Is Apple Intelligent?

Is Apple Intelligent?

Apple is being accused of bad behavior by its strongest advocates. In this week's newsletter there are strongly worded assaults on the company's integrity and decision making from John Gruber, Om Malik and MG Siegler. The reason? Because Apple announced that many of the features of Apple Intelligence promised at its 2024 developer event, WWDC, are going to be delayed, at least until 2027.

The breach of confidence is so bad that they are accused of faking demonstrations and producing and running ads for the iPhone 16 when they knew for sure they were not going to be able to deliver.

Internally the team responsible for Siri met and had to eat humble pie.

The scale of the failure is so extreme that Elon Musks promises seem positively accurate by contrast.

Now, it might just be me, but I am both OK with Apple not delivering and not surprised. The gains in AI over the past 12 months make most of the promises outdated. And almost all of the functionality of the best AI is available on my iPhone, iPad and Mac using software from OpenAI, Anthropic, Deepseek, Perplexity and others.

Apples failure has not impacted me one bit. And I still love my Apple products.

The opportunity to build in AI to the operating system is still there, but even without it the apps give me everything I need.

So...why is Apple so embarrassed? Well, because it probably lied, or at least over-promised. Now it has to correct. The internet is awash with advice, but one piece makes a ton of sense. Apple should acquire Anthropic and/or Perplexity.

Here are some examples:

Perplexity is my favorite, but both would be excellent. Could it happen? Only if Apple's DNA changes dramatically. It has not made major acquisitions for years. But the ideas make sense. Claude is the best model for many things (I wrote an Xcode app using it as I mentioned last week). And Perplexity is a big improvement on Google when used for AI and web search. I would be a fan.

Meanwhile a lot is happening in public markets this week. Most commentators pin the blame on tariffs and uncertainty around them. But I suspect it is simply another correction caused by inflated asset values when compared to fundamentals. The rate of growth of SaaS companies is slowing. And new SaaS companies are not choosing to go public. Public markets are not where the growth is.

The rapidly expanding capabilities of AI means that startups will need less and less capital to reach growth. As Alex Wilhelm said in his excellent 'Cautious Optimism' piece titled 'Do today's best startups need venture capital?':

"But I'll bet you a nickel that, compared to the SaaS era, venture dollars invested per dollar of ARR is going down. And the further down it goes, the less startups will need external capital. The best, most enticing startups, at least."

The evidence suggests that AI startups get to large revenues quickly, and the vertical AI startups do so with far less capital than traditional SaaS companies. See the first essay below.

Apple is just fine, AI is just fine, startups are just fine. Lets all chill :-)

Essays of the Week