Apple's Strategy

As we anticipate the launch of Apple's iPhone 15, it appears that the company is struggling with declining hardware sales, especially from the iPhone. An increasing amount of their earnings are now being generated by their services, such as iCloud and the App Store. Meanwhile, the industry's gaze is fixed on Apple's new AR glasses, Apple Vision Pro, and its potential to redefine Apple's business model and our interaction with their technology. The question is whether Apple's business model has reached its limits or if the market forces have cornered this tech giant. The situation presents an opportunity for competitors to fill the void. Apple certainly has the financial means to carefully consider its next move, but as Elon Musk has shown with Twitter, even giants can lose significant amounts of money in the process.

Apple's announcement of a device that could theoretically replace desktop computers is intriguing. Understanding the implications for their hardware line, one wonders: why purchase an expensive iMac, iPad, MacBook, or any other large device when AR glasses can provide comparable functionality? While it's possible to connect the AR glasses to existing hardware, doesn't this prove their redundancy in the first place? Many admire Apple's design aesthetics, with cables and ports neatly concealed. However, I'm guessing the majority of us would likely prefer a home without any visible electronics at all. This minimalist design philosophy, pioneered by Apple, may ironically be the very force pushing their own hardware into obsolescence.

"Why purchase an expensive iMac, iPad, MacBook, or any other large device when AR glasses can provide comparable functionality?"

Assuming that Apple could replace all of its hardware with its AR glasses, one could argue that their sales would simply shift from multiple hardware products to a single one. But then comes the consideration of the price tag. Apple is known for high prices, but the cost of these glasses is notably steep. I doubt that consumers will be eager to spend over $3000 on a device still in early development stages. The price will inevitably drop, but the timing is uncertain. Until then, consumers may delay purchasing any high-end iMac that could soon become obsolete, a reality reinforced by Apple's own presentation. By the time most consumers will consider Apple's headset, they may have considered cheaper alternatives, like Meta's offering.

Then there's AI, with the promise of delivering entirely new applications and redefining consumer electronics and digital experiences as we know them. While this is exciting, it's unclear how Apple will carve out its place in this arena. OpenAI's shift to proprietary source code may signal they're onto something significant. Although Apple is investing heavily in AI, it will have to balance innovation with their commitment to user privacy. Data collection and the risk of AI presenting inaccurate or potentially harmful information present additional challenges. Furthermore, if Apple takes too long to perfect and integrate its AI software, they risk being outpaced by the continuous product refinement of OpenAI (and by extension Microsoft).

"The silver lining for Apple is that we will still need hardware to run these AI applications."

Apple will likely try to integrate AI into their products the way Microsoft will. However, striving for perfection could cause them to lag behind. By the time customers experience these tools in Apple's software, the AI train might have already left the station. Meanwhile, OpenAI's model will become more accessible to both developers and consumers, resulting in a flood of innovative AI apps running on not just iOS, but also Android and the web. The relevance of a particular mobile platform may diminish as AI-powered code conversion allows developers to seamlessly transition between languages and operating systems, possibly even through pseudo code.

The silver lining for Apple is that we will still need hardware to run these AI applications. We may not be as dependent as before, but we will still need a device. If Apple finds a way to mainstream their AR glasses, reduce their price tag, and maintain a robust suite of AI-driven applications, they will likely maintain their industry status for now. However, a lot hinges on these factors. If any fail, and Apple ends up spending most of its budget on AI development without significant results, shareholder confidence may shrink. However, the increasing number of AI-enhanced iOS apps will give Apple plenty of time for shifting gears to accommodate for new market demands and consumer expectations.