Apple Could Win the AI Race By Reaping Reward of Other Firms' Spending

At various times during the past two-plus decades of the dotcom-mobile-AI era, references to another fabled Bay Area enterprise, Levi Strauss, and its enduring business model have re-emerged. The theory was that while lots of aspiring gold miners wasted time and money digging for elusive wealth, Levi Strauss got rich by selling them what they needed: shovels, tents, pans, food - and pants. 

Many tech or tech-adjacent firms yearned to be the supplier who coined it without having to do the hard work of actually digging, eg, writing code, fighting off avaricious competitors, etc. Ironically, if not surprisingly, it turns out that the big tech company closest to a latter-day Levi Strauss is none other than one of the originals: Apple. The Levis-Apple AI corollary is that while Microsoft, Amazon, OpenAI, Anthropic et al spend gazillions on data centers, talent, etc, Apple is just collecting tolls without having to spend as much because all the smart guys need the App Store gateway to get to their customers. Somewhere, ol' Levi is smiling and snapping the suspenders holding up his jeans. JL

Dan Primack reports in Axios:

Apple isn't burning cash to buy GPUs for training AI models and processing prompts. Nor is it investing huge sums in OpenAI or Anthropic, as are rivals Amazon and Microsoft. (But) Apple may reap the rewards of everyone else's spend by selling high-end consumer hardware that will become even more essential as AI becomes more ubiquitous. AI advancements could lead to shorter upgrade cycles, while Apple's reputation for enhanced privacy could become an enhanced selling point. All the while, "taxing" (AI-specific) firms via the App Store. It doesn't matter to Apple which app gets used most, so long as it's being used. This is an argument that more investors, including VCs with big AI positions, have been whispering about.

Apple isn't burning mountains of cash to buy GPUs for the sake of training AI models and processing prompts.

• Nor is it investing huge sums in frontier labs like OpenAI or Anthropic, as are rivals like Amazon and Microsoft.

Why it matters: Apple may reap the rewards of everyone else's spend. Success from the sidelines.

Apple's playbook: Keep selling high-end consumer hardware that will become even more essential as AI becomes more ubiquitous.

• AI advancements could lead to shorter upgrade cycles, while Apple's reputation for enhanced privacy could become an enhanced selling point.
• All the while, "taxing" the frontier labs via the App Store. It doesn't matter to Apple which app gets used most, so long as it's being used.

Behind the scenes: This is an argument that more and more investors, including some VCs with big AI positions, have been whispering about.

Zoom in: OK, it's not a sure bet.

• For starters, Apple does want/need to improve Siri. If it ultimately uses Google's Gemini models, the capacity will need to come from somewhere.
• There's also OpenAI's efforts to create its own branded hardware, designed by longtime Apple star Jony Ive. If successful, it could dent the iEmpire — or maybe even end the primacy of apps.

 

Wildcard: It's possible that the our primary AI devices won't be mobile. They'll be something else, running agents. What's in our pocket will be used more like  the original iPhone — talk, text, and listen to music. Keep selling high-end consumer hardware that will become even more essential as AI becomes more ubiquitous.AI advancements could lead to shorter upgrade cycles, while Apple's reputation for enhanced privacy could become an enhanced selling point. All the while, "taxing" the frontier labs via the App Store. It doesn't matter to Apple which app gets used most, so long as it's being used. This is an argument that more and more investors, including some VCs with big AI positions, have been whispering about. 

• In this case, Apple remains likely to benefit. As Axios' Ina Fried notes: "Lots of people are coding on their Macs and the Mac mini is sold out as enthusiasts use them to run agents like OpenClaw."

The bottom line: Apple's Tim Cook seems to be echoing the wisdom of Joshua, a rogue AI from the 1983 film War Games: "Strange game. The only winning move is not to play."