On his final earnings call as CEO, Tim Cook suggested Apple's upgraded Siri AI may require a subscription via iCloud+ for heavy users. The new Siri, part of a hybrid on-device and cloud strategy that uses Google's Gemini for complex tasks, will roll out this fall. This potential monetization comes as Apple spends less on AI infrastructure than rivals and after settling a $250M lawsuit over AI feature delays.
Cook's CEO transition
- ▪Tim Cook made statements about Siri AI during his final earnings call as Apple's CEO
- ▪Tim Cook will assume the role of executive chairman on September 1
- ▪Senior Vice President of Hardware Engineering John Ternus is set to become the new CEO of Apple
Apple's on-device AI strategy
- ▪Apple is pursuing a hybrid AI strategy, running some workloads on-device and using the cloud for more complex tasks
- ▪For complex AI tasks such as image generation, Apple will use Google Cloud infrastructure
- ▪Much of Apple's AI suite, named 'Apple Intelligence,' is designed to run directly on devices like iPhones and Macs
- ▪Apple has licensed a custom Gemini model from its competitor Google to augment Siri
Capital expenditure comparison
- ▪Apple's capital expenditure in the June quarter was $2.46 billion, below the StreetAccount estimate of $3.44 billion
- ▪An industry-wide, AI-driven RAM shortage has increased hardware costs, leading other tech companies to raise device prices
- ▪Apple's capital expenditure on AI is significantly lower than that of its hyperscaler peers like Alphabet, Amazon, Meta, and Microsoft
Siri AI upgrade details
- ▪Apple paid $250 million to settle a class-action lawsuit over delays and marketing of the iPhone 16’s AI capabilities
- ▪The upgraded Siri AI is available in the iOS 27 beta and is planned for a broader public rollout in the fall
Potential subscription pricing
- ▪Apple's potential freemium model for Siri AI mirrors the strategy of other providers like Anthropic and OpenAI
- ▪Apple CEO Tim Cook suggested that heavy users of the new Siri AI may face a paywall for extended use
- ▪Tim Cook confirmed that Apple does not yet have a "complete plan" for how it will charge users for AI features
- ▪Apple is considering offering upgrades for more Siri AI compute power through its existing iCloud+ subscription service
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