Apple's patient approach to artificial intelligence (AI) has paid off, and the company is now poised to win the AI race with its 2.5 billion devices. Unlike its competitors, Apple didn't try to out-compute Google or OpenAI, but instead waited for models to become a commodity. The company has inked a deal to use Google's Gemini for Siri's "heavy lifting" for a reported $1 billion a year.
While competitors are spending $50 billion a year on capital expenditures (capex) just to keep their models relevant, Apple is "leasing" the world's best intelligence for the cost of a rounding error on its balance sheet. Apple's biggest AI advantage is not one model, but its active user base of 2.5 billion devices across the iPhone, iPad, Mac, and other product lines.
With the upcoming update, Apple will enable Gemini for almost 2.5 billion devices, defining user experience and making many wonder if it makes sense to pay ₹1,900 or so a month to OpenAI or Anthropic for the privilege of an AI chatbot when the iPhone, iPad, or Mac has Gemini for free.
Apple's on-device AI approach provides a long-term cost advantage, as every time you ask ChatGPT, Copilot, or Claude a question, it costs them some cents to a dollar to compute on a server somewhere. When your iPhone's Apple Intelligence summarises an email thread or generates an image, it will cost Apple $0, as the compute is paid for by the user when they buy the phone.
Apple's focus on on-device AI also provides a strong case for personal AI, as most AI models require you to send your data to the cloud, where it's processed (and often stored). With Apple's Private Cloud Compute, even if a request does have to go to a server, it's processed on Apple Silicon in a "black box" that even Apple can't see into.
