Computerworld NZ
Microsoft has reportedly had a hard time convincing corporate customers to pay premium prices for its enterprise AI products, particularly as their employees prefer ChatGPT or Gemini. The Information reported in December that Microsoft quietly slashed sales targets for some of those products — a report that Microsoft denied . Nevertheless, by Microsoft’s own admission , just 3.3% of its vast Microsoft 365 user base has a paid Microsoft 365 Copilot license. Customers’ reluctance to pay top dollar for Microsoft’s AI tools likely reflects the pace at which new AI alternatives have raced to market. With so many services to choose between and the industry at such a febrile and inventive stage, customers want to dance between the options as they seek those they prefer, rather than being in thrall to one provider — while recent Microsoft 365 price increases show the extent to which sector dominance can leave customers exposed to price hikes. Now bitten, customers are shy to commit too much to one provider. Spoiled for choice Why would they want to, given that there are so many alternatives to choose from? AI services are like streaming services, except you don’t need to subscribe to them all: they pretty much all offer the same thing, though some are better for some tasks. Apple understands this. By its actions, it is showing us that that AI models are destined to become commodities, which is why the company is resolutely focused on making sure its systems become the best platforms on which to run the models. This recognition means Apple Intelligence is likely to only ever become a selection of hand-picked on-device assistants most of us will use some of the time, with additional tasks supported by third-party providers. We know that Apple plans to use Google Gemini to help it fast-track development of additional Apple Intelligence services, but we also know it intends to support multiple AI services . Apple’s App Store for AI I think the best way to look at this is as an App Store for AI. You’ll be able to do a certain amount using on-device AI and Siri, and you’ll be able to choose between third-party AI services to handle other tasks. That plan means the existing exclusive arrangement with OpenAI’s ChatGPT will be abandoned as the company opens Siri up so its customers can choose which third-party AI services to use. It isn’t clear yet if this will extend to use of on-prem AI systems, which will be a particularly attractive proposition to regulated industries and privacy advocates using Mac minis to run independent LLMs. An App Store model also gives Apple a chance to offer up APIs to AI developers to enable sophisticated AI applications that do not devour personal privacy. That seems a very Apple-like approach to these things. What is clear is the extent to which Apple the hardware company now understands that AI doesn’t replace platforms, but depends on them. Apple as a hardware and operating systems provider just needs to focus on providing the best available ecosystem on which to build and run AI systems, with a user experience to match. Pop goes the weasel Asymco’s Horace Dediu notes the significance of such a shift: “If foundation models are heading toward commodity status, then the strategic value shifts to whoever controls the integration layer and the user relationship,” he wrote. Apple’s 2-billion-plus ecosystem gives it the edge in distribution, while its tried and tested App Store approach helps validate and optimize the user relationship. The idea that AI services become apps to be bought and sold on Apple’s platforms isn’t far-fetched. Bloomberg suggests that Apple is building tools to let chatbot apps installed via the App Store work with Siri and other Apple Intelligence features. Reflecting that some AI services are better at some tasks than they are at others, Apple will also make it possible for customers to choose which AI service handles each request. Apple will probably take a slice from any AI services subscription sales made via its platform as part of this plan, just as it makes bank from every other fee-based app. I do wonder if this could end up with a weird Catch 22-like situation for Microsoft Office users, in which everything they do on their Apple device is handled by their chosen AI service, except when using an Office app when they may find themselves trapped with Copilot. More to come at WWDC? Summing up, it looks very much as if after the filth and the fury of the first stage of AI evolution, the song remains the same — you still need solid platforms to run this stuff on. Which is, of course, where Apple’s powerful Apple silicon-powered devices have so much to bring. The company is expected to introduce this with its 27-series of OS updates, the first glance of which we will gain at WWDC in early June . Once we see what kind of system Apple is putting together, we’ll have a much better understanding of what the future of the AI industry is going to be. From where I sit, it seems obvious: while AI may change the world, it’s likely to do so while running on an Apple product. You can follow me on social media! Join me on BlueSky , LinkedIn , and Mastodon .
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