Next Month at the World Developers Conference, 'Apple-style AI' to be Unveiled
Market Expectations Rise as Apple Stock Gains Momentum
Unlike Jobs, Tim Cook Leaves No Legacy
Attention on Whether AI Will Mark a Turning Point
"We plan to make a major announcement related to artificial intelligence (AI)." (CEO Tim Cook's remarks during Apple’s earnings announcement on May 2)
Tim Cook, Apple’s CEO, who had remained silent throughout last year despite the generative AI boom sparked by the release of ChatGPT, finally brought AI into the spotlight this year. He announced that Apple’s own AI will be unveiled soon, stating, "We are very optimistic about the opportunities in generative AI and are making significant investments. We hope to share something exciting soon." Now, the market’s attention is focused on Cook’s words at Apple’s annual event, the Worldwide Developers Conference (WWDC), scheduled for next month.
'Latecomer to AI' Apple’s Moves... Stock Jumps 9%
Apple’s AI initiatives have already begun. On the 7th, Apple unveiled the new iPad Pro equipped with the latest M4 chip designed for AI. The M4 includes Apple’s fastest Neural Engine to accelerate AI training. Tim Millet, Apple’s Vice President of Platform Architecture, explained, "The Neural Engine and M4 are more powerful than the neural processing units (NPUs) of any AI PC available today."
The day before the iPad Pro’s unveiling, the Wall Street Journal (WSJ) reported that Apple is directly producing AI semiconductors. Traditionally focused on mobile semiconductors, Apple has been developing its own AI chips for data centers under the codename 'ACDC (Apple Chip for Data Center)' for several years. The chip Apple is developing is said to focus on inference for service provision rather than AI training, an area dominated by Nvidia.
The market has been stirred by Apple’s consecutive AI-related news. Apple, previously regarded as a 'latecomer to AI,' saw its stock price rise about 9% over the past week (as of the 9th). Apple’s stock had fallen from $198.11 on December 14 last year to $165 on the 19th of last month due to a series of setbacks including declining iPhone sales, sluggish business in China, the suspension of the Apple Car project, and regulatory risks. Meanwhile, the so-called 'Magnificent Seven' companies?Microsoft (MS), Alphabet, Amazon, Nvidia, Tesla, Meta Platforms?have been fiercely competing around AI, while Apple had been lagging behind, raising concerns about its growth potential.
However, CEO Cook defended that Apple was not standing still. During the earnings announcement, he previewed Apple’s AI and revealed that the company has spent over $100 billion on AI-related research and development (R&D) over the past five years. He stated that Apple plans to embed AI in most of its devices, including the iPhone. This marked a change from his remarks a year ago in May, when he emphasized the importance of carefully considering how to approach AI.
Dan Ives, a star Wall Street analyst and Apple expert at Wedbush, described this as a 'drumroll moment,' indicating growing expectations, and confidently predicted, "Starting with the iPhone 16 coming this fall, Apple will lead a supercycle."
"No Legacy" Tim Cook, Can AI Turn Things Around?
There is great public interest in whether Apple’s belated AI offensive can overcome the gap with competitors and achieve success. Although immediate expectations are not high due to Apple’s late start, attention is focused on what results the 'icon of innovation' Apple can produce as it moves.
Apple’s entry into the AI business is expected to bring significant changes to the 13-year Cook CEO era. Cook, who has maintained and expanded the so-called 'Apple kingdom' for over a decade following founder Steve Jobs?who was credited with changing the world through the development of personal computers and the iPhone?is often evaluated as having no personal legacy. There are even criticisms that innovation has disappeared from Apple, once an icon of innovation.
In particular, products expected to be Cook CEO’s signature works have failed to attract public attention or have been canceled. The mixed reality (MR) headset 'Vision Pro,' launched ambitiously as the next big thing, saw initial interest quickly fade, resulting in poor sales. Other products, including the Apple Watch and AirPods, also failed to generate significant interest, with sales in the first quarter of this year down 10% compared to the previous year.
In February, news broke that Apple had abandoned the development of the self-driving electric car 'Apple Car,' a project that had been in development for 10 years. The management reportedly decided it was difficult to continue the project due to development direction and cost issues, leading to its cancellation. As a result, Apple laid off about 600 employees involved in the project last month.
These outcomes seem to stem from Cook CEO’s management style, which differs from that of founder Jobs. While Jobs created the Apple brand and attracted global attention by developing innovative products and designs, Cook focused on stabilizing Apple’s business through supply chain management and maximizing efficiency, maintaining and expanding the company. He expanded Apple’s business beyond manufacturing into various services such as music, TV, and gaming, building the Apple kingdom.
Since Cook’s appointment, Apple’s stock price has surged over 1200%. The company reached a historic market capitalization of $3 trillion for the first time and, although recently surpassed by MS, Apple maintained the world’s number one market cap position for a long time since 2011. Warren Buffett, chairman of Berkshire Hathaway and one of Apple’s key investors known as the 'Oracle of Omaha,' said in a 2021 interview with Bloomberg, "Tim may not design products like Steve, but among the CEOs I’ve met in the past 60 years, very few understand the world as well as Tim does."
Who Will Lead Apple After Cook?..."No Successor in Sight"
The market’s attention is not only on the achievements Cook will leave behind but also on who will succeed him. This reflects concerns about Apple’s future. Cook, who took over as Apple’s leader shortly before Jobs’ death and has led the company for 13 years, has never announced retirement plans. His close associates also believe there will be no CEO change for at least the next three years.
However, Cook, currently 63 years old, expressed his thoughts on succession in a podcast last year, saying, "My mission is to prepare several people to succeed as CEO, and I hope such people will emerge from within Apple."
Investors are interested in Cook’s successor but lament that no clear successor is visible among Apple’s executives. Recently, Bloomberg cited Apple insiders saying that if Cook steps down, the most likely successor would be Jeff Williams, Chief Operating Officer (COO). However, considering Williams is 61 years old, some speculate it may be difficult to entrust the company’s future to him. Bloomberg also reported that some view John Turners, head of hardware engineering who successfully launched the iPad, as a strong candidate. Yet, at only 49 years old and not someone who actively asserts his presence, there is skepticism about whether he is suitable for the CEO role.
This market interest seems to stem from concerns that Apple could be significantly shaken during the CEO succession process and regarding its future. When Cook took office in August 2011, there were concerns that Apple might struggle due to the enormous achievements of founder Jobs. Cook overcame these worries and successfully completed the succession. Forbes credited the company’s revival to the strong partnership between Jobs and Cook, and Time included Cook in the list of the 100 most influential people in the world in April 2012, the year after his appointment.
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