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Three things we learned about Apple’s AI plans from its earnings

Image credits: James Leynse/Corbis/Getty Images

Apple CEO Tim Cook didn’t reveal much about the company’s AI plans on Thursday’s second-quarter earnings conference call with investors, but he did confirm some information about how the tech giant plans to move forward with intelligence. artificial.

In particular, his comments suggested that despite spending more than $100 billion on R&D over the past five years, Apple does not plan to create too many new data centers to run or train AI models. Instead, when it comes to AI, it will continue to take a “hybrid” approach, as it does with other cloud services, the company told investors.

AI will encompass devices beyond the iPhone

We also learned that Apple views AI as a key opportunity in the “vast majority” of the company’s device lineup, not just the iPhone. While we’ve known this for some time (after all, Apple has been calling its MacBook Air M3 the “best consumer laptop for AI”), the company highlighted how AI is used across all of its products in its call. Profits.

“I think AI (generative AI and AI) are big opportunities for us across all of our products, and we’ll be talking more about that in the coming weeks. “I think there are numerous ways that are great for us and we think we are well positioned,” Cook said.

In addition to the MacBook Air, the Apple Watch uses artificial intelligence and machine learning for features like irregular heart rate notifications and fall detection, Cook said. And when talking about the company, the CEO made reference to large companies purchasing and exploring use cases for Vision Pro, although he added that he wouldn’t like to “limit it to just AI.”

“I would just say that we see generative AI as a key opportunity in all of our products. And we think we have differentiating advantages there,” Cook said.

AI likely won’t appear at this month’s iPad event

However, customers eager to get their hands on an AI-powered Siri will have to wait a little longer for that news, which was long expected to be announced at Apple’s Worldwide Developers Conference (WWDC) in June. When Cook was asked on Thursday how AI will impact consumer demand for new devices like the iPhone, he responded that, with respect to generative AI, we wouldn’t see any impact “in the next quarter or so,” but He said he was “extremely optimistic” about the technology.

Apple does not plan to make any major AI announcements before WWDC.

This discovery came via a correction to a CNBC news story, which had misinterpreted a statement Cook made to apparently indicate that there would be “big plans to announce” from an “AI standpoint” at the next two events, including next week’s iPad event. and WWDC in June. But as subsequent corrections show (probably after a lashing from a frantic Apple communications team), Cook paused before saying “…from an AI point of view…”, which was the beginning of his next thought and was unrelated to Apple’s plans for both events. .

The story was updated with this correction, so people didn’t think the AI ​​news would be announced at the iPad event scheduled for May 7. (You can read the backstory of the fixes here on 9to5Mac.)

While we didn’t expect to hear much if anything about AI until at least WWDC, this fix basically confirms that timing.

Apple is taking a hybrid approach to AI investments

The biggest news about AI, however, is something Cook said about Apple’s capital expenditures, which are funds spent on fixed assets, such as servers and data centers, real estate, and more.

While that’s not usually the most interesting topic, this time the company’s response hinted at Apple’s AI investment plans. As technology investor MG Siegler noted on his blog, Apple CFO Luca Maestri responded to a question about the impact of generative AI on Apple’s historical CapEx cadence by explaining that Apple is pursuing a hybrid model, “in “We make some of the investments ourselves, in other cases we share them with our suppliers and partners…”

Additionally, he added, Apple does “something similar on the data center side. “We have our own data center capacity and then we use third-party capacity.”

“It’s a model that has worked well for us historically and we plan to continue in the same vein in the future,” Maestri said.

Siegler interpreted this to mean that Apple will not need to spend on CapEx because Apple does not plan to immediately build and train LLMs (large language models) on its own servers.

And, if you squint a little, it could also be another sign that Apple could be looking to third parties to power its AI services. As Bloomberg reported in April, Apple has been holding talks with OpenAI, the maker of ChatGPT, and Google to push for an AI chatbot that will arrive in an iOS 18 update.

With Apple confirming that its CapEx would not be affected by its AI plans in the near term, it is likely that Apple is planning to forge some type of agreement with partners for AI services in addition to what it can handle on the device and by itself. Whether Apple will ultimately shift the balance to using more of its own servers and data centers over time remains to be seen.