Apple is behind on AI! We all know it! It was in all the papers. But Horace Dediu wonders if Apple didn’t pull off the most brilliant move in corporate history.
That move? Not dumping hundreds of billions into AI. Just tens of billions.
The Macalope has been suggesting much the same thing for a while now and Dediu questions the spend Apple’s competitors are making on AI.
Amazon is spending $200 billion this year on AI data centers. Google, $185 billion. Microsoft, $114 billion. Meta, $135 billion. Combined: $650 billion.
Well, surely it’s all going swimmingly, though: “Meta planning sweeping layoffs as AI costs mount”
We’ve gone from “AI does everything so we can now lay off all our staff!” to “We have to lay off all our staff because AI is sucking all our resources.” It’s almost as if AI is being as an excuse for layoffs.
Ha-ha! That would be silly! Because, in reality, we know that there really is no problem that cannot be solved by laying off vast swaths of the people who have devoted their careers to you. It’s just math.
Speaking of math, it seems Apple’s spreadsheets are coming up with different numbers than everyone else’s. Dediu notes:
…Apple’s capital budget is still a modest $14 billion…
It’s not nothing, but it’s not close to the vast sums these other companies are throwing at it.
And who is the big beneficiary of all this spending? Nvidia.
Apple is refusing to transfer its cash flow to Nvidia. Curiously, it believes that its cash flow belongs to its shareholders, not to Nvidia’s.
It’s weird how many recent tech trends have relied on Nvidia’s chips: crypto, NFTs, the blockchain, and now AI. Two years ago, the Macalope joked:
The Macalope doesn’t consider himself someone prone to conspiracy theories, but he would not be surprised to find out years from now that Nvidia has been running a powerful psychological ops campaign that dreams up technologies that require its boards to run and then convince venture capital firms to invest in them.
Was it a joke? He’s not even sure anymore.
Dediu notes:
The hyperscalers are now spending 94 percent of their operating cash flows on AI infrastructure.
Eeeyow. There are places where AI is reaping some real gains in productivity and utility, such as programming, data analysis, and accessibility. And then there are all the other places where these companies are trying to jam it like a slippery herring into a carburetor.
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Why are you trying to put it in there, Phil?! It doesn’t belong in there! You’re a terrible mechanic! The Macalope doesn’t know why he brings his car to you!
Examples: Customer support? Customers don’t want it. Virtual assistants? Enhanced Siri may be late but enhanced Alexa is out there stumbling around looking for someone to hold its beer. A study showed that in the workplace, far from helping, AI is causing “brain fry”. The Macalope doesn’t really know what that is but it doesn’t sound good.
And then there’s generative AI. At least that’s all fun and games, right—oh nooo…
“Teens sue Elon Musk’s xAI over Grok’s AI-generated CSAM”
(Grok and X, by the way? Still on the App Store, in case you were wondering.)
Ultimately, however, Apple seems to be mostly taking the same stance with AI that it took with Dropbox. “You’re a feature, not a product.” So far, that seems 100 percent correct. Every attempt to make AI a product has failed or is having a lot of trouble getting off the runway.
“OpenAI, Jony Ive AI hardware faces reported delays”
“Uh, so far every prototype we’ve made has exploded inside the hangar. One of them exploded before we had even made the device. The artist’s rendering exploded. I don’t even know how that happens.”
The one thing Apple definitely did do wrong was promising Apple Intelligence features it could not deliver and may not be able to any time soon. If Apple had simply said “Our devices are ready to fully support on-device models from whatever vendors want to work with us to retain privacy. Our software will also hook into cloud-based AI for customers who want more.” it might have saved itself some trouble.
Apple didn’t miss the AI revolution. It just bet that the winners won’t be the ones who build the infrastructure.
All this spending is predicated on big demand for AI products in the future and right now that’s a real uncertainty. On the plus side, can you imagine the first Spirit Halloween that sets up shop in a former AI data center? Just epic.
