Investors ambivalent as Apple plans to make AI a core feature

Apple Inc. took the wraps off long-awaited new artificial intelligence features, including a partnership with ChatGPT maker OpenAI, betting that a personalized and understated approach to the technology will win over customers.

A new AI platform called Apple Intelligence was the highlight of the company’s Worldwide Developers Conference presentation on Monday, which also included updates to the iPhone maker’s operating systems. The technology will help summarize text, create original images and retrieve the most relevant data when users need it. The push also includes a revamped version of Siri, the company’s once-pioneering digital assistant. 

Apple is making a high-stakes bid to catch up with rivals in the booming AI market. After falling behind tech peers like Alphabet Inc.’s Google and Microsoft Corp., the company is counting on a streamlined interface — and loyal customer base — to regain ground.

“This is a moment we’ve been working toward for a long time,” Senior Vice President Craig Federighi, who oversees software engineering, said at the event. He described Apple Intelligence as “AI for the rest of us,” alluding to an old slogan about the Mac computer.

Craig Federighi, senior vice president of software engineering at Apple, said the company’s new AI system would take a personalized approach while still securing user data.

The partnership with OpenAI, which Bloomberg reported on before the event, will let customers access ChatGPT via Siri at no extra cost. Apple Intelligence will begin rolling out later this year, but some features — including the ability for Siri to precisely control features within apps — won’t come until next year. Support for languages beyond English also won’t arrive until later. 

OpenAI Chief Executive Officer Sam Altman was at Monday’s event and wrote on the social media site X that he was “very happy” to be teaming up with Apple. While the ChatGPT integration will be free, paid subscribers to OpenAI will get additional features over time. Apple, which has also held talks with Google about using that company’s Gemini feature, said it plans to support other services later.

Ensuring that customer data is secure was a major theme of the presentation. A system called Private Cloud Compute will help keep users’ information safe when it’s being sent to data centers, Federighi said. Apple Intelligence will also support AI-created emoji called Genmoji and automated photo editing.

Apple’s iOS 18 and iPadOS — its iPhone and iPad software — will get features that improve customization, productivity and communication. Some additions will include: 

• An upgraded home screen will let users place icons anywhere. App icon colors can also be changed, and they can be tinted when the device is placed in dark mode.
• A new Control Center includes support for third-party controls, multiple pages of settings and an updated look.
• The iPhone 14 and more recent models will get support for text messaging via satellites. That was previously available in emergency situations.
• The Messages app will have the ability to schedule a text to be sent later. The Tapbacks feature, which lets users quickly respond to texts with things like a heart or question mark, will now work with an emoji or digital sticker.
• Customers can set up effects — such as a shaking word — for individual words and phrases, rather than entire texts. And there’s rich text support, which will make it easier for Apple customers to communicate with Android users.
• A Passwords app will manage secure logins, passkeys and Wi-Fi account details.
• A redesigned Photos app will use artificial intelligence to improve editing.
• There’s the ability to lock any app behind Face ID.
• The iPad gets the Calculator app for the first time, and it will let people solve handwritten math equations using an Apple Pencil. That app’s absence from the iPad was a longstanding issue among customers, and the new feature was announced to applause at Monday’s event.

INVESTOR REACTION

Investors gave a tepid reaction to the event — a not-uncommon reaction when Apple debuts long-anticipated new features. The shares fell almost 2% to $193.12 in New York, leaving the stock little changed for the year. 

The Cupertino, California-based company also rolled out macOS Sequoia, which includes the same Apple Intelligence features as the iPad and iPhone. 

Some of its other enhancements:

• The ability to receive and interact with iPhone notifications.
• The ability to drag and drop files between devices.
• Mirroring an iPhone’s display so it can be used on a Mac’s screen.
• The ability to organize Mac application windows as tiles that stick to different portions of the display.

And the company unveiled visionOS 2, the latest version of its software for the Vision Pro headset. That has new features for photos and handling office work, including: 

• The ability to turn regular photos into 3D spatial pictures.
• New hand gestures for opening the Home View and Control Center.
• A new version of the Mac Virtual Display feature that can create a virtual wraparound screen.
• The ability to AirPlay content from an iPhone, iPad or Mac into the Vision Pro.

Apple also announced plans to launch the Vision Pro internationally, with preorders beginning in China, Hong Kong, Japan and Singapore on June 13. The device will go on sale in those areas June 28. That will be followed by Australia, Canada, France, Germany and the UK. Preorders will begin in those countries June 28, and sales will start July 12.

New AirPods software, meanwhile, will make it easier to hear users’ voices during a phone call by removing background noise. The Apple Watch will get additional health capabilities, such as enhanced pregnancy tracking and an app that shows at-a-glance vital statistics.

But the AI features were the biggest focus of the event. Those tools will also include the ability to transcribe phone calls and voice memos, solve advanced math equations, sort through email, and prioritize notifications.

Though Apple had an early lead in AI after it launched Siri in 2011, its technology was quickly overtaken by the Google Assistant and Amazon.com Inc.’s Alexa. Then AI took another giant leap forward when OpenAI’s ChatGPT arrived at the end of 2022.

That led to a flurry of other services, including ones from Google, Microsoft and Meta Platforms Inc. Samsung Electronics Co. — Apple’s biggest smartphone rival — also integrated Google AI features into its devices earlier this year.

Apple CEO Tim Cook is now under pressure to show that the iPhone maker can lead again. The company also is contending with a broader sales slump. Revenue declined in five of the past six quarters in the face of sluggish smartphone demand and a slowdown in China.

On Monday, Cook said AI would be “the next big step for Apple.” Though the company won’t make money directly on the new features, the hope is to make users more loyal and prod them to upgrade more frequently.

“We think Apple Intelligence is going to be indispensable to the products that already play such an integral role in our lives,” he said.