What Apple's Failures Say About AI's Limitations —  With M.G. Siegler
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Are Apple's AI failures happening in a vacuum or are they a damning sign of the limitations of AI itself? Yes, we're going there. Plus plenty more observations from WWDC. That's coming up right after this. Welcome to Big Technology Podcast, a show for cool headed and nuanced conversation of the tech world and beyond.

Let's break down what happened at Apple's big developer event this week and look at whether the company's AI limitations say something worrying about AI itself. We're joined today once again by the great MG Siegler, author of Spyglass, which you can find at spyglass.org. MG, welcome back. Thank you.

Thanks so much for having me on, Alex. All right, let's just get quickly to the event itself. I'm just going to go read the last line of your post to begin with because I want to get your reaction as to what we saw from Apple because they did have their big annual developer event this year, introduced a new user interface, said...

shockingly little about AI. I think you said that they said more about the phone app than they did about Apple intelligence. And your, your, your conclusion is overall, I'd probably give this WWDC two out of five stars, but it easily could have been a zero due to their mistakes of the past. So quick reaction to WWDC. Uh,

And why just two of five? Yeah. So, and obviously that was an allusion to their ending, which they did this cute little ditty song made up of their co-elating different app store reviews for different real apps in the app store with a six out of five, which is a very catchy song, nicely done. But that may have been unfortunately sort of one of the highlights of the event right there at the end, because, you know, this of course was the elephant in the room event where, you

there was all the talk leading up to it that Apple just would be shying away largely from AI this year, given what happened last year at WWDC, where, of course, they may be over-promised and ended up under-delivering on what was actually promised. And

So when I say two out of five stars, I'm giving Apple a little bit of benefit of the doubt here just because it easily, I really think, could have been a zero out of five stars given how little they had to talk about AI. And so they went back to sort of one of their historic strengths, and we can talk about this more in a bit, but going to UI instead of AI, right? Going to...

overall sort of look and feel of their operating systems, again, what has been considered a strength for them in the past. And I think they were able to sort of smartly navigate down that path, giving people things to talk about when they weren't going to be talking about, again, that elephant in the room. Now, they did talk about

Apple intelligence. I don't know if they ever used the word AI as you know, last year, they sort of famously said, or didn't say that the, you know, AI, they, they went after Apple intelligence, their own branding of it. They did talk about Apple intelligence quite a bit. Um, but sort of my interpretation and read of the situation is that they were just totally sort of downplaying it and, and skirting over, um,

you know, what's actually obviously being talked a lot about in the industry and sort of just making it just like, you know, this little feature that we don't really need to talk about this year because there's just little things that it's doing for you and it's not that big of a deal, which of course I think everyone outside of Apple would disagree with.

I think that's so perceptive. Like one of the things that we saw from Apple last year is it at least realized that was one of the companies that could build this sort of masterful AI product drawing from all different information sources. And then if you look at the AI perspective this year, it was much more, let's do a couple of features that aren't sort of tied together in a coherent way.

message. This is from Twitter user Signal. Watching this WWDC felt like watching a dinosaur try to do ballet. Technically and aesthetically competent, but spiritually lost. They talked about Apple intelligence, like they just discovered the concept throughout the presentation. There was zero ecosystem thinking and no real attempt to rethink a single interaction model. I mean, this was really the problem, right? It was just like that. And obviously, they've had problems executing and we can touch on that.

but that broader vision of what AI can be, it's just gone. Yeah. And I mean, if we take a step back and they sort of kicked off with this, Tim Cook kicked off with it. This is a developer event, right? And developers are arguably, have never been more excited to talk about anything than they have been probably about AI, you know, certainly since, you know, the,

the introduction of smartphones and, you know, the web before that. But like AI arguably is even a step above those right now because the developer ecosystem is so much larger than it was back in those days, thanks in part, obviously, to the smartphone and all the different technologies we have now. But so this was supposed to be a developer-focused event. And again, you hit on it and I joked about it, but it was like Apple spent three minutes talking about a phone, the phone app.

Like, who uses the phone app anymore? Like, yeah, there's some nice little cute upgrades, but we didn't need to talk about that for three minutes when we talked about Apple Intelligence for roughly three minutes to kick off with. And so, you know, that dichotomy, it seemed very telling of it, and they just didn't have...

a lot to talk about with regard to developers and Apple intelligence. They did talk about being able to leverage some of their on-device models that had leaked, of course, beforehand. I think Mark Gurman, as with most things, was able to scoop that ahead of time.

But that was sort of the one bone that they threw to developers. And it's unclear how useful that will be. I think, again, at a high level, I think it's interesting to have on-device access to models for all sorts of reasons. But are they really going to be as powerful as some of the other state-of-the-art models out there? Obviously not. But can they be used for sort of other things that developers will actually find useful? That's obviously very TBD at this point.

I just want to put this all in context because Apple has failed so bad on rolling out Apple intelligence that I think there's this belief out there that they like...

had a mind-blowing presentation last year, but they didn't. And last year, okay, a couple things. First of all, your headline was Apple fails to overreact to the AI revolution, which was like they had a bunch of features. They did have this ecosystem thinking, but even that would have kind of caught them up to the modern day thinking of a company like Google. So it wasn't like they were promising the moon to

you know, it doesn't seem like they even delivered a lamppost. And then, you know, I even just like looking back to last year, I did this poll. We talked about it on the reaction show. I asked people your reaction to WWDC AI stuff mid-event.

Wow cool or meh meh was the winner fifty point four percent this year I asked again Apple WWDC reaction not even talking about AI and now maybe my audience is primed because they've heard me talk about Apple for a moment But it's probably the same audience as last year and Meg gained 30 points a 30 point increase in meh This is a landslide. It came in at 81 percent So talk a little bit about sort of where I

Apple's vision is this year compared to last year and why you think they haven't even met these sort of muted projections for what they want to do with AI.

Yeah, so you sort of hit on it, you know, a bit ago for a second. The notion last year, it felt like was, look, maybe Apple has a window of opportunity here to actually step in and productize some of the work that's been done underneath with AI, right? There'd been all the model breakthroughs, and obviously there was ChatGPT doing some, you know, real consumer work.

facing work with AI, but a lot of the other stuff was underwhelming and/or just seemed very disparate and not sort of put together in a nice cohesive package, which of course Apple is famous for doing, coming into a market a little bit later than everyone else and sort of putting together a nice package around stuff that's not exactly new, but that they could sort of put it together in a new compelling offer, all-in-one offering.

And so I think that was some of the hope after last year's WWDC. Again, a lot of people sort of felt it was still underwhelming. And certainly people, I think, with a more perhaps technological bent felt like, you know, it wasn't sort of up to the snuff of some of the other giant companies, what they were doing, but had absolutely.

been able to execute on some of that you know maybe we would have been looking upon it differently now of course they didn't as as you're sort of talking about and so this year yeah it was it was basically going into it you know with um with that baggage hanging over them and again you know sort of the

the maybe hope that they would do something to surprise and, you know, something that, that possibly hadn't leaked ahead of time, but that ended up not being the case. Every single thing had leaked, which I do think is a problem, increasingly increasing problem for Apple. And in particular was a problem here because, you know, had everything not leaked, uh,

maybe they could have gotten away with a little bit more leeway with the audience if like you know oh they hadn't uh unveiled the liquid glass ui elements ahead of time and and they hadn't known about the name changes ahead of time you know those are silly things compared to sort of what's going on with the overall ai revolution but it still would have at least given them you know some some uh air cover i think with talking points you know on in on the media circuits and whatnot that

Look, Apple's doing things a little bit differently. And maybe, you know, maybe it would plant a seed of doubt in people's minds that, look, maybe this AI stuff still is too early and maybe Apple shouldn't be so focused on it right now. And that was, again, some of the talk after last year. You know, maybe Apple was just getting in at the right time or maybe it was still even a little bit early and they were doing things a little bit pressured by Wall Street, which I think in hindsight ended up being a lot pressured by Wall Street, right? That's why they couldn't sort of...

execute on some of those promises. But this year, again, they just had none of that benefit of the doubt. And so you're going into this looking like they're just sort of not talking about AI because they literally can't right now because they had to rejigger the whole team

They have to sort of, if not completely start over from scratch, at least sort of look at everything from, you know, a starting over from scratch standpoint and think, you know, much like Amazon, it seems like had to do perhaps with Alexis sort of figure out, do we have something here that we can salvage, you know, notably in Siri or is there, you know, are we going to really have to rethink this from the ground up?

I want to give you some credit here because there were two reactions that you had on our show last year. First of all was Apple fails to overreact to the AI revolution. Spot on, even though they haven't even been able to meet their lack of overreaction. The other thing that you said, and I'm going to quote, is there's a lot of cool stuff happening

I just don't know how you productize it. You were skeptical from the very beginning of Apple's ability to build the things that it showed in these demos last year. So let me just use that as like a jumping off point to ask you, and then I tease this at the beginning, and I think this is really important to discuss.

to ask you about the limitations of AI itself, because we saw Apple make this promise. We saw Amazon make a similar promise in February of this year with Alexa Plus, and some people may have Alexa Plus. I haven't met them. And I'm waiting months after they promised it would roll out, not here.

Google might be the most far ahead, but Gemini has severe limitations, if we're being honest. I mean, if you're using Gemini in Gmail, you're probably going to be disappointed. Sometimes it works, but most of the time it's like, I think this should be better. So here's the question for you is, you know, have we gotten carried away with what AI can do? Because if you think about what AI has actually been useful for, the chatbots are great. I think everybody agrees that everyone who uses them, ChatGPT's O3 model, that thing's amazing.

Where has AI extended beyond the chatbot? Maybe a tiny bit of agentic work in enterprise. But beyond that, we haven't seen the ability for these companies to build these promised smart assistants, despite, I guess, we see another company talk about it at a developer conference every few months. So what's going on, MG?

Yeah, I mean, I think that some of this is exactly what we're talking about with Apple, Amazon and Google. So all three of them notably had, you know, assistants in the past. Right. So there was Siri, there was Alexa and Google had, you know, the Google assistant and Google Home products, too, which sort of everyone sort of, you know, talks past now. But that was also, you know, a multimillion million unit product.

device that was in a lot of people's homes and still is in a lot of people's homes. And all of them, I sort of chalk up to having major problems sort of upgrading those devices

both devices and mentalities because they had some level of success. Now we could argue about, you know, serious level of success, but it was the first mover in a way, right in the market. And, you know, it got a lot of buzz and had some early promise. Alexa came along and sort of blew it out of the water. And Amazon just had a different strategy of ubiquity and getting these cheap, uh,

Echo devices in everyone's homes and everywhere. And then Google sort of matched that general strategy with Assistant stuff.

But again, that in a way became an albatross around all of their necks, because when it came time, you know, to this new wave of AI, they basically had all these devices that they still had to service and, and hope to upgrade in some ways. And it's as it turns out, it looks like now in hindsight, obviously, it's just a lot harder to sort of go back and try to shove this new technology into

into that old technology, even though on a surface level, they seem like they're similar. It seems like, you know, behind the scenes, they're not similar at all. And in fact, there's a lot of stuff that's like so simple that Alexa was doing with like timers and stuff that it's actually harder in some ways to get some of the newer technology to do. Now to your broader question about like products, like I just speak to that because I think like

a lot of those companies had the mentality of like, look, we already productize some of, again, like what the high level of what these assistants and chatbots are doing with Echoes and HomePod and things like that. So why can't we just do that again? Well, you know, as it turns out, first of all, like some consumers were turned away from those after trying them for so long and just not getting a lot of utility out of them, right? Beyond the timers and playing music, it's like,

Again, there's sort of this weird problem of success, quote unquote success, in that the people were trained to use these devices and now can they really go down that same path? And so, you know, I think the big companies are all sort of stuck in this weird position where they're

they tried that path and it sort of worked, but it didn't work well enough. And it's probably not going to work exactly, uh, correctly with the new technology. And so do they try to use, you know, new devices or do they try in the case of, of course, Apple and Google, do they try to shove, um,

you know, this technology into smartphones, which they're doing Google to a greater extent, of course, than, than Apple is right now. But what ultimately do the products look like there? Like you're talking about, is it just like, you know, being able to auto correct Gmail or write emails for you in Gmail, or is there sort of something new that should be done? And that of course gets to what, you know, Johnny Ive is potentially working on with, with Sam Altman and with the open AI team and the whole acquisition of the IO, um, company. Um,

And by all the accounts, they're trying to build a newfangled device, something that's completely new from the ground up that's not trying to, again, cram this new technology in an old device. And who knows? Obviously, we can all guess as to what that will be and how that will work. No one will know until it ships, including them.

you know, they're, they're talking a big game about it, but they always talk big games about all this stuff, especially Sam Altman, of course, as, as he famously does. And so it's really going to be hard to know for sure, but I do think that that path is probably a little bit more clear than what the, you know, the quote unquote incumbents or the big tech companies have right now, because, uh,

They have all of this legacy and institutional knowledge of what they've done in the past to productize different technologies. And I'm just not sure it's going to work that time because, in a way, we kicked off talking about AI versus UI. In a way, AI is a new UI, right? And it's weird to think about in that way, but it really...

Sort of you need to, I think, think about it in that way. And so if you're trying to cram AI into sort of the older paradigms of UI and thinking like, oh, we need, you know, you know, this beautiful interface or we need, you know, like a like an app specifically to do that. You know, we'll see that will work for some services, I think, but not for everything.

Yeah. So we might talk a little bit more about this Johnny Ive device, but just to touch on it quickly, because I've talked about it a lot in the newsletter and on the podcast recently, we had a great YouTube comment. And honestly, it's a little coarse, but sometimes this says everything you need to know about the Internet, where a guy said, unless you can tell me, unless you can tell me dudes can watch porno without a high definition screen, the AI device is a hoax.

Fair. I think that's a fair criticism. Porn has driven a lot of technological adoption, of course, famously over the years and what that looks like here. But, you know, again, like this is not a new and exactly new thought, but I do generally agree with like the notion of if we consider that sort of AI and UI blending together in some ways,

I think that AI ends up working in some capacity on a product side because it's going to be all different sorts of different interfaces and devices that we use it on. It's not just a phone. It's not just a computer. And it's not necessarily just a new device of whatever these various other companies, including OpenAI, are working on. Yeah.

There's got to be a screen involved. It'll be a screen and maybe a device. Like Ives device will not have a screen. That's what the reports are. No screen, not a wearable. There's no way that becomes the device. Is it a device? Maybe. Probably, actually. Or maybe that entire user interface just happens with your phone speaker and microphone. But it's not going to replace screens.

Look to what Amazon's doing right now, right? I think you've talked to Panos Panay about this. Yeah, he demanded I get a screen device. Right, exactly. And that's how they're rolling it out, to your point, if they're actually rolling it out. I mean, I think that a few people have it, but it's unclear how many. But they're restricting it heavily because they're restricting it to the newer Echo devices with a screen in particular. Yeah.

So I want to ask you if you're going to account for any probability that the AI technology itself just can't handle this. And I'll give like the argument that I think would sort of capture why LLMs might not be able to do this. It's a lot of information to take into account. Think about how many emails we have, the data we have in maps, how many text messages we have.

Is it possible that they simply cannot put the attention? Now we have a million or two million, I think two million token context windows. But is it possible that there's just, you know, these assistants that are trying to capture all your data cannot work reliably trying to handle such a huge amount of information at once?

I think it's a good question. It sort of reminds me of something I wrote a little several weeks ago at this point, but when it was around some news that basically when all of the AI companies were starting to roll out memory features, right? OpenAI did it and Google's done it and a few others, Google like doubled down and tripled down on that at IO, right? Talking about how now it'll have the context of like pulling in Drive, pulling in Gmail and everything. And like, to me,

When I hear that, so at a service level, that sounds like, yes, of course, I want my AI to know everything and I want it to be able to have the historical context. My thought a few weeks ago, and I still agree with this, is that

I wouldn't be shocked if that sort of backfires against these companies in some way. Like, I'm not really sure that people want to use this new technology to sort of dredge up the past and have all of that historical context. Now, obviously, there's the famous examples, like dating back to Facebook, of, like, you know, servicing, you know, old girlfriends or servicing people that you don't want to see anymore and that kind of stuff. But I think even beyond that, just, like, everyone's...

everyone evolves as a person a lot. And if you have the, you know, context from your Gmail's that you sent in 2004 or five or whenever Gmail actually launched, you know, 20 years ago, like, is that really going to inform your, uh,

you know, your interactions with AI in 2025 and 2026 and beyond. And what does that mean? Like you would hope that the AI is smart enough to know, like maybe discount something that you said in 2005, because you no longer believe that for whatever reason, but maybe it doesn't know that, right. Maybe it weights it just as heavily, you know, certainly there's, there's been plenty of, um, of fits and starts with different AI products where they sort of don't quite get, um,

the context that they need to with regard to sort of the way that you're using AI, you know, dating to the Bing chats, hallucination stuff and trying to get Kevin Roos to leave his wife or whatnot. And so there's all sorts of historical precedent for why you might not trust these chatbots to sort of take the proper context into account when utilizing these things. But again, to your exact question, I, you know, I do think that there's,

there's a concern that they're going down a path right now thinking that it's the right thing to do when instead like maybe even something like OpenAI, which is obviously a much newer product, shouldn't be so heavily thinking about and worrying about all of this memory stuff and historical stuff to pull in there. Let's go to one more YouTube comment because I think this sort of gets exactly your point. We had somebody in my recap from the event

on Monday says, they said, I don't give one flying flip for AI on my phone. Apple should just leave it out altogether. I don't want AI reading my messages. I don't want AI looking at my photos. I want AI to get the F out of my life. I wonder how many, what percentage of the population that comment represents?

Yeah, I mean, there's a lot in there, right? Like, I've seen that too. I've seen that general comment. People have left me similar comments, right? Like, especially about Apple. It's interesting, especially about Apple products, because I feel like, I don't know if it's the sort of historical privacy messaging or even the anti sort of meta and Google messaging, right? Where it's like,

People who are diehard in the Apple ecosystem almost, at least historically, have viewed Google and meta as sort of the villains who are just all about data hoovering and bringing this all in to feed their business models. Obviously, there's some level of truth to that.

Um, because their model that is their business model, but there's, you know, there's of course a flip side to that too, which is Apple's not, you know, the, the full on, uh, white knight in this regard who, you know, who's doing everything, you know, for purely, um, uh,

you know, above board reasons, everyone has their own agendas, right? And everyone has their own business models and everyone has, has reasons. All companies have reasons to do what they're doing. But to you, to that comment, yeah, I do think that there's, there's a subset of people who,

Look at this stuff with AI and think like, is this Apple sort of delving into a world really that's more of the Google and meta mindset with data and everything else? And like, I don't want any of this stuff. Now, I do think that there's a bit of a Luddite concern there, right? Like that this is just people not fully understanding or not liking the notion of having to learn a new thing or worried that

this is just not going to be useful at all. And again, to our earlier points, it's up to these companies to prove the usefulness of these products. I think that ChatGPT has done that. And I think that there's a reason why, where there's all this talk about Google search. And I think Google's reactions to this and shoving AI front and center into search are more indicative of anything that they're saying out loud. It's just follow what they're doing. It's obvious that this has worked to some extent.

But will anything work beyond that? You hit on some of the other things, generative stuff. You know, some of the video stuff is cool, but it's so early that it's like it's just not there right now. And so the only thing that is there right now is really chat GPT. And, you know, what does that look like productized? I mean, OpenAI already did it. And so either Apple just...

you know, fully more fully bakes it in, which I still think, by the way, they should probably do with Siri while they rebuild Siri, right? Just totally outsource it to chat GPT. We did see that yesterday announced, like, that was sort of one of the more subtle, interesting things, like, they did a bunch of more smaller partnerships with chat with open AI to integrate chat GPT. And notably with the with Xcode, where all the rumors had suggested that it might be

um, anthropic and clawed that, that were sort of being baked in. And, and, you know, it's, it's probable that they're still sort of testing that behind the scenes, but they rolled it out. It sounds like with, with chat GBT. And so it's interesting that they're going further down that, that path with that company. Um, but again, that, that sort of makes sense. Again, that's the, that's the product. That's the brand that's resonating with people right now from a product perspective.

Right. I had this conversation, like along those lines, I had this conversation with someone on the broadcast riser yesterday when I was out at WWDC or on Monday, where they were like, well, I don't need an iPhone. I like my phone as it is. I was like, yeah, well, you don't have it. And that's sort of been the history of technology is that technology.

The best companies will give us things we didn't know that we wanted, and all of a sudden they become essential to our life. Absolutely. I would just give you one quick anecdote on that exact point, which is my own personal usage of, believe it or not, back in the day before the iPhone launched,

I was super skeptical. I watched the keynote like everyone else did. I wasn't there, but I was watching it from afar. And I just thought like, yeah, it looks cool. There's no way I'm buying a $700 phone. Like, you know, I had a Motorola Razr flip phone. I was like, this is great. It's super small. It fits in my pocket. That's all I need. Like, what am I going to do with a $700 phone?

Sort of like Steve Ballmer, I guess I sounded like back in the day. And then day one, I happened to be near an Apple store. I was actually back home where I grew up in Ohio. And I just, on a whim, I saw a long line of people. So I was just like, yeah, I have a few minutes to kill. I'll go wait in line and just see what the deal is with this iPhone.

I picked it up in the store and I literally walked out of the store with it. It was like, it was one of those things where I just used it for 10 seconds and immediately got it. Whereas I didn't get it even with Steve jobs, brilliant presentation. And even with all the hype around it, I just thought, no way I'm doing that. And then I picked it up and I,

I didn't necessarily have the $700 to spend at the time, but I had a credit card and I was going to get that device no matter what. And to your point, like maybe, you know, there will be something that comes along that we see that with AI where it becomes like it's on paper, it doesn't sound like there's anything that can sort of come along. But if someone nails it, like it could be one of those aha moments. Yeah.

And in the near term, how competitive is this? So here's another question that we got. This is from the Big Technology Discord. How much time do you think they have? After Google I/O, I was considering switching from the iPhone to an Android.

For those like me using Windows on the desktop and Apple on the phone, Google might hit an AI tipping point that would make it worth giving up my pretty phone, especially if an Android phone will make my Google AI glasses work better. So is this already competitive? Is this like five years down the line? Like how should we be thinking about this?

I've heard this a lot too. You hear it sort of increasingly over the years, right? It's an interesting dichotomy between WWDC and Google I/O because they're always around the same time, right? They're both developer-focused events. And while it's not the iPhone event, it's sort of a good jumping off point to sort of compare where the two companies are at, right? And this year, of course, is a vast chasm, at least with regard to AI, with where the two companies are at.

Even after IO this year, I feel like I heard that exact comment that you're talking about more and more than I ever have. And again, I feel like I hear that more and more every year where it's like, this is the year that I'm going to ditch my iPhone and go over to Android because clearly they have the momentum with AI. And if you believe that sort of this is the future technology that's going to matter the most, like it doesn't necessarily matter if Apple has the better UI and if Apple has even the better hardware necessarily.

Um, if again, AI is going to take over. I don't think that that's necessarily the case right now for exactly the reasons that we're talking about, because I don't think that there's exactly the killer app, um, um, that, that makes Android that much better than iOS right now. I have, um,

I have a pixel fold, you know, the newest one, I think it's pixel nine right now. It's a nice device. I think it's cool that the folding, you know, form factors is sort of coming into its own. Obviously Apple's going to go down that path. It sounds like maybe next year and they'll have something like that, but,

regardless of the hardware, again, the, you, the AI elements of it is, is sort of what I was looking for and why I got that to see how, how different it actually was. And yeah, there's things where Gemini is more baked in, of course, to the, to the OS level, but it's honestly, in my mind, at least it's not that differentiated right now because, uh, on the iPhone, again, check GBT is sort of the leader in the, um,

you know, in the house right now with regard to consumer facing AI products. And so that app is on the iPhone and it's good and it's on the Mac and it's good and it's on the iPad and it's good. And so until there's something new and maybe to your commenter's points of this other secondary device where it better integrates with it, it would be interesting if that sort of ends up being a weak point for Apple because that's historically been a strength, right? The AirPods work with the iPhone a

The Apple Watch works with the iPhone. And so what if all of these sort of concert of AI devices work better with Android than they do with Apple devices because Apple is so far behind in AI? And that could be a major weak point, but we're a ways away from those secondary compelling AI devices from coming out.

Okay. And so, uh, can I suggest something? Is it possible that this mistake of this Apple's Apple's inability to ship Apple intelligence, uh, is not, you know, necessary because like, like you said, it's not immediately competitive. It's not as much about the fact that they haven't been able to do this is that Apple just needs something right now because they're under attack from so many different angles. The tariff issue is obviously not good for them. Uh,

Their service business is under attack from two vectors. One is that that search revenue that they get from Google, the $20 billion to be the default, may go away. And the other, like you've written about, they're going to start potentially being forced to take payments via the web and not in their in-app payment service, which means they get zero cut if that's the direction consumers want to go. And so you also have flat iPhone sales, right?

So you need something. And that's why the pressure is on Apple intelligence. Maybe less about the fact that people are going to get the AI phone and run away from Apple. But like this company needs a spark.

Yeah, it's a great point. In particular, I think, you know, what you're, you know, hinting upon is the notion that basically for the past, you know, since the iPhone launched in 2007, it's been up and to the right sales wise until the very recent, you know, past few handful of quarters where things have sort of stagnated. And so that up and to the right of

of iPhone sales have sort of masked anything else that Apple has sort of missed on. And that includes, by the way, the Vision Pro, right? Like that obviously was not a huge hit, but it didn't matter so much, right? Because they still had the iPhone and they still had some of the other services business, which are also hitting upon with Google and the App Store. And so all of those were able to mask any sort of

you know, missteps that they had and they don't really have anything right now that can mask that. Cause again, iPhone revenue is, is now sort of flatlining and just stable and not growing anymore. And now services revenue, which is the one growth area that they've had for the past few years is under massive pressure. And if that were to stop or go down, if they lose the Google search revenue,

you know, $20 billion a year deal. Like they have all of a sudden they have all sorts of unanswered questions and they have a lot of pressure for that next big thing to come in to sort of restabilize the company. And so I think this is sort of a perfect storm in a way

timing wise. And so going back to the notion of AI and why that plays into this, I do think that, yeah, that's certainly what Wall Street is looking for with regard to what's the next growth area. And for Microsoft, it's been AI. For Google, it's been AI. For Amazon, it's been AI. So all these other companies have sort of ridden this wave and Apple hasn't so far.

And so I think Wall Street looks to it like, oh, well, they'll get back on the horse and they'll be able to do it. So that hasn't been the case so far. But that's one side of the story. The other thing that I think is sort of downplayed a little bit in this narrative, which is that

Beyond everything that we've been talking about with regard to AI and the productization of it, and maybe they're not too early because maybe no one's really productizing it in a compelling way right now, I do think more so with AI than with any other technology that I've seen in the past, it's moving so fast.

to the point where if Apple isn't in the game, I worry that they just don't have both the right mentality, but also the right talents and they're not able to recruit the right talents and they don't have the right leadership in place to sort of build

be there if and when the time comes, you know, for it to really take off from a product perspective. Right. And I do think that a lot of the narratives that we've seen sort of leading up to WD, WDC about the behind the scenes stories about what went wrong at Apple and why they sort of weren't able to meet the moment with, with regard to AI sort of does point to both some leadership challenges, but also just, it's a company that historically operates a very set, you know, set, set in their ways, way of doing things and,

and

But AI, the real sort of transformative nature of it for Apple might be the fact that they have to sort of break that mentality of how they've operated up until date to be able to work in this new environment. And again, it's weird because like we're talking about, it's not necessarily because the products are ready to go, but it's that if they don't get on board now, they're going to be so far behind when the products are ready to go that they don't have, again, the right leadership, the right talent and the right mentality to actually execute as we saw sort of in a small way over the past year.

This is why I've been jumping up and down on the table for them to acquire Perplexity. It would be the biggest acquisition in their history by far. I know you ranked it number two on your list of potential Apple acquisition targets after Anthropic, but they're raising at a $14 or $16 billion valuation. I said this on the program on Friday on CNBC yesterday. I'm going to write about it. I'm not going to stop until I manifest this into reality, but...

You know, it's a company that $100 billion buyback two years in a row, like go out and buy perplexity today. So, and I agree. And I mean, I think, I think anthropic I put as number one, simply because of like the overall mentality that they have, right. With, with how they talk about AI, it feels like it's more simpatico with the way that sort of Apple would think about things. Whereas like perplexity, um,

they have a little bit more, you know, a little bit more in your face, right? Like, and they have to, right? There's that culture. Yes, exactly. It would be a little bit, a little bit of a challenge, but to his credit, like they're the scrappy startup. Like they're going, they were going up against Google when no one thought that search would be a vector that you could attack. And they were right about that. Right. I mean, like, obviously they're, you know, they're, they're not,

to the extent that ChatGPT is, but still, they picked an avenue and I think a smart one. And that avenue happens to be another avenue that would immensely help Apple beyond just the AI, having a search element of it if this Google search component goes away for Apple. Like having technologies like...

like the ones that Perplexity can bring on board with AI and with search itself, I think would be immensely useful. And to your point, it's also a lot cheaper than what Anthropic, I don't think that Apple can buy Anthropic just because of like the weird ownership now of Amazon and Google owning so much of that company. I think it would be very hard to see how they could possibly do that. And it would just cost, you know,

a hundred billion dollars or whatever it would cost in order to do that. But perplexity is definitely something that they probably could swallow and figure out a way to do. Though, as I'm sure, you know, you saw the other day, it seems like they're closing in on a major deal with Samsung. And, you know, does that muddy the waters of sort of trying to get a deal done in that regard? Because Samsung is their biggest device competitor. Yeah.

Yeah, you got to do it right away. You cannot wait. Yeah. All right. So I want to end this segment or this whole like, let me put a point on this conversation. You have a prediction in your piece, either the one that just came out or the one that's come out recently, that Apple will get its act together on AI by 2026. So I want to ask you this.

It does seem like you do believe that this ever-promised assistant that we've seen from all these companies, it will materialize. This is going to happen. I mean, I would say that I don't think that they'll have everything solved by 2026 by any means. But I do think I...

I've heard enough sort of and done enough triangulating where I feel like they're at least now have the appropriate fires lit under their asses to, to get, you know, a little bit back in line. I do think that they would be helped by an acquisition or two or three or many to bring more of just what we were talking about, sort of that right mentality, you know, and sort of a changing in a way of the culture to just a more, you know, fluid and, and, and,

and shipping culture than sort of these bespoke jewels of that liquid glass, maybe the best encapsulated version of that we've yet seen. And so I would caveat it to no end that they have a lot that needs to get done before from here to there. At the same time, they have a device and they have multiple devices and an ecosystem of devices, including these, including this,

including whatever comes next with Vision Pro. AirPods Watch, right? Yes, that they can leverage that. And by the way, they have the other sort of absolute...

necessity in all of this, which is that they have a retail presence which no one else can match for consumer goods. And so if and when they can find sort of either that next device or that product for the current devices, they can move units and sell these things in a way that Google can't match, in a way that Meta can't match.

You know, even if you believe that Meta is going down the right path with sort of the Ray-Bans and now, you know, whatever the – it's not Orion anymore. Whatever the new version of Orion – I think they have a new constellation they named it after or something. Artemis. Artemis, I think, is the new version of it. So, you know, Apple's obviously going down those paths as well. But again, Apple has this huge strength. They have retail stores all around the world. So if they can get it right – and again,

hopefully make some acquisitions to sort of speed that up a little bit and just have the overall right mentality. I think they have an opportunity to come back into the game. Okay. And Apple, notwithstanding, let's say we take into account all these companies,

You do think that when it like again talking about this assistant that let's say something that maybe can check your mail and you know give you an update about when you need to get to the airport like that's the example that they've all given or like be contextually aware you get a text message it knows it's important it puts something in your shopping cart when that happens and then you know shows it to you and says I've put these three things together and I've done this for you. So you're of the belief that we might be able we might actually see that and maybe within the next couple years.

I do think that we'll eventually see that. I would just say to that, you know, it's so funny that Apple, Amazon, they all use the same mom or grandma is stranded at the airport. They all use the same example. It's the same one, right? Yeah, it's the same example always. Can someone pick this lady up, please? Someone save mom or save grandma. Like, why is she always stuck there? Why does she have a phone? Now that Apple upgraded the phone app, maybe she can make a call again. Just get a new one, grandma.

But I would say, like, I think that someone will do those rights eventually or get that right. I think it's a matter of time. And, you know, you sort of hit on, like, is it just like we just don't have these AI models don't have the capacity to sort of deal with that complexity? I do think that they'll eventually get there. I'm not worried about that. But I'm not sure that those are really killer use cases of ultimate use cases of AI. I think that that's like

again, sort of trying to squeeze an old paradigm into this new technology, right? And I think that things that end up being the killer use cases are things that we're just not thinking about right now because we don't have the right either hardware, we don't have even the right software necessarily in place for what they can actually achieve.

Okay, I need to take a quick break, get to our mid-roll, and then I want to talk for a couple minutes about liquid glass itself. And whether this is actually an upgrade for Apple, like I said yesterday, or I said in my little short pod on Monday, or whether I made a mistake. I'm going to give you an answer, a definitive answer, on the other side of this break. And we're back here on Big Technology Podcast with MG Siegler. You can find his writing at spyglass.org. I'm a subscriber. Definitely recommend you go subscribe. It's great stuff. I'm

high volume and always interesting. So, yeah, for sure. And so, MG, you know, it's so interesting because I did this like sort of from the WWDC 10 minute podcast talking about my reactions. And the one thing I took for given was that this was like a good upgrade, a good UI upgrade.

and that liquid glass, at least in their presentations, looked really nice. And then people started downloading it on their phones and they are, let's say, not happy.

I've seen some of the reaction. Yeah. Yeah. I mean, there are people who are like looking at the notification screen and saying that like it's translucent and I can't really see the notifications. There are people like who are pulling up the lock screen and they're like, this is, well, let me just read a couple of things. Steve Jobs would have taken you out back and shot your kneecaps for pitching something with this contrast ratio. Someone took a screenshot from the presentation where there's like a pink mask

Mac desktop with like flowers and other stuff in the background and they say this is why Johnny I've left Nikita beer might have my favorite thing he said if I can't read notifications anymore then I might as well stop talking to women all together and he put a photo up of the Google pixel so

So what's your read of this design update? I'm starting to take back. I think I called it beautiful twice in my Monday podcast, and I'm starting to regret that characterization.

So I have a few thoughts about this. First and foremost, you and I have been around doing this long enough where we know that the immediate reaction to any sort of change, especially user-facing design change, is almost always going to be negative, right? Like people just don't like change and they don't like switching up

Now, Apple's historically done a little bit better because they're so design oriented and people, I think, give them more of the benefit of the doubt that they're going to release these beautiful designs into the wild. But yeah, I mean, I've seen everything on the social about sort of the backlash to this. I will say I also downloaded iPad Air.

OS 26 to my iPad, to a backup iPad last night and played around with it. I think it's fine right now. I'm, I'm, I'm I would say I'm hesitant to say that I love it or hate it. I think that there's some things which are better. It's, it's a boring nuanced position of it, but I do think like, again, having done this long enough,

A lot of these early betas, they end up tweaking quite a bit, even from a design perspective, right? Like there's little like shading things that don't make sense right now. There's, yeah, there's notifications that you can't read right now. Obviously Apple is going to fix those before they sort of shift us to the wild. This is the very first developer beta. I think before the public betas, it's reasonable to think that they'll get quite a bit better in that regard. But overall, do I think that it's the right general stance to take, you know, from a design perspective? I mean, yeah,

It's I think it's good to unify the designs right across all their different devices, which they've slowly been doing anyway. And I do think the the flat quote unquote flat design that, you know, Johnny, I did right back in the iOS seven days was getting a little bit stale. It's always good to refresh these things. Yeah.

I do worry that liquid glass is a little bit too transparent for, um, for what it's doing. I also think like, um, I think it works better on certain devices probably. Um, and I do think like, uh, it's a little bit, I love the fact that they've finally done like windows and stuff on, on iPad OS, which is why I downloaded there. But it also is like comically turning it into a Mac, uh,

um, which, you know, sort of Craig Federighi, a little bit sort of tongue in cheek joked about on stage, I think during the keynote, but, um, you know, the overall, I think that everyone will calm down after, after they've lived with it for a little bit. My board can take. Yeah. I think that's probably true. I mean, every, I remember hating many redesigns as well. Uh,

But then again, some redesigns really ruin products. So there's, yeah, I mean, snap has had to roll back several redesigns of things. Right. And so if, if, if, if people really hate it, would Apple dare roll something back? I mean, they basically did that. It sounds like with what's that.

To see Apple, if Apple actually messes up on design too, then yeah, it's another alarm. They sort of admitted that though with the photos thing, right? Like even in the keynote, they talked about, yeah, we had to go back to the thing that sort of giving you the option for the thing that everyone wanted. All right, let's end with this. Give us the state of Apple and with the context of something that you mentioned earlier about

You actually wrote this also in your recap piece, just the leaks. I think you said that such a leaky boat is never a good sign of overall company health. Where does that company stand today and where is it going?

So, you know, while I was sort of optimistic about, you know, where I think they can get to and how they think they have the fire lit under them with regard to AI and, you know, the reporting. The Mike Rockwell guy who was on stage yesterday talked about VisionOS. He's taken over the project, it sounds like. And so I think that they're correcting the ship there. I do still worry at a higher level about leadership decisions.

And again, not knowing these people directly, it's hard to sort of speak to it exactly. But again, just triangulating everything that's being reported and everything, both you hear and see the manifestation of these things like,

I do worry that they just are sort of stuck in this stubborn mentality of doing things the old ways. And I worry that in, you know, the quote unquote age of AI, that that's just not going to sort of cut it anymore. And I do think that all of the things that, you know, you talked about, like they're getting hit from all sides right now. I think that there's probably this weird internal sense. And I think that,

one thing that drove that home to me was, um, you know, maybe he'll speak to it, I guess later. I don't know if you're going to go to it, but they, they apparently are not sending an Apple exec to John Gruber's, uh, talk show, um, you know, event this year for the first time in a decade, which is a weird thing. And, uh,

It seems to stem at least partially from the fact that he was super critical about their AI shit show, for lack of a better word. Reasonably so. Yes, and reasonably so. He wrote his post of the something rotten in the state of Cupertino, and it seems like as a result, they're ghosting him at this event. And so, again, that sort of speaks to what we're talking about, I think, where they just have this weird mentality and to the point of leaks like,

I mean, it is wild how much German gets. Like I was, I was an Apple reporter back in the day. I got a fair amount of Apple scoops, nothing compared to what Mark German pulls out of Apple and how he's getting those. I mean, I, I have no idea, but the mere fact that Apple has not been able to stop selling

some level of them and maybe they have but the fact that they keep coming if they stopped one leak and they keep coming that's even a worse situation as it speaks to like the internal culture stuff and it wasn't just german this time nine to five mac is his former former place of of operation got a bunch of stuff there were a bunch of youtubers who got a bunch of stuff it feels like that is leaking out and it's just like this is it's just not a good uh internal culture you know

showcase when all this stuff that's that people have been working pouring their heart and souls into all year long just leak out on a on a whim it's just not a it's not a good uh it doesn't feel like a good healthy environment if that's happening

Definitely. And I'll just end by saying that the vibes at this event yesterday couldn't have been more different from the way that it felt a year prior. Now, part of that is media hype, but I'll just give you one example. Last year, we were in the Steve Jobs Theater for a Q&A and people got to hang around the grounds all day long and event wrapped up.

On Monday, I was looking out from the broadcast riser because that was basically where I was allowed to be. And the Jobs Theater was, I wouldn't call it empty, but there was basically nobody there. It was a muted event and a very, very different vibe.

What's your take on this stance, which I agree with, even though it's been a while since I've been to one of these. They need to go back to doing this live, like not these pre-recorded things. Oh, 100%. I mean, it's so funny because I asked to go to the actual keynote and, you know, because I was there for CNBC. So we did the pregame on Halftime Report and then we had a couple hour break while they did the keynote and then I wanted to come back.

And they're like, nah, we don't have room in the keynote. So I was like, okay. And then I like, you know, again, remembered, wait a second. It's just a bunch of people watching a video on a screen. Why do we want to be there? I'm just gonna watch on YouTube. So yeah, of course, it's just bizarre.

It's very weird, and it, again, speaks to, like, I don't know, they're just not reading a number of rooms. They're not reading the AI room. They're not reading the courtrooms all around the world. They're not reading any sorts of things. They're stubborn, and I think that it's in the past, in some ways, that maybe has helped them, but these days, like, there's a lot of fires that they need to put out at this point.

All right, folks, go check out spyglass.org for MG's writing on Apple and many of other companies. MG, it's always great to speak with you. Thanks for coming on the show. Thanks so much, Alex. All right, everybody, thank you for listening. Ron, John, Roy, and I will be back on Friday to break down the week's news, including Meta's big investment in scale AI and Alexander Wang making his way inside the company. It's going to be a fun show, so we hope you tune in. We'll see you next time on Big Technology Podcast.