Apple's AI story is still a rough draft

Driving the news: At its Worldwide Developer Conference, which kicks off on Monday, Apple is expected to showcase a revamped Siri that uses genAI to better understand what iPhone owners want to do and to help them take action.

• Apple is unlikely to show off a full-fledged homegrown chatbot. Instead, the company will turn to a partner or partners to offer these services.
• Bloomberg's Mark Gurman's sources say the new system will be called "Apple Intelligence."
• The company has reportedly reached a deal with ChatGPT creator OpenAI and has held talks with others, including Google, which already provides the iPhone's default search engine.
• An Apple representative declined to comment.

Between the lines: The partner approach is less than ideal for Apple.

• The company prefers to offer its own services, especially on fundamental technology like genAI.
• Even if the genAI boom doesn't produce new kinds of hardware that supplants the smartphone, chatbots could shift the paradigm from the app-dominated approach that Apple has managed to control and benefit from.
• Sending user data to the cloud — and perhaps a partner's cloud — threatens to undermine Apple's argument that it offers significant privacy advantages by keeping data on the device.

The big picture: Apple has been the slowest of the big tech companies to publicly embrace what many see as a generational shift in technology.

• Microsoft is poised to have its strongest case in years that Windows can offer things the Mac can't, thanks to its outsized investments not just in OpenAI, but also in the AI copilots it has added throughout its product line.
• The new Arm-based chips from Qualcomm could also help Windows better compete on battery life with the Apple-designed chips that power current Macs.
• Google is also infusing genAI across its products, including within its Android mobile operating system and in search, photos and Google Docs.

The other side: Having failed to own a smartphone platform, Meta and Amazon are keen to stay on top of whatever hardware shift comes next.

• Facebook's parent company has invested in a range of hardware, from its Quest VR headsets to its AI-equipped Ray-Ban smart glasses.

Yes, but: Whatever Apple announces Monday needn't be Apple's long-term answer, and probably won't be.

• It's easy to imagine genAI advancing to power an even more capable personal assistant. That is going to require not only continued advances in the underlying technology, but also a great deal of trust.
• As Microsoft and Google have been early with genAI, they are getting blowback for leaning into a technology that, while impressive, remains prone to making frequent mistakes.

• Meanwhile, security and privacy experts have pilloried the Recall function that Microsoft has made the signature feature of its Copilot+ PCs.
• At this week's Axios AI+ Summit, Signal President Meredith Whittaker called the feature "a serious hijacking of trust" and "a dangerous honeypot for hackers."
• Google is also working on a feature like Recall, according to PCWorld.

Zoom out: Future generative models are expected to offer more powerful reasoning engines.

• At the same time, continued advances in phone and PC processing should allow more of the work of genAI to stay on smartphones and computers — a shift that could play to Apple's strengths.
• Apple isn't alone in touting the power of on-device AI, but its tight control over software and hardware, combined with its base of fiercely loyal and largely trusting customers, could leave it best-positioned to take advantage of the shift, provided it can catch up on the underlying AI technology.
• In addition to the privacy benefits of handling genAI tasks on device, there are tremendous advantages in cost, battery life, environmental impact and performance.

Bottom line: If Apple can increase its use of genAI, even modestly so, while also maintaining the trust of its massive user base, this year's advances could pave the way for bigger things to come.

What's next: Axios will have live coverage from Cupertino starting at 10 a.m. PT on Monday.