Tim Cook Plays Hardball With AI Armada

By Austin Smith Published Jun 19, 12:52PM EDT

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Tim Cook Plays Hardball With AI Armada — © Stephanie Keith / Getty Images

Apple (NASDAQ: AAPL) | AAPL Price Prediction launched a series of AI products that seemed unremarkable but pushed its stock to a 52-week high, surpassing Microsoft’s (NASDAQ: MSFT) market cap. The new operating system only works with the latest phones, leaving recent iPhone 15 and older models incompatible. This strategy seems aimed at driving adoption of the iPhone 16. Despite potential backlash, especially since improvements like a better camera or faster processor aren’t compelling to most users, Apple is banking on AI to boost sales. Elon Musk’s ban of these products on Tesla (NASDAQ: TSLA) campuses adds another twist. Ultimately, Tim Cook is playing hardball to ensure strong revenue in the next fiscal year.

Transcript:

Apple launches its big AI armada of products, which seemed to me to be sort of boring, but it took the stock to a 52-week high.

Market cap passes Microsoft again because of this.

I don’t know that it’s really that good a deal for customers, is it?

Hardly, because the operating system is only going to work with the new phones.

So everybody from a 15, many of which bought an iPhone 15 thinking it would work, to everything back to a 12. They won’t work, they’ll have to buy a new one.

This seems to me to be the only way that Apple was going to get the 16 to get high adoption, because here are the things you can’t give it a better camera that people understand.

I understand you can give it a better camera.

You can make it like a, like a $3,500 camera, but people, people can’t tell at all.

Faster processor. No one cares. No.

What does a faster processor do when you’re texting and you’re FaceTiming?

So Apple says, well, we’ll get AI, but we’ll force people to get a 16 to get it.

Now, that could backfire.

Well, I think for the hardcore Apple legions, probably, because I saw that the holding time for iPhones is not very long for hardcore buyers. It’s like 20 months or 28 months.

Right. It’ll be interesting to see because Elon Musk said, well, those will not be allowed, I guess, on Tesla campuses or anything like that.

So that’ll be an interesting part of the puzzle.

It’s certainly hardball.

On Tim Cook’s part, it is definitely hardball.

Oh, absolutely. He has no choice.

Right. But I think that’s the point. It doesn’t matter how much people complain.

This is his path to good revenue really in his next fiscal year.

Without it, he’s not going to get there.

About the Author Austin Smith →

Austin Smith is a financial publisher with over two decades of experience in the markets. He spent over a decade at The Motley Fool as a senior editor for Fool.com, portfolio advisor for Millionacres, and launched new brands in the personal finance and real estate investing space.

His work has been featured on Fool.com, NPR, CNBC, USA Today, Yahoo Finance, MSN, AOL, Marketwatch, and many other publications. Today he writes for 24/7 Wall St and covers equities, REITs, and ETFs for readers. He is as an advisor to private companies, and co-hosts The AI Investor Podcast.

When not looking for investment opportunities, he can be found skiing, running, or playing soccer with his children. Learn more about me here.