Apple's AI Strategy: A Balanced Approach in the Tech Race

Since the 2022 launch of OpenAI’s ChatGPT, the race for artificial intelligence (AI) has intensified. While companies like OpenAI, Google, Meta, Microsoft, and Nvidia have made significant strides, Apple Inc. has been viewed as a laggard in this domain. However, this perception may be misleading.

Apple’s approach to AI is distinctly different from its Big Tech peers. Instead of prioritizing AI as a central identity, the company has focused on integrating AI deeply into its devices and services. This strategy emphasizes privacy, security, and user experience, often through on-device language models.

For more complex tasks, Apple taps into external AI models like OpenAI’s GPT-4 and Google’s Gemini, offering users a choice of platforms. The company has also made over 30 AI-related acquisitions, including Turi, Xnor.ai, and Vilynx, which have strengthened core features in Siri, Photos, and on-device intelligence.

Apple’s services business, which crossed $100 billion in revenue in 2024, plays a crucial role in its AI strategy. With over a billion paid subscriptions across iCloud, Music, TV+, and the App Store, Apple’s strong user base allows it to gradually integrate AI into its products. This ‘services flywheel’ ensures high retention and engagement, driven by device sales.

Compared to its rivals, Apple’s AI strategy does not threaten its core business but enhances it. By waiting for generative AI and AI-on-devices to mature, Apple may be well-positioned to integrate these technologies across billions of devices. This privacy-first, user-centric approach aligns with Apple’s core philosophy.

However, risks remain. Apple’s dependence on external AI models could be a constraint. If generative AI becomes as fundamental as operating systems, the company may need to invest more deeply in AI research and development or acquire a model company like Cohere, Mistral, or Anthropic.

Despite these challenges, Apple’s balanced approach to AI, focused on user experience and privacy, positions it well in the ongoing tech race. This strategy may prove to be a long-term advantage as the AI landscape continues to evolve.