Big Technology Podcast - Apple Fails to Overreact to the AI Revolution — With M.G. Siegler

Episode Date: June 12, 2024

M.G. Siegler of Spyglass is back to recap Apple's big AI-themed WWDC event and look ahead to AI's broader potential moving forward. Tune for an in-depth analysis of Apple's new AI features, and what they say about the strengths and limitations of the current AI models. We cover whether the new features will lead to an iPhone upgrade cycle, the stock market's reaction, Elon Musk getting angry about the event, why OpenAI played a smaller role than many anticipated, Apple's potential robotics future, and where Apple stands after the big reveal. Hit play for a timely conversation that goes beyond the hype to examine the real-world implications of Apple's foray into AI. --- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/ Want a discount for Big Technology on Substack? Here’s 40% off for the first year: https://tinyurl.com/bigtechnology Questions? Feedback? Write to: [e-mail]

With Apple's AI plan now out in the open, we'll assess whether the company met the moment and what its announcements say about the future of AI for, as Apple put it, the rest of us. All that more is coming up right after this. Welcome to Big Technology Podcast, a show for cool-headed and nuanced conversation of the tech world and beyond where we are here. Recording in the aftermath of WWDC as Apple has made its big AI announcement and we have a great show for you today because M.G. Siegler is back. he's a venture partner at gv formerly google ventures and the author of spyglass a great site covering everything in tech also some terrific articles in the run-up to wdc and in the aftermath of wd wdc and mg we previewed apple's big ai play in april and here we are recording right after the announcement so we're going to talk not only about apple but also about sort of what the

set of announcements means for the trajectory of a i more broadly so it's going to be a good great in-depth show. Welcome back. Thanks for having me back, Alex. Yeah, I feel like when we talked last, I think we, I was going over that and looking, looking over that episode. And I think we hit a lot of sort of it pretty well on the head. But in the intervening time, I feel like I've gone down these wayward paths of like trying to figure out how Apple could integrate open AI and the back end and do all this crazy stuff and do a brain transplant for Siri. And instead, it ended up being pretty straightforward what they ended up doing, I believe. We're going to talk about this, the weird like buildup. And it wasn't, I mean, I think everybody thought, I thought, and the report certainly seemed

to indicate that Apple and Open AI would have a major partnership. And it turned out to be pretty minor. So we'll talk about that in a moment. But first, I just want to, you know, I slept on it. I want to get your reaction to this. Because the aftermath of Apple's WWDC has sort of broken out into two camps, right? Very different camps. There's one group that says this event was Apple's biggest moment in a decade and embracing AI is going to set up and super cycle of upgrades for the iPhone and it was a master's stroke. And then there's the other side where, and this is sort of like reflected in this poll that I did, actually as the event was basically wrapping up asking people what they thought, whether Apple's AI announcements were wow, cool, or me. And yes,

Yesterday, you know, right after the event, the poll had like 49% of people saying, meh. Now 50.9% say, man. And I listen, listeners, I know this is unscientific. But the reaction, it does capture what a lot of people saw. And maybe it was because German leaked all this. But basically that it was basic, obvious use cases of AI. I said, you know, bring Sam Altman up. And I was looking for more fireworks.

And so that's Camp 2. I think I guess I'm in Camp 2. I'm curious, you know, after having watched this, like, which one is right? It's funny you frame it that way because I almost feel like in trying to think about this today, the day after 25 hours later, after the keynote, I'd written something, you know, immediately afterwards just trying to distill my thoughts really quickly on like the gut reaction to it. And I thought, to your points, like overall, it felt pretty right down the middle, in part

because, as you mentioned, like, Mark Irman had broken so much of what was going to be announced, and it went pretty much straight down that line. And it felt like, you know, perhaps a little underwhelming as a result of that, for those of us who, like, follow this so closely and, again, had read all those reports and knew what was coming. Today, I'm a little bit, I'm almost in exactly in between your two camps. And I know that because I'm, like, trying to think about what my next sort of take to write about will be. And I sort of have these like two paths that that I'm potentially want to go down. And I'm not sure which one I feel more passionately about.

I'll probably end up writing both them, to be honest, because I do feel like it's a very nuanced situation. But I do feel like, you know, in one camp I have sort of the headline in my head of like Apple failed to overreact to the AI revolution, which I think is, you know, a tongue-in-cheek way to frame it. Yeah. But I do think that that's that's sort of what we're looking at right now, right? Like everyone wants some giant, you know, new feature, some big partnership with OpenAI. And instead, they did what Apple often does, which is just sort of go down a very, you know, middle of the road, focus on sort of products and implementations that are going to hopefully resonate with their very big user base and not focus on the latest and greatest whizbang features and instead do stuff that they think the masses will resonate with. At the same time, the other angle that I'm thinking a lot about is what Apple showed off looked good as it often does, right? Like visually, like appealing and, you know, I think they made some good product decisions on what they showcased yesterday. But I'm also fairly skeptical about how well they'll actually be able to execute on that simply because they've been in market for years and years with Siri.

and we've been told again and again that, you know, this is the year that series better. This is the year that they fix all of the issues. Exactly. In the year of Linux. It was the year of mobile for like 15 years. Yeah. And I am pretty skeptical having watched the demo, you know, remotely.

You're there, but I was, I'm in London, so I was watching it just on the live stream. And then I went ahead and watched it again this morning just to see like, you know, second reaction, if I missed anything. And watching a lot of those demos, again, they look impressive, but I'm just watching them, I'm like, come on, it's not going to work as well as it is in this demo. And obviously, that's always true of a demo. But I am skeptical of Apple's ability, you know, maybe unfairly, but I don't think so, given the history with Siri, that they'll be able to execute on this. And I think in part, what you're seeing, what you saw yesterday, and especially the announcing that a lot of this stuff, it's not just that it's, you know, not going to be available on day one of iOS 18 and MacOS and the other. their operating systems, it's going to roll out over, you know, the course of the next year,

basically. They gave these nebulous dates. And in some ways, that's probably right and good because that's not what Apple normally does, right? Like this iterative approach to software development, they instead focus on these key dates where they, you know, roll stuff out and make a big splash. But I feel like with AI, you have to sort of do it in a much more iterative way because, you know, models change and, and there's always sort of new states of the art.

And so, again, in some ways, you know, I think that that's good, but I do think it also speaks to, they're rolling this out before they're ready to do it. And I think that, you know, the good news there again is that a lot of us are, we're not going to see it for a while because the betas are out. I downloaded the new iPad OS beta because I have an iPad, backup iPad that I'm not using for day-to-day work. And, you know, a lot of stuff is just not there right now. It's just not literally not in there. So can't even try. Right. that's sort of like I'm going to blow up my interview flow for this one because I was planning to leave the stuff for the end but you know screw it let's just talk about this because one of the things you know there's one of the things I was thinking about all through the day yesterday is this kind of like saying in Silicon Valley that it's AI until it works and then it just becomes technology and yeah on one hand that's true and on the other hand that's not been the promise of AI the promise of AI has been that it's not just working technology. is that, you know, basically we're going to be in dialogue with these devices and AI is going to be like our own little agent and our bot with us and, you know, eventually we're going to reach like maybe human level intelligence and we're going to really feel it in a way that like you can't really feel, you know, your phone. Your phone is a cool device, but it's not like this sort of almost sentient type of thing with you. And, you know, maybe my expectations are too high. But I also think that is it possible that the sort of basicness of Apple's announcement,

really show the limitations of artificial intelligence. There's this, or at least today's generative AI, there's this feeling among people in Silicon Valley and in the tech world that we're really going to need basically 18 more months of model refinement before the stuff reaches like kind of the potential or reaches the point where it meets the hype. Like even though GPT4 and GPT4O models, which are the cutting edge, are cool, they're not, you know, exactly at the end state or they're not what people have been building around. And so I'm curious if just like what we saw from Apple is just the manifestation

of the limits of the current stage of technology. And if so, what does it mean for AI right now? I definitely agree with that. I think, and I've written about this from a few different angles, both from sort of the investing in AI perspective, from Apple's perspective. We all hear all the hype all the time with AI. And, you know, in some ways, just a So there's really cool demos that are out there like the GPT4O, you know, that OpenAI did a few weeks back. Really, really interesting stuff with vocal computing and sort of the promises there and, you know, Scarlett Johansson and the her stuff aside, you know, it's a pretty cool demo. And it's sort of, you know, gives you a sliver of vision into what, you know, the future of

at least one aspect of computing could look like. But at the same time, to your points, I feel like everyone's a bit ahead over their skis right now. And I think that these models are both changing so fast and there's so many companies being built around the space on top of these models. There's so much funding going in because, you know, every investor basically has to believe that this is the next big thing. and there's so much capital out there flowing in where I feel like we're at some point relatively soon going to hit not necessarily a wall but sort of a strong headwind of reality and I feel like to your point that Apple's announcements in some ways are indicative of that which is that there is a lot of cool bleeding edge stuff that's going on right now I have no

idea how you productize it in a way that's sustainable there's a lot of lot of cool demos that pop up that are popular for, you know, a day, some a week, some a month. You know, even chat GBT itself, you know, came out of the gates as the strongest adopted, you know, by some measures, piece of technology ever. And then, you know, it's still in an impressive technology. It's still being used in impressive ways, but it's not growing at the way that it was by most accounts, you know, in those early days. And so, again, I think that there's a lot of stuff that makes for good demos.

There's a lot of stuff that leads to sort of excitement. But ultimately, how are these things going to help users save time get things done? And I think Apple focused on that a lot. And that's what Apple does. And I think that that's a very smart thing to focus on for a longer term. Now, they could have, again, sort of going back to my notion of the headline that they failed to overreact to the AI revolution. I think, you know, if it was a different company, you can easily see a world in which they go all whizbangs, and try to create all these new, you know, new features and functionalities based off of

AI, but really what they're, it sounded like, you know, the messaging from the top on down was basically like, we're trying to figure out what we can do for our user base that they'll actually use and not just be, you know, a great demo. And in some ways, that's underwhelming because, again, a lot of this stuff was leaked, but it's also been stuff that has been table stakes. Google and others have been doing a lot of this stuff within Gmail and, you know, predictive text and things like that for a long time. and Apple sat back and waited. And I don't think it's ultimately going to be a mistake that they did that.

Because again, exactly what we're talking about. I think that we're going to at some point face those headwinds where we realize there's, you know, cool demos you can do. But from a product perspective, there's, it's going to take a long time to get to sort of that next echelon of computing. Yeah. And I didn't, I was kind of holding lots. of different feelings at the same time today had like very uh quite a morning where i just kind of sat with all this stuff and i had like these feelings of like this is amazing like for instance being some of like the serious serious stuff as well like you say you know when is my mom landing and it will

like search your emails and get her flight data and then check when the flight is uh coming in or um you say uh this was my favorite one find that podcast that my wife texted me or messaged me about the other day and it will find it for you this stuff is amazing it makes devices super useful but then i also like wrote a note here that it sort of gives me a vision of how this fizzles and it's like super cool it's great ui but it is it really just like a better you know smart notification i know that's selling it way short but yeah but it is interesting where it's like it might be that the hype has been so great right we hear about like aGI and this stuff's going to turn us to paper clips you know from anyone working at an AI research lab but if the if the height of the product like the

best vision that Apple can show us is that you know it will take a and this is cool right it will look at like the fact that a meeting has been slapped in your calendar and then check the traffic until you're going to be late to pick up your daughter like that's amazing stuff and I'm still trying to figure out whether that feels evolutionary or revolutionary to me yeah I I think that um the The stuff that we're going to end up using in the short term, you know, with regard to what Apple announced in AI, I feel like the things are almost, you know, the whimsical things like the generative emoji stuff is going to be like, you know, the stuff that's actually used, whereas the stuff that you're talking about that they demoed, you know, were previewed because it's not going to come for a while, like the multi-step sort of, yeah, you know, my mom's on a plane type thing. And that's the stuff, by the way, that I'm fairly skeptical that Siri will be able to execute upon. And it's like if it fails at that once, you're never going to do it again, right? Because it's more of a hassle to get the wrong information than it is to just do the laborious work of actually looking up the email manually.

All that said, I do believe that there are some, you know, low-hanging fruit stuff. But it's a lot of like just sort of big data problems. Like I think it was Aaron Levy talked about this. And I know you did an interview with him recently. But he had a tweet recently about, you know, on the enterprise side, of course, like why AI is so exciting. And it's just like, we live in a world where there is just an increasing amount of data, both, of course, you know, within the cloud on enterprise side, but in our personal lives. Like I have 40 some thousand pictures on my phone and, you know, Apple showcase like what you can do, you know, with with those photos now, which is interesting. But it's also just like I know, I remember, you know, in my head a time with my family like a few years ago.

And right now, sort of the way to do that, you can try to do, you know, like a granular search of a date. But it's a little hard to remember the right syntax to do that. The easiest thing I do now is actually use Google photos and sort of go to a place because they're all geotagged, right? And sort of zoom in on a map and find a photo that I was looking for, which is weird. And you should be able to do that just by talking or by typing something in semantically and it being able to find that. And I think that those are the things that are going to be low-hanging fruit that we're going to be able to accomplish. But again, that sounds like it sounds boring when you sort of say it out loud like that. But I think it can be sort of profound from a technology perspective.

But it's these things that are, you know, again, not the whiz-bang features. So one way we're going to be able to measure how desirable these features are, right? This predictive assistant that we're going to get with Siri and the ability to do, generate emojis and the ability to create images of people in your context and have Apple help you write with its assistive tools and there's the smart notification prioritization that they're going to do with AI. We're going to find out really soon, like whether this is desirable from a customer base because Apple's had effectively a slowdown in iPhone upgrades. I think you wrote about how they've basically saturated every market that lends itself to buying iPhones and people

aren't upgrading as fast. And they're going to make this. available on just the iPhone 15 pro and of course like some of like the like older laptops with m1 chips but i mean it's the phone that matters and we're going to see whether people a you know in the fall this is this is going to come out in the fall and of course it's going to release more iteratively which is interesting but um we're going to see whether people upgrade to the 15 pro and especially the next iPhone event is going to be the 16 and wall streets had like a weird really the kind of the strangest reaction to this so on actual WWC day. The stock was down 1.91%. And we're recording Tuesday morning. Stock's up 5.43%

on like no news other than the event. And at a major down day for the rest of the market. Right. So do you think that this is going to drive that upgrade cycle? I know it's hard to predict, but I'm going to ask. And then does this kind of, I mean, Apple's now solidly in second place. It's like really surpassed Nvidia. Does this quote unquote save Apple's position in the market? I think, so first and foremost, you know, what I was talking about in what you were alluding to is the fact that Apple doesn't necessarily have as direct of a way to monetize off of all the AI capabilities, right? And some people were waiting yesterday to see, like, would they be selling AI as a part of a services narrative, right? like would they be upselling certain features? And it looks like not only is that not the case, from what they were saying,

it sounds like, you know, you'll only have access to the free element of open AI. And you can bring your own premium version if you want, but they're not even necessarily going to be upselling you or allowing open AI to upsell you on that. And so the question for Wall Street would have to be how Apple plans to monetize this. And to your point, the most direct way that they can do that now, not planning to sell this as a service, at least not anytime soon, would be through that upgrade cycle. And yeah, you would hope that they would hope that these features, because they're restricted to newer phones, the new ones coming out and also last year's, you know, pro models will lead to the quote unquote super cycle upgrade.

To me, I think that that only really happens if there are features that are live or, when those new phones come out, um, that people want to use. And so again, I look to like the gen moji stuff, um, how they handle that. They didn't really talk about it. I don't know if any of the other, if you went to another panel or, um, you know, like the developer state of the union, I watched some of that, that video online. But like from what it sounded like, or what I would guess is that they sort of restrict that to I message. And it's not like, um, you know, you can't cross that to other, you know, WhatsApp or text to Android phones, you know, the way that they would do that is obviously, you know, just basically sent an image, I guess. But it sounds like technically speaking,

it's not an actual emoji, which is just text that, you know, the consortium puts together every year and right rolls these out. They're sort of doing this clever, like, hacked together version of it, which I think looks good because I think that they smartly made it look like what their emoji style is. But I think that's the type of feature. that might get people interested in like seeing what their their friends with the new iPhones are doing and then the the only new app at least that they talked about was image playground right and that's like the the thing to be able to create images which you can do it sounds like via some of the other apps themselves but they have an actual standalone app to be able to do that too so it's like those types of things which are forward facing are the ones that are probably most likely to drive you know user interest and upgrading the Stuff like predictive text and things like that, I mean, it's hard to see how that that would drive someone to, you know, spend, you know, upwards of $1,000 to buy a new phone when they don't need one. And so again, I have to think that it's going to be the much more forward facing

stuff, if anything. And it's a little bit hard to see that right now. I do think that that might be what Wall Street is getting excited about that, again, they're restricting these features to newer generations of phones and the new ones coming out. And so it would, We'll certainly lead to some sort of bump, but will it lead to a super cycle? I'm not so sure. All right. And why don't we talk a little bit about this open AI thing? I mean, that to me, the more I thought about it, the more puzzling it was to me that

open AI was sort of, I mean, of course, in press reports played up as a major part of this announcement. I don't think they did much to put fire, you know, to try to douse that fire. And it turns out that all of the AI that you're going to see on the iPhone is going to be run with Apple models, a lot of small. language models, right? Which is interesting. Not the big LLMs, but the small language models running on your devices, which is basically the same technology, but smaller, more efficient. It doesn't need to have the whole corpus of the world's information to run. And then there are going to be instances

where Siri will suggest that you use chat GPT. Like that was the extent of the open AI announcement. What's going on there? So, and it goes back to when you and I last spoke, because that was around the time when there were several papers were published about Apple's LLMs, right? And, and, you know, they got buzz at the time, obviously, because it's, it's Apple and, you know, it's rare for them to put out sort of a, any sort of look, you know, behind the curtain of what they're doing. But that's sort of the state of, of AI and what they needed to do in order, you know, to attract talent and to keep their talent around the table. And so in a way that was interesting because that is, you know, more or less what they ended up sort of going with, right? They have their own.

several different sort of flavors of their own LLMs of varying sizes, certain smaller ones obviously to run on device, and then the cloud ones that can be larger. And their secret sauce there, it sounds like is basically, you know, some sort of algorithm to determine whether it goes to the on-device LLM or whether it goes to the cloud or, you know, and I'm very curious to see how responsive speed-wise this is to know, you know, like if they can basically instantaneously know if it goes to on device, to cloud, or to open AI and how they sort of determine, you know, that level of calculation will be fascinating to sort of see from a product perspective again. But yeah, I mean, again, it was what we talked about

in that conversation. And I was sort of wondering and trying to talk myself into again, like the idea that maybe this open AI partnership was much more deep. And what if They even just used GPT-40 as the basis for Siri now based off of that demo, you know, that was pretty compelling. And again, what we know about the historical version of Siri, which is not good. And so, you know, was Apple willing to do that? And of course, the answer was no. And that probably was always going to be a bridge too far. But it's still, like, were they going to augment in some ways?

And that's sort of what they're doing, but they're doing it in a very, you know, sort of bound way in that. I'm not sure that you're going to need to opt in every single time, but it sounds like you might, right, in order to send anything to Open AI where you basically have to confirm that you're okay sending it to them and you are acknowledging that the results you get back are from them and not not from Apple. And so again, that's a it's a very Apple way to do things, but it all comes down to what the product execution is, both in speed, obviously in results and then, yeah, how they how they do handle the UI, including like, you know, voice and everything. else aspect of the UI. Yeah. And I actually kind of like the fact, you know, in retrospect that it was weird for opening I that they were so small, but for Apple, I think it's good that they thought well beyond sort of like a chat bot that gives you information and more just like how to use Gen AI to like figure out what's going on on your phone, go through all this, all this text, be more useful like this personalized intelligence. Like I mean, we've talked, I guess,

through most of this podcast about how it's like, okay, whatever. But, um, The strategy is, I think it's a good strategy for Apple, even if it's not going to knock our socks off. And it's like something that can get better as the technology gets better, especially if we do see that leap in models in 18 months. So that's the other side of the client. Yes. And so that's a super, you know, important point because, you know, I guess in, you know, a session afterwards, you know, they alluded to, they alluded to, they alluded to this in the keynote. But then they, they more, it sounds like directly at least, you know, suggested that other partners are coming. you know, and they're continuing to have discussions. Open AI is the first.

But even with Open AI, they'll be able to swap out models and use whatever, you know, if and when GPT5 comes, like Apple just flips switch, presumably, and we'll be able to use that with Siri as the fallback option, which is smart. And basically, you know, all of this stuff at a high level makes sense. It's Apple acknowledging the current state of things. And there is a lot of excitement and hype around chatbots. And, you know, to your point, it's not like the be all end all state of everything and i don't think anyone thinks that but

did apple really want to go down the path of um you know trying to do that on their own whereas they could just partner and you know check the box as it were and um and then go down that the one other thing you said i think is important in what they were talking about yesterday is the personalization aspect they played that up time and time again and that ties it directly into security as well because they feel like they have a real advantage in being able to be trusted with people giving up their personal context and the context in which you know people and again the mom example of in the airplane and being able to access your calendar and are people going to be okay with giving that to a third party? The answer is probably no.

Some people certainly and people who are early adopters of things, of course, will. But for the masses, I think Apple has a very smart angle there to take. And it's interesting in the context of what Microsoft did recently with their AI announcements, co-pilot plus PC, great branding is always from Microsoft. But, you know, they got into a bit of a nightmare situation with the recall feature, which obviously isn't even out yet, but just the privacy fiasco around that. because Microsoft is as, you know, currently still the largest company in the world until maybe Apple overtakes them again in a few days until this afternoon, even they're not trusted

clearly from a privacy perspective because of all the mishaps they've had with Windows. And so Apple didn't talk about this. I was very curious if they were going to have like their recall-like feature. And they don't have anything because, you know, harkening back to the days of Time Machine, if you remember that, right? They had like that backup system where you could sort of scroll through time and figure out like old versions of your system and restore those. I was curious if they were going to do something.

They didn't explicitly say anything about that except that sort of a lot of the demos and stuff implied that they like know that. Like again, like look up, you know, the podcast my wife sent me, you know, and so how they're actually doing that technically. Yeah. Is that very different than what Microsoft is doing? Presumably they're not seeing actual screenshots every few seconds. but still, they have all access to that same data,

but Apple is trusted in that way. And so I think that that was a very smart angle. As we're talking, and again, this is Tuesday morning, so this could be different by the time this goes live Wednesday morning, but Apple is now up 6% on the day. It's worth $3.14 trillion. Microsoft is worth $3.18 trillion. So we might see a flip as we're recording.

It would be another historic moment here on Big Technology Podcast. So, all right, we have some questions from Twitter. that I think is going to be worth addressing, including why didn't Apple just work with a version of meta's open source Lama? Why did I have to go to chat GPT? Why didn't they build an AI-specific phone? There's also questions about Apple robotics and why Elon's so mad. So why don't we do that on the other side of this break? Hey everyone, let me tell you about the Hustle Daily show, a podcast filled with business, tech news, and original stories to keep you in the loop on what's trending. More than two million professionals read the Hustle's daily email for its irreverent

and informative takes on business and tech news. Now, they have a daily podcast called The Hustle Daily Show, where their team of writers break down the biggest business headlines in 15 minutes or less, and explain why you should care about them. So, search for The Hustled Daily Show and your favorite podcast app, like the one you're using right now. And we're back here on Big Technology Podcast with M.Giegler. He's a venture partner at GV, which is formerly Google Ventures,

and he writes the great tech news site, Spyglass. You can find it at Spyglass. It's a must read for me. Definitely recommend it. All right. Let's talk a little bit about some of these questions that have sprung up on Twitter, both in response to my solicitation for questions and also some others that I found lurking online. This person Bindu Reddy asked, I don't understand why Apple has to send anything to chat GPT. It's just bizarre. Why not get meta to give them a license and just use Lama? What do you think, M.G? Well, I mean, some of this, is inner company politics, right?

Like Apple and Apple should have been so mean to meta and they could have gotten free alone. They certainly have a contentious relationship in the past and so I'm not sure that those two would necessarily work together but even still to the point like it's open source so they could use it.

But still to me that just goes back to the high level notion that everyone knows about Apple that they want to own and operate everything that they do. And I think again what we talked about with chat GBT is is checking a box, as it were, right? They know that people are going to want certain functionality that chat GBT offers right now. And so they're happy to sort of partner in these early days and see how it plays out. Like maybe that becomes less compelling over time

and they don't need it anymore. Or maybe they do build their own sort of version of what chat GBT can do and eventually swap out for their own. And so that's why I believe that they would do that. And I think that that's a much easier lift than, yeah, trying to implement Lama, again, someone else's technology and being beholden to them. Could you imagine quite the role reversal if Apple was all of a sudden beholden to whatever meta was going to open source or not open source with Lama? I don't think that they want to be in that position. Yeah. I mean, it's like that tweet of like, was it me reaping? Ah, ha, ha, this is so great. And then me sewing. It's like, I don't know. I don't know. I didn't get it exactly right, but it's just like eventually like being a bully. Yeah. This tech evolves.

There's another great question that I got, which is, would it not be better for Apple to have an AI specific phone device in addition to the pro and the pro max? I mean, let me expand that also to say, does that, you think that could come? Like, is Apple potentially going to build like their own rabbit? So that's interesting in, you know, leading up to this event, one of the things that I came across, which I remembered but had forgotten about was Apple had this old demo in the, it was actually the post first jobs days and pre before him coming back, I believe, called the knowledge navigator. And you got to look up this old demo on YouTube if you haven't seen it or haven't seen it in a long time. But it's basically this sort of very 1980s staged demo of a new hypothetical product. Apple used to do these like all technology companies did of these like, you know, not real, but potential future products where it was essentially an AI device that you spoke to. And it had a little virtual assistant in the face of a virtualized human. So this is way before Siri, of course, which would, you know, answer all these questions, like, what's on my calendar for today? And, oh, you know, someone sent me an email the other day.

Like, can you look that up for me? It's a lot of like what they're actually doing right now. But again, this was an early take on what, you know, the future might look like in computing. And that did have a standalone device because it was, of course, way before the iPhone existed and way before iPod and way before basically anything besides the Mac and Apple's older computers. And so I think it's interesting in that context because it is a bit like what the what rabbit you know are one ended up being could Apple do their own device. The only way that I would see that is through either Apple Watch or AirPods. I don't think that they would do like a new pin or something like that. Because I think that they have the technology that they need there in both of those devices to be able to do this. If they can get an LLM that's small enough to fit on the watch or eventually the AirPods, I think that that's a pretty compelling product for a number of different use cases, not for everything, but for certain on-the-go use cases. And again, maybe they fall back to what they're doing now where they call up to the cloud for other things that are more intense. But I don't see them making their own sort of newfangled

product unless, you know, they feel like there's something really different that they could do there. But I feel like they already have the tools in place. Right. Yeah. In the run-up to the event, like German was, I think, throwing a lot of his extra reporting at the wall and seeing what stuck. And he had some very interesting notes about how, like, this basically sets Apple up for the future where, like, it can build this AI technology into new devices that he says are coming, including, like, a robotic arm with an iPad that's supposed to be looking like a robotic that I guess it has a face in it, like nods and stuff, makes human-like gestures. And then a bot that might, a robot that might follow you around. And then to me, what I think is the most interesting is the, and I've said this on the Friday show, but the fact that they're going to add cameras to the AirPods and like make them almost like the Rayban metas where like you can kind of imagine, ask them about your environment and stuff like that.

So what do you think about this set of, you know, potential hardware and devices and robots that might be coming? I do think robots are very interesting from, but a very long term thing. I don't think that that's something that's like anytime soon. You know, this is like 10 years away. I'm sure that the reporting will say that it can happen sooner. But like most reporting, it's just like, yeah, there's optimistic views and then there's the reality of the situation. I think that we're a long way away from that.

I do think that that will be reality someday. And I think that there's a lot of compelling aspects to that. And, you know, Amazon's done some early work there. And others will continue to do early work there. There's some of those fun robot dogs from Ebo on down. But there's newer ones now that I think are fun. But again, from those being practical, long way away. The robot arm iPad thing, I read that report too, I don't really understand what that is other than if it's sort of, you know, almost like a new home pod type device, right, where it has a screen and it can play music and it can do video and, yeah, like follow you around.

Sort of like the Facebook's portal device, you know, that sort of was popular for a bit during the pandemic. I could see something like that, but how AI plays into that, yeah, like machine. learning vision stuff, I guess, but just running whatever Apple, like, announced yesterday, sure, like eventually, I guess all Apple products will run that. But is it really needed or based around that? I don't know the answer to that. And then the AirPods stuff, I also agree is compelling. I'm very curious how they would actually do that, though.

Like, I look at my own face right now, right? Like, I have a beard, and so I'm wearing the AirPods. Like, can they look? Do they just look beyond sort of the beard to? find are they more outward facing i i don't and people always talk you know complain about the fit of air pods and and you know how having to consider how the camera then would be facing and and if that it's at the right angle like i think these are much harder problems than they might seem like on the face of them and so um it sounds like yeah they're probably going to try different things in that

in that world and especially if if meta continues to have success with what they're doing with the ray bands but um you know uh i think that and and vision pro and dialing that down more into like a glass like um shape and size might be something there too yeah eventually it could converge i mean my guess with the AirPods is there's a the headphone goes in your ear and then it wraps around your ear and you have like kind of like a periscope coming out the top of your ear yeah yeah that would be strange looking at first but could could normalize if it's not too uh Too weird, but then there's a whole recording aspect of, you know, like, what does that look like? Yeah.

Yeah. Yeah, the more I think about it, the more I'm just like, okay, six-month pause on that. So you had a headline about Elon's reaction to this. It was Big Med over Open AI and Apple, and I'll just read the way that Elon reacted and then the community note. He says, it's patently absurd that Apple isn't smart enough to make their own AI. yet is somehow capable of ensuring that open AI will protect your security and privacy. Apple has no clue what's actually going on once they hand over your data to Open AI. They're selling you down the river.

And then he puts that tweet out. He also says he's going to ban Apple devices, if this happens from his companies. And if you bring an Apple device in, he's going to lock it up in a Faraday cage. This is a community note. Apple has developed their foundational model. which runs on device and has approximately 3 billion parameters for tasks that require more compute. Apple either uses private cloud compute or open AI with an additional confirmation. Wow, it seems like some Apple fans community noted Elon. But what do you make of his reaction here?

And you also in your post talk about how Apple doesn't like Elon. That's kind of something I'm not fully aware of. So I'd love to hear a little bit more about the relationship between the two. To me, again, this is inner company dynamics of this dates, you know, and there's been many, many reports on this dating back a decade, I think, at this point, where there have been various reports that Apple at various points has been talking to Tesla, different people at Apple talking to different people at Tesla about potentially acquiring the company. And, you know, I think all sides have acknowledged that that sort of was true at different. points, unclear, you know, just how far along in the process that was. But, you know, it was obviously stems from when Apple was working on a car project. And, you know, was there something to be done there with, you know, what at the time was the upstart car company that was coming in and revolutionizing electric vehicles and everything that Tesla did. And so, you know, I think when that deal didn't

materialize, then Apple had their own car project, of course, ramping up over all that time. And there was a lot of just back and forth headlines about how many engineers Apple was poaching for that project from Tesla. And at one point, Elon, I think, had a soundbite that Apple had hired everyone that Tesla's fired, you know, all the worst people like who they didn't want anymore. We're now working at Apple. And so, you know, they were never going to succeed. And, you know, to his credit, he was right. He was right. I don't know if it was directly as a result of who they hired or not hired, but he was right that they didn't succeed in that space. But sort of it all, you know, I think the animosity between the two stems from that.

There was also, of course, the element where Apple, like many companies, pulled advertising after some comments, you know, that Elon's made in the past. I think that they subsequently came back. Though they weren't doing, it was interesting that they weren't advertising, at least as far as I could tell, the WWC stuff. Normally they have a hash flag, is that what it's called? When they do a, you know, a special hashtag? add they didn't seem to have one yesterday so maybe they're they're at odds again and sort of not advertising there but anyway all that stems from yeah the bad blood between those two sides um in those regards and so the whole thing is just silly of course like you know yeah he's uh

i i would be uh very curious if he did actually ban apple devices from tesla and all of his various other companies what the employee reaction to that would be um i would be also curious if he tried to pull, you know, what is now called X off of the App Store, what would that do to X's actual business? It feels like that would be sort of a self-inflicted wound if that were to happen. Of course, I don't think that that's going to happen. But when one person owns the company, you can never sort of rule it out. And one person who has a history of doing some pretty volatile things in the past. Yeah, I've always said Elon can't possibly tell more people to go F themselves, but he might.

Yep, we're a few, I put that in there. You know, he obviously said that to Bob Eager, who was in the audience of that event. And maybe we're inching closer to that, that type of rhetoric with Apple now. So as we come to a close, you know, as we've talked through this, there's one thing that has kind of stuck out in, to my mind, actually from the B-to-B context. And that is that, like, I was at a dinner with Aaron Levy and the CEOs of, you know, of MongoDB and Datadog and it was all on the record. So I'm free to share this, but there was a big like kind of hubb up between some of the

journalists that were at the table and these CEOs where the journalists were like, this is the same stuff that has the B2B tech companies have been promising forever. Like basically like simplified workflows and automating tasks that we've heard about. And their point was basically like that was always the goal. We just couldn't build it. and now we have the technology to build it. And I wonder, like, we've been hearing about some of the stuff that Apple has announced, like, you know, from various consumer companies, from, like, companies like the Rabbit and

the Humane Pin, which didn't work from Google forever, and the technology hasn't been there. So when we think about the state of AI and we kind of started kind of, like, pretty doubtful, I would say, about, like, where it's going, but is it possible that this is kind of the same thing as that B2B context where it's like, yeah, this is the vision that we've been hearing about forever, but now it works. Or is that kind of too optimistic? No, I feel like, you know, at the highest level, so much of technology is just right place, right time, right? Like, the ideas that people have dating, you know, from science fiction, I think are often come back around when the technology is actually there to make them reality.

And I think that that comes into play a lot with everything that we're talking about here. it's just a matter of sort of time horizons and you know we kicked off talking about how Siri has underwhelmed historically and so do we believe that now is the right time like what what actually changed within Apple where now of a sudden they're going to make Siri work now they would say it's LLMs and and you know we sort of have these new models that are able to just handle requests in a different way and certainly that's true but are we there to the point where it's true that it's going to work flawlessly all the time? My guess would be no. And then it's a question of sort of granularity of like, will it be

so annoying that people stop using it because it doesn't work all the time? And to me, when you bring up, yeah, the idea that is the technology going to come into focus where all this stuff can actually work now? I think that that's more true than it has. been in the past, but I don't think that that's still true of everything. And for something like these features that they're touting of Siri, as we've already talked about, like unless they're working 100% of the time and you can fully rely on them to go into your workflow and be there and give you the right results, I think that they're going to have a major sort of churn issue in people using them and they're just going to default back to what they know will work because it's just

going to be a waste of time. And so, um, I think that there's, there should be some fear. And hopefully, you know, Apple's going to do a lot of work before they release these to the wild, um, where they can garner enough trust that people know that, that it will actually work in the way that it's intended. But I'm, I'm skeptical that we're even there right now. Right. And then we think about Apple. I mean, five out of the past six quarters, they've had revenue declines. Vision Pro, I think you wrote about it this in the run-up. The Vision Pro is not selling, you know, as expected or it's kind of just a non-factor

at this point. They don't have a direct way to make money off of this stuff outside of upgrades, unlike, let's say, Amazon, Google, and Microsoft, which can sell cloud services and the video, which can sell chips. Obviously, a stock market likes what it saw yesterday. given that the company is just shooting up today. But what's your overall view? And yeah, we have a couple minutes left.

So if you could do it briefly, that'd be great. But just like, what's your overall view of like the state of Apple right now? And how has your view of them changed since the beginning of, since before the announcement? I think that, you know, the hope, again, within both Wall Street and Apple is that this does lead to a super cycle where people have to upgrade iPhones. As we talked about, I doubt that that happens in a major, major way this fall. It might happen a year from now when they have, you know, potentially a new looking hardware, a new form factor, not totally new, but it's slightly, you know, more thin or all the rumors talking about a different type of new iPhone device mixed with the fact that a lot of this AI stuff may actually be ready to go. Because remember, as we've talked about, a lot of this stuff is not going to be rolled out even in the time that the new iPhone launches. And so I think that that negates a lot of that part of it.

The other element that drives Apple's business right now is just services. That's the only element of the business that's growing. And I do think that that's very interesting to think about into next year. If this doesn't drive a major upgrade cycle for the iPhone and other devices, does Apple start to move more again in the services model and come up with a way to upsell some of these AI functions as a way to keep the services narrative growing and growing and growing? I think that that is not on the table right now. but it might be next year. And I think that those are the things that played because I, you know, we talked about it. I think that the iPhone is saturated a lot of sort of the higher end of the market.

And they're going to keep sort of raising prices to keep sort of driving up the average selling price. But, you know, do they, do they launch other versions of the iPhone in emerging markets? Do they do other types of, you know, tangential devices to try to, yeah, just drive that revenue, but it's services. That's all that matters to the company right now. And AI, I don't think is going to move the needle really this in this cycle. And it might next year. But it's, I feel like that's, that's going to be the thing that we have to reconcile sort of heading into the end of this year for the company. The website is Spyglass. You can find out at Spyglass.org. M.Gissela. Thanks so much for joining. Thanks, Alex. Great to talk. Great talking.

All right, everybody. We'll be back on Friday, breaking down to the week's news, Apple, and everything else. So thanks so much for listening and we'll see you next time on Big Technology Podcast.