Apple Intelligence is Right On Time by Ben Thompson

AI is the only foreseeable technological advancement that could provide sufficient differentiation to actually drive switching, but even there, the number of potential competitors is limited — there may only be one (more on this in a moment). (View Highlight)

The fact of the matter is that smartphones are nearly perfect devices for the jobs we ask them to do: they are small enough to be portable, and yet large enough to have a screen to interact with, sufficient battery life to make it through the day, and good enough connectivity; the smartphone, alongside cloud computing, represents the end of the beginning, i.e. the platform on which the future happens, as opposed to a transitory phase to a new class of disruptive devices. (View Highlight)

Platform-provided AI capabilities will not only be the easiest way for developers to incorporate these features, they will also likely be the best way, at least in terms of the overall user experience. Users will understand how to use them, because they will be “trained” by Apple’s own apps; they will likely be cheaper and more efficient, because they are leveraging Apple’s overall investment in capabilities; most importantly, at least in terms of Apple’s competitive position, they will further lock-in the underlying platform, increasing the hurdle for any alternative. (View Highlight)

Apple has never and need never build a competitive search engine, because it owns the devices on which search happens, and thus can charge Google for the privilege of making the best search engine the default on Apple devices. This is the advantage of owning the device layer, and it is such an advantageous position that Apple can derive billions of dollars of profit at essentially zero cost. (View Highlight)

Apple (along with Google/Android and Microsoft/Windows) is located at the point of maximum leverage in terms of incorporating AI into consumer-facing applications: figuring out what AI applications should be run where and when is going to be a very difficult problem as long as AI performance is not “good enough”, which is likely to be the case for the foreseeable future; that means that the entity that can integrate on-device and cloud processing is going to be the best positioned to provide a platform for future applications, which is to say that the current operating system providers are the best-placed to be the platforms of the future, not just today. (View Highlight)