Apple’s AI Problem Gets a Lot Worse

By Douglas A. McIntyre Published Jun 2, 9:15AM EDT

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It could get worse for Apple Inc. (NASDAQ: AAPL) investors if the iPhone maker fails to come up with a strong artificial intelligence strategy.
It is hard to exaggerate what is at stake for Apple.

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Apple Inc. (NASDAQ: AAPL | AAPL Price Prediction) stock has been hammered down by nearly 20% this year, and it could get worse. The first of two primary triggers is a possible 25% tariff on all iPhones imported into the United States. The other is that Apple’s artificial intelligence (AI) strategy is considered a dismal failure.

Apple’s AI plans appear to be falling apart faster and more deeply than expected. Bloomberg reports, “Apple needs a comeback. But that probably won’t be happening at this year’s WWDC. People within the company believe that the conference may be a letdown from an AI standpoint.” Apple cannot afford to lose both developers and consumers in the same year.

The AI challenges at Apple are a mystery. How could one of half a dozen tech giants in the world miss the boat on what many think is the most critical software product in a generation? Only Apple insiders know for sure. It is indeed a black eye for Apple CEO Tim Cook and may be remembered as his most critical failure.

Apple’s problem is not just that it is slow in its AI product launches. It is that the competition is rolling out AI products so quickly. Google has integrated AI into its search engine, which has the largest footprint in the world. Microsoft is merging AI features into Windows. OpenAI has partnered with the most famous designer in tech history. Jony Ive is acknowledged as the person who designed the iPhone for Steve Jobs.

Another Apple AI problem is that it has not found a partner in China, which is the world’s largest smartphone market by far. There is no sign it is close to finding such a partnership.

It is hard to exaggerate what is at stake for Apple. Despite some success of its Services business, iPhone sales are the engine for Apple’s revenue and earnings.

Investors are left to wait to see if Apple can launch a strong AI product next year. Alternatively, it could be weak or delayed again.

Why Is No One Talking About Apple’s Long-Term Artificial Intelligence Plans?

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.