WWDC Made AI Winners and Losers

After taking time to digest this year's WWDC, I think Apple made some changes that will fundamentally change the conversation around AI. To me this seems like a master stroke that signals the claim they're staking. I suspect it's one that their competitors won't be able to follow (privacy-centric, no-added-cost) and could ruin the financials of companies that try to match.

Winners

Consumers

A lot of people are going to be experiencing useful LLM models on their device for the first time. Real end user penetration of LLM and GenAI has been low, but soon the millions of iPhone, iPad, and macOS users are going to be getting to use it firsthand in useful ways. They'll use the boring-but-useful elements of GenAI every day, and it will become an interactive baseline like Spell Check or local index search.

I've seen a number of folks who were confused at how conservative the Apple Intelligence presented was, and how little it broke new ground. The fact is most people not in or writing about tech aren't playing with these tools every day to know they already exist. What's groundbreaking here isn't the technology; it's the integration, privacy model, and price point (free with the price of admission).

TSMC

TSMC is in the ultimate no-lose situation here. If you use Apple Silicon, Snapdragon Elite, or Nvidia, TSMC is winning. Given their stranglehold on getting more chips made (for what seems to be an obvious transition to ARM in the non-Mac business world), TSMC will have a lot of pricing power for at least the next 3-5 years. Intel, on the other hand, looks to need a major shakeup.

OpenAI

Securing both Microsoft and Apple publicly with their models-as-a-service offerings secure their lead ahead of the competitors and will help them secure themselves as a key LLM platform for the future. Apple seems positioned to use OpenAI as more of a crutch here (much like they'd done with Google Maps previously), and I suspect we'll see OpenAI's share in Apple's experiences lower over time, but this is still good news for the next 3 years.

Losers

Google

Google comes out of this WWDC as a clear loser. With Apple moving to implement more AI-based immediate feedback to its platforms users, Google is taking a back seat, and it seems obvious that even the days of Google as the default search engine in the browser are likely to come to an end.

Google has done themselves no favors here, with their attempts to increase the number of ads and their failed launch of their consumer-facing AI tools. In the past, consumers would have sought Google out if it wasn't their default browser, and I suspect Google has squandered that goodwill. As first Microsoft and now Apple transition to their own ML-enhanced search tools, Google is being cornered in the search market to their own platforms.

Microsoft

Microsoft brought OpenAI to the ball and now their direct connection no longer feels unique or innovative. Even worse for Microsoft, Apple has set down a gauntlet for AI Privacy that they'll now be expected to compare against, both in Azure cloud and on device.

Even worse for Microsoft, a lot of their perceived pricing power just went poof. Microsoft had hoped to charge a premium for Copilot Pro and 365 to enable the AI functionality and bring in a new revenue stream. Apple is going to give people equally-or-better integrated tools across desktop and mobile free with the price of admission.

AI as an ARPU Boost

Every company wants to raise their Average Revenue Per User (ARPU), and a lot of companies got really excited that AI would make it happen. Microsoft, Notion, Adobe, Slack, and others all tripped over themselves racing to the obvious (self reference to my earlier article on the subject) to release "Something AI" they could charge $20-50/mth more for.

Apple is now setting a baseline expectation that those features will be well-integrated and at no additional cost, taking AI from an ARPU boost to a built-in Cost of Goods Sold (CoGS) expense. Companies won't stop billing for AI right away, but the writing is on the wall now for any business that was hoping to use this to lift revenues. I expect you'll start seeing a lot of "AI is free with Pro/Ultimate" announcements in the coming months before the iOS release in the Fall.

Vision Pro

Vision Pro again came off awkward and sad, with a lone person sitting on their couch. Nothing they showed off today made me want to buy the Vision Pro, and the ball is still in Apple's court to reduce pricing and find a better use case.

Conclusions (for now)

It remains to be seen if anyone else has a counter-shakeup in the works, but so far my expectation is that Apple is about to do something it is historically known for: streamlining innovations into widespread use, and winning market share as a result.

Competitors? It's your move.