🍏 Apple's AI Strategy Unveiled and Q1 Report

Update 2023-05-08

What’s in today’s Business Edge update?

There is much focus on Apple in today’s update with their sellar Q2 earnings and comment on their AI strategy, while Microsoft concedes in console wars to Sony and Nintendo!

In other news, Microsoft teams up with AMD on AI chips, Google Search goes visual and snackable, and OpenAI challenges Google with its costly ChatGPT project. Dive in!

🌐 Digest

Concise summaries of the most interesting tech news stories.

[1] Apple Reports Strong Q2 2023 Earnings and Emphasizes Thoughtful AI Integration

Apple reported its Q2 2023 earnings with quarterly revenue of $94.8 billion, surpassing analysts' expectations despite being down 3% YoY. The company set new records for Services and iPhone sales, with net profit at $24.16 billion and earnings per share unchanged at $1.52. During the earnings call, CEO Tim Cook also discussed Apple's approach to AI integration, emphasizing a deliberate and thoughtful strategy.

More:

• iPhone revenue reached a March quarter record of $51.33 billion

• Services achieved an all-time high of $20.91 billion

• Apple's active device installed base reached an all-time high

• Cook highlighted the importance of addressing potential issues and risks in AI

• AI already integrated into products like Siri, iOS software, and device features

Details on AI:
Apple's CEO Tim Cook refrained from mentioning AI in his prepared remarks during their second-quarter earnings call on May 4. Apple reported strong earnings for the quarter, with revenue exceeding analysts' expectations at $94.8 billion.

During the Q&A session, Cook was asked about his stance on generative AI and how it would fit into Apple's products. In line with Apple's strategy of maintaining secrecy about its future efforts, Cook did not comment on product roadmaps. Instead, he emphasized the need for a deliberate and thoughtful approach to AI integration, acknowledging the potential of the technology while also considering the associated issues and risks.

Cook did not provide specifics about the issues he had in mind, but the AI industry is currently grappling with concerns such as bias in AI analysis and content generation, AI explainability, and safety and societal risks. The Biden administration recently announced initiatives to address some of these concerns.

AI is already a part of Apple's product lineup, with the Siri voice assistant using natural language processing (NLP) across devices like the Apple Watch, iPhone, iPad, Mac computers, and HomePod. The company's iOS software also features AI capabilities, such as Deep Fusion for enhancing image quality. In 2021, Apple hired Samy Bengio, a former leader of Google's AI efforts, to help develop its own AI.

Cook highlighted the company's progress in integrating AI and machine learning throughout its ecosystem, mentioning features like fall detection, crash detection, and electrocardiogram (ECG) functionality in iPhones and Apple Watches. He said that AI is "huge" for Apple and that the company will continue to weave it into products thoughtfully.

_{Tags: #Apple #FinancialReport #iPhone #AI}

Read more about it at —> and (link) (read time: 6 minutes)

Insight: The reported earnings are specific to Apple and shed light on its financial performance, product sales, and strategy. Additionally, Cook's emphasis on a thoughtful approach to AI integration could influence Apple's product development and market positioning compared to other big tech players. These factors may affect the company's competitive landscape within its market segment but do not have a broader impact on the industry or global economy.

[2] OpenAI Takes on Google with Expensive ChatGPT Development

OpenAI, co-founded by tech leaders like Elon Musk and Peter Thiel, has doubled its losses to $540 million as it develops ChatGPT and poaches key employees from Google. Despite the high costs, ChatGPT's potential is significant, with implications for marketing, customer service, and content creation.

More:

• OpenAI hired AI researcher Jacob Devlin from Google

• Building ChatGPT requires massive computational power and storage

• ChatGPT was built on GPT-3.5 architecture, needing large amounts of data to train. Now GPT-4

• Microsoft plans to sell private ChatGPT to other companies

_{Tags: #OpenAI #Google #ChatGPT #AI}

Read more about it at —> (read time: 5 minutes)

Insight: OpenAI's decision to take on Google and other tech giants in the AI race affects the entire industry. The development of ChatGPT and the poaching of key employees from competitors could potentially shift the competitive dynamics and lead to new technological advancements or disruptions within the AI sector.

[3] Microsoft Reportedly Collaborates with AMD on AI Chips

Microsoft is said to be collaborating with AMD to help the chipmaker expand into AI processors, as the two companies aim to compete against Nvidia, which holds an estimated 80% market share in the AI processor market. In exchange, AMD is reportedly assisting Microsoft in developing its in-house AI chips, codenamed Athena.

More:

• Demand for AI processors grows with the popularity of AI services like OpenAI's ChatGPT

• Microsoft's Azure Cloud relies on Nvidia's expensive processors for AI services

• AMD CEO Lisa Su emphasizes AI as the company's top strategic priority

• AMD's upcoming Instinct MI300 data center chip could be adapted for generative AI workloads

_{Tags: #Microsoft #AMD #AI #Nvidia}

Read more about it at —> (read time: 4 minutes)

Insight: The collaboration between Microsoft and AMD to develop AI chips could potentially affect the entire industry as it seeks to challenge Nvidia's dominance in the AI processor market. These companies' development of AI processors can lead to new technological advancements or disruptions within the AI sector.

[4] Redefining Google Search: Visual, Snackable, Personal, and Human

According to speculation, Google is set to introduce new AI-powered features to Google Search, making it more "visual, snackable, personal, and human." The company aims to shift away from the traditional "ten blue links" and develop a more appealing interface for younger users. It plans to allow users to converse with the search engine and complete transactions, such as shopping or booking flights, directly through search results. The upcoming Google I/O event is expected to showcase these new features and improvements.

More:

• Google's Project Magi: An all-new search engine with over 160 Googlers working on it

• Enhanced personalized user experience in development

• Searchers may be asked follow-up questions or presented with TikTok-style videos as responses

• Google to refine its definition of "trusted" content and enable confidence in content usage

_{Tags: #Google #AI #Search}

Read more about it at —> (read time: 4 minutes)

Insight: The changes in Google Search will affect a specific market within the tech industry, introducing moderate technological advancements and potentially altering consumer behavior within the market.

[5] Microsoft Admits Defeat in Console Wars to Sony and Nintendo

Microsoft Gaming CEO Phil Spencer has conceded defeat in the video game console wars, admitting that the company will not be able to catch up with Sony and Nintendo. In a candid 40-minute interview with an Xbox community YouTube channel, Spencer acknowledged that Microsoft lost the critical Xbox One generation and that the current Xbox Series X would not significantly impact the sales of the Sony PlayStation 5 and Nintendo Switch.

More:

• Microsoft has struggled to overtake Sony and Nintendo in the gaming console market

• Spencer is shifting focus from hardware to software, including the Game Pass subscription service

• Microsoft's $69 billion acquisition of Activision Blizzard was recently blocked by the UK's antitrust authority CMA

_{Tags: #Microsoft #Xbox #Sony #Nintendo #consolewars}

Read more about it at —> (read time: 4 minutes)

Insight: This news has a Negative Impact on Microsoft. The company's admission of defeat in the console wars against Sony and Nintendo is a significant setback, and the negative consequences of this situation are likely to affect Microsoft's gaming division in terms of sales, market share, and overall competitiveness in the gaming industry.

⚡️Bites

Brief news summaries that provide quick and easy-to-consume information.

Global smartphone shipments fell 14% YoY and 7% QoQ to 280.2M units in Q1 2023, with Samsung down 19%, Apple 2%, Xiaomi 22%, Oppo 10%, and Vivo 18%. (link)

Meta Platforms hires the former Graphcore AI networking technology team in Oslo, bolstering its AI and machine learning capabilities for data center infrastructure. (link)

EU warns Apple against limiting the functionality of uncertified USB-C cables for iPhones, as it could violate upcoming legislation requiring USB-C ports on devices sold in the region. (link)

Meta reports a rise in malware disguised as ChatGPT across its platforms, with hackers using AI-themed lures to compromise Facebook ad accounts and steal user information. (link)

Atlassian shares dropped after reporting lower-than-expected revenue and increased costs, including restructuring charges, despite a 24% YoY rise in revenue to $915.5 million. (link)

Salesforce and Accenture collaborate to establish an acceleration hub for generative AI to enhance customer relationship management (CRM) through AI-driven strategies and technologies. (link)

🔍 Extra

A mix of learning links, software products, deals, and other interesting content.

Former Yahoo CEO Marissa Mayer admits buying Netflix for $4B or Hulu for $1.3B would have been better transformative acquisitions than the $1.1B Tumblr deal, with Netflix now worth over $140B. (link)

Amazon’s AI strategy focuses on choice with the launch of Bedrock, offering multiple AI-powered foundation models for developers, focusing on choice and customizability for generative AI applications. (link)