Apple’s strategy is actually genius if you think about it
by Horace Dediu
I did think about it. Three years ago.
the real bear case for this AI boom isn’t a bubble or a recession.
It’s your iPhone.
Baker says in 3 years, a bulked up iPhone will be able to run a pruned version of a frontier model.
Think future Gemini, Grok, ChatGPT at 30–60 tokens per second, on device, no cloud is needed and it’s free.
That’s exactly Apple’s strategy, don’t win the model war, become the distributor of AI.
Make it private, local and safe.
If that happens, most everyday AI use rewriting, summarizing, basic reasoning never touches a data center.
The AI capex boom gets cut off at the source.
Model builders become interchangeable and apple owns the gateway.
That’s the bear case Gavin is warning about.
The real threat to the AI boom isn’t that the models fail.
It’s that Apple makes them run on your phone and keeps all the power for itself.
The richest company on Earth just watched its rivals light $650 billion on fire.
And did nothing.
This might be the most brilliant move in corporate history.
Source: X (formerly Twitter)
NB: Apologies for linking to X. Edge computing is as old as the hills...
...It does not take a giant leap to conclude that what can be done centrally can be (eventually) done in your pocket. The other history lesson is that software and compute commoditize. What does not commoditize is access to customers, aka distribution. What factors are involved in the creation of customers and their satisfaction? Technology alone has never been sufficient.
4 comments
FredHS ·
As you mentioned on the debrief yesterday, 'the work to be done' by AI is wide open. Apple is poised to own Edge Agentic on its Magic Carpet, running securely and privately across all a user's devices.
"You don't know, what we can find. Why don't you come with me little girl on a Magic Carpet Ride." Steppenwolf.
Sacto Joe ·
It’ll happen first in Apple’s Private Cloud, then Apple’s high power devices, then on iPads, then on high end iPhones, then on low end iPhones and iPads “for the rest of us”.
It won’t be “free”, of course. Heck, we’ve had “free energy” for well over a decade now on the roof of my house, but the solar system and the house battery cost us. And guess what: because we were flush enough to afford that, we not only pay less for our energy, but we remove a bit of demand from the grid, decreasing the cost for energy generally.
I agree with you, Horace: Technology alone has never been sufficient. There has to be a moral underpinning for a company to be truly great. Enter Steve Jobs, who instilled Apple with a moral core.
And btw, this what I call kissing of Donald Trump’s filthy ring is, IMO, a tarnishing of that moral core. It’s a worm in Apple that needs expunging now, before it can do greater damage.
And I don’t think the worm is necessarily Tim Cook. After all, in the last analysis, he’s just an employee who serves at the whim of the Apple Inc Board,
If there’s a worm, zi strongly suspect that’s where it resides.
Elliot Z ·
@Sacto Joe: thank you for saying what others are afraid to say!
farshad ·
I note that the word "edge" has deep network-centric connotations, where the computer (network, mainframe, ...) is presumed to be at the center of the universe. We humans reside "beyond the edge".
With this point of view, we can see that Apple's entire arc has been to reverse this relationship, in a kind of Copernican Revolution of computing. It's not the program/developers/computers/network that's at the center. The users are at the center.
It wasn't until I saw Woz's talk (ironically at the first Apple Investor event I attended) that I understood how foundational this was to Apple. He described that the ('edge') 'terminal' was already there, which gave users input (keyboard) and output (teletype), "all we had to do is to put a CPU in the terminal".
History has a fun way of repeating itself.