Apple under pressure to shine after AI stumble

Yahoo

3 hours ago

Pressure is on Apple to show it hasn't lost its magic despite broken promises to ramp up iPhones with generative artificial intelligence (GenAI) as rivals race ahead with the technology.
Apple will showcase plans for its coveted devices and the software powering them at its annual Worldwide Developers Conference (WWDC) kicking off Monday in Silicon Valley.
The event comes a year after the tech titan said a suite of AI features it dubbed "Apple Intelligence" was heading for iPhones, including an improvement of its much criticized Siri voice assistant.
"Apple advertised a lot of features as if they were going to be available, and it just didn't happen," noted Emarketer senior analyst Gadjo Sevilla.
Instead, Apple delayed the rollout of the Siri upgrade, with hopes that it will be available in time for the next iPhone release, expected in the fall.
"I don't think there is going to be that much of a celebratory tone at WWDC," the analyst told AFP. "It could be more of a way for Apple to recover some credibility by showing where they're headed."
Industry insiders will be watching to see whether Apple addresses the AI stumble or focuses on less splashy announcements, including a rumored overhaul of its operating systems for its line of devices.
"The bottom line is Apple seemed to underestimate the AI shift, then over-promised features, and is now racing to catch up," Gene Munster and Brian Baker of Deepwater Asset Management wrote in a WWDC preview note.
Rumors also include talk that Apple may add GenAI partnerships with Google or Perplexity to an OpenAI alliance announced a year ago.
- 'Double black eye' -
Infusing its lineup with AI is only one of Apple's challenges.
Developers, who build apps and tools to run on the company's products, may be keen for Apple to loosen its tight control of access to iPhones.
"There's still a lot of strife between Apple and developers," Sevilla said. "Taking 30 percent commissions from them and then failing to deliver on promises for new functionality—that's a double black eye."
A lawsuit by Fortnite maker Epic Games ended with Apple being ordered to allow outside payment systems to be used at the US App Store, but developers may want more, according to the analyst.
"Apple does need to give an olive branch to the developer community, which has been long-suffering," Sevilla said. "They can't seem to thrive within the restrictive guardrails that Apple has been putting up for decades now."
As AI is incorporated into Apple software, the company may need to give developers more ability to sync apps to the platform, according to Creative Strategies analyst Carolina Milanesi.
"Maybe with AI it's the first time that Apple needs to rethink the open versus closed ecosystem," Milanesi said.
- Apple on defensive -
Adding to the WWDC buildup is that the legendary designer behind the iPhone, Jony Ive, has joined with ChatGPT maker OpenAI to create a potential rival device for engaging with AI.
"It puts Apple on the defensive because the key designer for your most popular product is saying there is something better than the iPhone," Sevilla said.
While WWDC has typically been a software-focused event, Apple might unveil new hardware to show it is still innovating, the analyst speculated.
And while unlikely to come up at WWDC, Apple has to deal with tariffs imposed by US President Donald Trump in his trade war with China, a key market for sales growth as well as the place where most iPhones are made.
Trump has also threatened to hit Apple with tariffs if iPhone production wasn't moved to the US, which analysts say is impossible given the costs and capabilities.
"The whole idea of having an American-made iPhone is a pipe dream; you'd have to rewrite the rules of global economics," said Sevilla.
One of the things Apple has going for it is that its fans are known for their loyalty and likely to remain faithful regardless of how much time it takes the company to get its AI act together, Milanesi said.
"Do people want a smarter Siri? Hell yeah," Milanesi said. "But if you are in Apple, you're in Apple and you'll continue to buy their stuff."
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