Apple's highly anticipated developer conference just
happened and they announced a lot of things.
They, of course went over an entire feature set of different
things they're doing with their operating system and all of
their core apps. They had a lot of third party
developer apps. But the biggest thing, this
time, the most anticipated part, was of course the artificial
intelligence, which in Apple's case they don't call artificial
intelligence, they call it Apple intelligence.
They officially released Apple Intelligence.
We're going to go through in this video and try to unveil the
truth of what this actually means.
What is Apple Intelligence really, and how does it impact
Apple as a company, the customers, and importantly, the
stock? How is Apple Intelligence going
to sell more devices or more services?
How is it going to impact Apple's financials?
We have a lot to get to in this video because we're going to be
going over all of this, and I'll be giving you my take on what
the most important features were of this developer conference.
As we jump into this, I realized first that Apple's doing
something that they've always done in the past.
They like to control their destiny, and part of control is
controlling the branding of what you're doing with your company.
For example, every company out there aside from Apple wants to
jump into the AI race. They want to become an AI
company because right now, AI is good.
AI gets the thumbs up from investors.
So companies like NVIDIA, like Google, like Amazon, Microsoft,
you name it, all of them are AI companies.
And in fact, the more an AI company they can become, the
better the most AI company in the world, which is NVIDIA, is
quickly becoming the biggest company in the world.
So every company has an incentive right now to become an
AI company because again, right now AI is good.
Well, Apple has seen the history.
They know that sometimes terms like AI, which are good right
now, can kind of become bad later.
That can happen over time. Not always the case, but
sometimes it can happen. Think about blockchain and
crypto. Just a couple years ago, that
was like the thing to be Everybody wanted to be a
blockchain company and suddenly the wind shifted and now that's
a bad thing. Apple knows this, so they never
brand themselves a term that they don't control the ultimate
destiny of. So by switching from AI to Apple
Intelligence, they have now branded control over their
artificial intelligence, and now it's a part of Apple that they
have their own control over, not something that other companies
and that the market has control over.
Apple also knows that the ecosystem is the most valuable
part of what they offer, so they've kept everything deeply
integrated into their ecosystem. For example, there's no third
party AI Apple Intelligence app. There's no just ominous third
party app. Everything is built into the
ecosystem, deeply tied with their devices.
So they keep everything in that ecosystem to keep that Moat
together. Now if we go through the
specific features that they went over, they start off first with
the the Apple Vision Pro. And this is just, I think it's a
weak part of Apple right now. I think they're doing a good job
with the headset. I think that they do a good job
with the Vision Pro, but it's just not a great product and I
don't know what else to think about it.
I've never believed in Mark Zuckerberg's metaverse.
I've never believed that people want to sit there with a headset
on for hours and hours and work a full day with a headset over
their face. So I'm just not buying it, both
figuratively and literally. I'm not buying the Vision Pro.
I think it's ultimately a niche product that will appeal to a
small group of people, but I don't see it as popular as the
Watch or the iPhone or the Airpods or anything else.
I think it's going to be a far more niche product.
Now, after talking about the Vision Pro for a minute, Apple
went through a whole list of changes improvement specifically
to the software of their core apps.
So these are a lot of small changes.
I wrote down the ones that I thought were the biggest ones,
things like further personalization and
customization of basically every part of the iPhone.
They had app icons. You could further customize them
and have dark modes and almost like different colour tones.
That was something that was like, meh.
I, I mean, this is, this is stuff Android does, right?
It's not that impressive. And this is a point where I
thought that this was a very weak start to the meeting.
So I, I think that this was just getting things going.
But you had customization of icons, you had a new Control
Center with a new Control Center API, you can do things like
change out the flashlight or the, the camera at the bottom of
the lock screen. Apple's now making it so that
you can hide apps on the iPhone even after the iphone's
unlocked, so you can have an additional layer of security
that even if someone has the iPhone unlocked and they're
using it, they can still not see this app unless it's
specifically unlocked. So this is good for those
situations, I guess, where you have something really personal
like an app that's kind of embarrassing that you want to
keep to yourself and you don't want people to see it even if
they have access to your phone. We've all been in those
situations where you you have a photo, you want to show someone
something interesting and then they want to take the phone to
look at it. That's no fun because then they
have your phone, then they can see your messages, they can see
all the apps on your phone right until they give it back.
So this is kind of a way for Apple to be extra sneaky and
hide apps even after you've unlocked the lock screen.
They also introduced the feature of scheduled imessages.
They give the example of not missing someone's birthday.
You can auto send them an iMessage, which I think is kind
of lame. If it's someone's birthday, you
should probably call them, but there's a lot of other
applications for that. So scheduled imessages I think
is cool, Bold, italic and underline in imessages.
So further customization to sending messages.
You can now add text effects to imessages.
They've also added in the ability to message and text
through satellite, so if you lose reception, you can still
send out messages and text. They've improved Apple's Mail
app, where it's becoming a lot closer to the Gmail app where
you can categorize emails and filter different things.
A lot of people think Apple will never catch up to Google and
Gmail, but remember there was a time when people said that about
Apple Maps. Apple Maps was a complete
disaster. It was ugly, incorrect,
completely inaccurate all the time, and now it's pretty good.
It's right there with with Google Maps.
Apple TV Plus got a few upgrades.
They're basically copying X-ray from Amazon Prime Video, which
is the feature where if you pause at a specific part, it
tells you all the actors on the screen and it tells you what's
going on. Apple's doing the same thing,
but they're calling this insight.
It's literally the same thing as X-ray to Apple is just inside.
The enhanced dialogue is especially helpful in TV shows
or movies where you can't understand what people are
saying. That's so frustrating in some TV
shows, especially with a lot of sound systems people have where
they have the center channel. That's just a big sound bar.
You can't turn up the dialogue independently with those sound
bars. So Apple's trying to make it so
you can understand what people are saying better.
Now they move on to the Watch OS, and this is where I actually
think some of the upgrades here get really impressive.
They have something called the effort rating, which I think is
a direct copy from a product called Whoop.
Whoop is a competitor to the Apple Watch and it tracks
different metrics, like you're sleeping and they have something
called, they have something called your sleep performance
where they rate your sleep. And they have another thing here
called your strain, and it's a measurement, a rating of how
much you strained during a workout.
That sounds awfully familiar to your effort level.
Apple's copying the same features of Whoop and
integrating it into the Apple Watch.
So Apple's doing the same type of thing where they look at what
other various companies have done really well, and they try
to build that into the Apple ecosystem.
And I see them doing that both in health care with things like
blood pressure monitoring, heart rate, and with more active
stuff. Measuring your effort level is a
direct copy of Whoop. Then they moved on to the iPad
and this is where things got interesting.
This is the first area that we saw Apple introduce some real AI
features, some really magical things.
Now started off with some very small things like organizing
your desktop or a small UI change like a floating tab bar.
So nice little UI upgrades, but again, not that impressive.
Where it got interesting was with the calculator app.
Now the calculator app in and of itself, there's a million
calculator apps, but they integrated it into the Notes app
and this was really magical. They showed examples of you
being able to draw out different math problems and after the
equal sign it would automatically put in the answer.
It's like you could be writing out a a complex math equation
and the AI would understand your written language and then auto
fill in the answer after the equal sign and update it as you
make changes. That was the first impressive
example of Apple integrating artificial intelligence into the
ecosystem. It was with the Notes app and
specifically with math. So the Notes app was pretty
cool. But again, up until this point
there is no big AI strategy. This just seemed like a
run-of-the-mill update with a lot of little OS improvements
until we got to this part. They finally did it.
Apple finally introduced themselves into the AI game with
Apple Intelligence. They rebranded it Apple
Intelligence because they control Apple Intelligence.
They don't control artificial intelligence.
The branding's an important aspect of this.
Now, Tim Cook talks about how Apple Intelligence is going to
be centered around 5 different things.
They have powerful, intuitive, integrated, personalized, and
private. The most important one being
private for a couple reasons we'll get to.
Now when I look over all the features of Apple Intelligence,
I list them out and I try to summarize what is Apple
Intelligence like? What does it actually mean?
It's basically an on device large language model.
So it's like having a ChatGPT on your iPhone, but it has specific
training and knowledge that's deeply integrated with all of
your apps. So think of it as like an
assistant that knows a lot about your notes app and photos app
and messenger app. And it can kind of help you out
with any of that. Again, it's like a super
advanced Siri, but it's not quite Siri because the Apple
intelligence goes even beyond Siri.
Apple Intelligence has a lot of the tools we've seen before,
like the writing tools of proofreading, summarizing text.
It'll create generative images for friends, birthdays, and it
will do it in multiple styles. So you have generative images
built into Apple's ecosystem. Now, it also has the power to
translate any type of plain commands to do anything across
the ecosystem. For example, if you say I want
to find a picture of my driver's license, the AI will look at
that and it will search across everything, your notes, your
messages, anywhere for a picture of your driver's license, and it
will recall it if it finds it. So it's a really powerful thing
to have your entire ecosystem and one assistant that helps
with it. Now, after showing a lot of
features of the different AI integrations, they moved on to
privacy. And Apple spends a lot of time
on privacy for two different reasons.
The first one, I believe is a nod to regulators.
They want to get regulators off of their back and they're using
privacy as an excuse to do this. For example, one of the things
that Apple said, and this is a direct quote, privacy is only
possible through our integration of hardware and software.
See what they said? Their privacy is only possible
through our integration of software and hardware, meaning
hay regulators, you can't break up our software and hardware
integration unless you want to sacrifice the privacy of our
customers. So they're kind of linking the
privacy of the customer to the integrated ecosystem of Apple,
therefore protecting their Moat, which is their ecosystem.
If the regulators come for Apple and they want to break
everything apart and separate all the apps, Apple can say
you're exposing our customers to less private ways of doing
business. So I think part of the strategy
here from Apple is linking privacy to the deeply integrated
ecosystem, making it therefore more difficult for regulators to
break up that ecosystem. The next thing, of course, is
just a selling point for customers.
Customers love having their data private, and Apple mentioned
that they have now a private cloud compute by Apple naming
there's private cloud compute. It immediately makes all the
other ones feel less private, like Apple just named there's
private cloud compute. So if you have just a normal
cloud computing business, all of a sudden yours feels like it's
not private because you don't have that little, that little
qualifier in front of it. Apple's private cloud compute is
built to where it doesn't save user data.
Now they continue on with Apple Intelligence, their rebranding
of artificial intelligence with a complete overhaul of Siri.
The Siri icon's different. The Siri animation looks
completely different and no longer fills up the center of
the screen. It maintains conversational
context. So now it's a little bit more
like ChatGPT. You can talk back and forth to
Siri and it will remember what you just previously said.
Siri also has the ability to do things like editing photos.
You can bring up a photo and say, hey, Siri, make it pop, and
Siri will make the photo just look better.
Now every time I look at these new features like photo editing
from Siri, making photos pop right in your iPhone, I look at
Adobe stock price and it didn't react that much.
So investors aren't too concerned, but every time I look
at it, and I think it's not a great thing for Adobe, all these
photo editing tools and AII just believe is more of a negative
for Adobe than a positive. Now there's a lot more generic
AI features, not specifically with Siri, but these are
important features. Ones like notification summaries
where they surface the most important text messages out of a
big stack. The most important one will be
surface to the very top. They also have Gen.
Moji, which is generating emojis.
So you have Gen. Moji now and AI generation
emojis. You have Image Playground where
you can just create new images. So they're taking a little bit
of risk here because we've seen from Google people can abuse
these tools and create really bad images with them.
Apple's probably locked this down pretty good, but they're
still taking some risk here. With image generation, you can
generate the images you want, and then you have something
called Image Wand, which improves sketches in real time.
So like, if you Draw Something in the Notes app and you circle
it, the image wand will make it better and more real.
And then Apple's photo app's getting a huge upgrade where it
will take a lot of various photos and videos from a
vacation or a trip, and it will automatically create a photo
book from it with music. And it's getting better at
making these better and better. So that's another cool thing
that's built into it. But Apple's doing what I
expected. They're integrating all of these
features closely into their ecosystem.
Now finally, and I think surprisingly, after going
through all the Siri upgrades, they also mention that they're
integrating Chat GT with IRI, but not in the way that you may
think. It's not like IRI's suddenly
becoming Chat GT. Rather, what they're doing is
IRI can hand off a question to Chat GT.
So it's a little bit more of a transition.
They hand you off to ChatGPT rather than it becoming ChatGPT.
And they mentioned that they're open to having other integrated
LLM's. So you have all of these Apple
Intelligence features, the things like the Gen.
Moji, the advanced Siri, the photo book creation tool, All of
this stuff is Apple Intelligence.
They're AI rebranding. It's important to note that this
stuff is only available for the iPhone 15 Plus or later, meaning
that you had to have the latest Apple iPhone to have access to
any of these features. Everyone else won't have them,
but they gave some users the latest features.
The thing I think they're doing here is creating a strong
incentive to upgrade from the previous iPhones to the newer
ones. Now, a lot of people that buy
iPhones are not watching this developer conference.
In fact, I'd say 99% of people that buy iPhones are not
watching this developer conference.
So it's not like they're sitting here looking at the new features
and trying to be sold on the iPhone.
That's not how Apple sells iPhones.
The way that they're going to get people to upgrade to the
latest version of the iPhone is by people who already have the
latest version of the iPhone using these features.
Once other users see them using these features, that's when it
creates FOMO. That's when it creates people
wanting the latest. When your iPhone can send Gen.
emojis and different scheduled text messages and has advanced
Siri and someone else is looking at that and their iPhone doesn't
have it creates a little bit of jealousy, creates a little FOMO
inside of you. Even if you're reluctant to do
it at first, if more and more people are using all these cool
features and you don't have access to them, you're going to
feel left out. So Apple is creating a strong
incentive with Apple Intelligence to upgrade your
phones. And I think that's one of the
biggest thing they did here. They created a further incentive
for a new iPhone cycle. Now, it's difficult to say how
many people really upgrade because of Apple Intelligence.
You may scoff at it and say it's not that impressive, but all it
takes is one good feature for someone to upgrade, just
something to justify upgrading their phone.
If your phone's already a few years old and you've been
looking for an excuse to upgrade, Apple just gave you
that excuse. So I'll admit Apple didn't do
anything revolutionary, anything cutting edge.
They didn't invent anything new, but they don't need to.
They already own the market. All they have to do is create an
incentive for people to upgrade, and they gave many motives for
people to upgrade. A lot of people underestimate
the power of a little fun feature in the iPhone.
All it takes is one of those to encourage people to upgrade if
they see something they really want, some feature.
There's a lot of social pressure with the iPhone.
Apple understands this and they are encouraging people and
motivating people to upgrade their iPhone to get Apple
Intelligence. Now, of course, the stock is
down a little bit after this meeting, it's down 2%.
This is nothing new. I've been following Apple for
years and years and years, and it's difficult for me to
remember a time that Apple has had a developer conference where
the stock price went up during the conference.
It almost never happens. Apple always trades down during
developer conferences, but the stock price usually recovers
within the following three months.
So I see nothing unusual here. So overall, my biggest take away
is that Apple is leaning into privacy once again and they're
using privacy as a shield, an excuse to protect their
ecosystem. And I think that's a pretty good
excuse. They can further protect their
users data with a close integration of software and
hardware. If the government comes in and
tries to break that up, it gives them more of an excuse to keep
it together. So I think that's a protection
against regulation. And then the next thing they're
doing is creating a strong motive to upgrade, which I think
they've done successfully. I think there's enough little
Easter eggs here, enough little cool features to encourage
people to upgrade their iPhone. So overall, even though the
stock is trading down, I view this as a positive development
with Apple. I think that this met what they
needed to meet and I think it also was executed really well.
So I'm excited about this development.
Let me know what you think. See you in the next one.