text translation results in real-time during a call.
To put it simply, Samsung's generative AI smartphone will change the functions of the more mature scenarios on the market, such as writing documents, changing **, and drawing pictures, from cloud execution to using the phone's own artificial intelligence chip to execute.
As soon as the news of Samsung's large model came out, there was immediately a voice turning to Apple, and it was speculated that the iPhone16 might be an AI version of the iPhone.
There may be an AI iPhone, but most likely it will not be an iPhone 16. An industry insider commented that Apple has been pursuing breakthrough innovation in technological innovation, taking XR headsets as an example, Meta, PICO and other domestic and foreign headsets have been wave after wave, and Apple is belated, because they want to design products with obvious innovation advantages, rather than following the trend to install what is popular. The generative AI craze will hit Apple, but not so quickly.
There are still several hurdles that must be crossed for generative AI smartphones from conceptualization to product maturity.
Whether product innovation is enough is "painful". Judging from the generative AI mobile phone led by Samsung, the product concept advocated is to incarnate the mobile phone into a personal "AI assistant", for example, a specific scenario: users can complete the writing, editing, and sending of work mailboxes through voice commands, and the next work content mentioned in the article can generate a to-do list and add it to the calendar and alarm clock to remind users in real time. An AI product manager said that in fact, many domestic office software can also achieve these functionsOf course, if mobile phone manufacturers can realize these functions from the hardware level (without relying on the software cloud), it is certainly an innovation, but if they can't seize the opportunity more than software, and there is no smoother and breakthrough in function than software, then the attraction of this innovation to consumers is limited. ”
In other words, if an all-round AI assistant like Iron Man's Jarvis can really be realized, then consumers will naturally flock to it. But if it's no different from the previous software and you want me to pay more, then it's better to stay where it is cool.
In addition, a senior AI industry practitioner analyzed that at the R&D level, generative AI mobile phones are still full of challenges in terms of technology and cost control.
Technology: AI algorithms typically require a lot of computing resources, including powerful processors, graphics processing units (GPUs), and dedicated AI chips. This requires efficient hardware performance to support real-time AI computing and task processingAI tasks are computationally intensive, which can cause your phone's battery to drain too quickly. Therefore, effective energy management techniques are needed to optimize the operation of AI algorithms and extend the battery life of mobile phonesAI phones involve the collection and processing of data by users, so it is essential to ensure the privacy and security of the data. This includes encryption technology, access control, and protection mechanisms for user data;And, due to the limited storage and computing resources of mobile phones, the AI model needs to be compressed and optimized to reduce the size and computational effort of the model while maintaining high accuracy.
Cost side: To support AI capabilities, phones may require more powerful processors, larger memory and storage capacities, and specialized AI chips or modules. These hardware upgrades may increase the manufacturing cost of the phone;In addition, the data and talents required to train large models will also increase the overall manpower and procurement costs. How to achieve large-scale production under effective cost control and finally sell to consumers in a reasonable way requires a process.
In the long run, in the face of the continuous year-on-year decline in smartphone shipments, the concept of AI+ smartphones does give smartphone manufacturers a hope for increments. Counterpoint Research's recently released "Generative AI Smartphone Shipment Insights" report predicts that 2024 will be a key year for generative AI smartphones, with shipments estimated to reach 100 million units.
***counterpoint
As for generative AI smartphones, will they be Apple's next big thing?
Generative AI smartphones may be the trend of the times, and Cheng Xiang, Senior Consultant at CIC Consulting, said that compared with the cloud and the edge, the mobile application of AI naturally has many advantages. The AI phone is able to process data in real-time on the local device, reducing the latency of communication with the cloud, enabling the application to respond more quickly to user requests, bringing real-time responses for seamless transitions. On the other hand, AI applications on the web side usually require users to upload personal data to the cloud first, which poses a risk of privacy leakage, while processing sensitive information on AI mobile phones can effectively improve the level of privacy protection.
But for Apple at this stage, it is too early to say that generative AI mobile phones, U.S. stock investor Colin said, "I personally think that the strategic significance of Apple's R&D model is to integrate the content side, quickly improve user stickiness, and thicken the moat of the company's service business, because the current high-quality content often requires paid subscriptions, which ultimately helps Apple continue to replenish the ecosystem." Generative AI phones are still too early to bear the weight of Apple's growth curve in the short term. Apple's next competitive point still depends on the innovative hardware of Vision Pro, whether App developers can quickly create software that meets the needs of different scenarios, such as medical care, education, entertainment, etc., and the combination of software and hardware has become Apple's moat. ”
It is undeniable that in the long run, with the gradual maturity of generative AI and the in-depth development of use scenarios, the combination of smartphones and generative AI will become a major trend. As for whether Apple can win again in this innovation, it depends on whether Apple or other mobile phone manufacturers can take the lead in tapping valuable needs and meeting it.
The interviewees in the article (Chu Chu, Xiao Li, Hou Liang, and Colin) are pseudonyms.