Apple and Google target consumer AI as OpenAI moves toward enterprise

As OpenAI moves away from the consumer focus that made ChatGPT famous; google and apple is rolling out a number of new consumer AI products to demonstrate how this technology is practical for everyday users.

The conflicting approaches became clear this week, as Apple used its annual developer conference to introduce Siri AI as a new standalone app and OpenAI announced that it had secretly filed to go public. This is a move made possible by the company’s recent traction in the enterprise market, primarily in AI-assisted coding.

The watershed comes at a pivotal moment for artificial intelligence, as OpenAI and Anthropic focus on building big, and ultimately profitable, businesses by selling to companies eager to spend, rather than luring paying consumers accustomed to free online services. In contrast, Apple and Google have huge amounts of cash and can afford to subsidize consumer use of AI, if only to expand its adoption and ensure that coveted users remain in their ecosystems.

Gartner analyst Kel Carlson said that for Apple, it’s a question of “can we offer this for free because we’re going to cover it with the iPhones and iCloud subscriptions that they buy?”

According to Apple, there are more than 2.5 billion active devices worldwide. Google currently has seven products, each serving more than 2 billion monthly users.

“Companies are starting to realize that users can get value from AI, not necessarily through models and platforms, but through the products, experiences, and solutions they build with them,” Carlson said.

Apple is finally showing some progress in consumer AI, but its Worldwide Developers Conference was widely seen as disappointing given how late the iPhone maker is to the game and the high expectations for an upgraded Siri. Shares fell more than 5% in two days as analysts questioned the lack of specific timing and delays in some parts of the world.

In addition to the new Siri app, Apple also showed how AI is integrated into a variety of products, including the iPhone camera, email, and Shortcuts for automation and productivity apps. The company also spent much of Monday’s keynote introducing new child safety tools that are rapidly gaining importance as AI becomes more widespread.

Apple’s annual event comes less than a month after Google I/O, the search company’s high-profile developer conference. There, Google showed off a number of consumer AI products, including Gemini Spark, a general-purpose AI agent that the company claims will work in the background of search and “send intelligent synthetic updates with the ability to take action.”

Google also announced smart glasses, a video editing tool that lets users “change what’s going on” in clips they shoot, an effort to carve out a corner of the wearables market where rival Meta has had success.

Google and Apple are long-standing rivals in consumer technology, but they’re also partnering in AI. Gemini powers Apple Intelligence, the technology behind the new Siri. And Apple executives said at WWDC that Google and chipmaker Nvidia are backing the company’s latest model, called the Apple Foundation Model Cloud Pro.

Apple has not commented on this matter. A Google spokesperson said the consumer focus at I/O is related to the nature of the event, and the company made hundreds of enterprise-focused announcements at its April cloud conference.

ChatGPT creator and generative AI pioneer OpenAI’s announcements this year have been almost entirely enterprise-driven, and it now appears to be going after Anthropic.

Founded by early OpenAI researchers, Anthropic’s latest funding round in May valued it at $965 billion, surpassing OpenAI’s $852 billion valuation in March. Anthropic also made its move a week before OpenAI did the same, having successfully advanced to the confidential initial public offering filing stage.

Last month, OpenAI announced the formation of OpenAI Deployment Co. (DeployCo). The joint venture is majority owned and managed by OpenAI, along with 19 global investment firms, consultancies, and system integrators. Its goal is to place “forward engineers” directly into enterprises to bridge the gap between model functionality and complex enterprise workflows. OpenAI also agreed to acquire Tomor, an AI consulting and engineering company with 150 “deployment specialists.”

Meanwhile, OpenAI has abandoned some consumer products in an effort to streamline its finances. The company shut down its video generation tool, Sora, in March, reaching 1 million downloads in less than five days after its launch in late September. That same month, OpenAI announced a shift from the instant checkout shopping feature it launched last year.

Dennis Dresser, OpenAI’s chief revenue officer, said last month that the company’s enterprise AI adoption is at a “tipping point,” after chief financial officer Sarah Friar said in March that enterprise AI would represent up to 40% of total revenue, and would be about half by the end of the year.

“If you look at the total value of software, a large portion of it is business software,” said Rob Colley, founder and former business intelligence leader at consulting firm P3 Adaptive. microsoft. “That’s where we make money. That’s where the productivity is worth paying for.”

OpenAI has built a brand on the popularity of ChatGPT. But the real money is now being spent on the AI ​​coding market, where developers and non-technical people are using the company’s Codex and Anthropic’s Claude Code to create software and build apps based on text prompts.

“Coding is the easiest funnel for companies to get into because their purchasing cycles are complex and engineering teams’ budgets are being depleted,” said Ram Bala, associate professor of AI and analytics at Santa Clara University.

OpenAI has not commented on this matter.

One particular risk that Apple and Google face as they target consumers is the growing skepticism toward AI, with concerns that it could rapidly replace jobs and lead to behavioral problems among children and teens.

A Pew Research Center survey released in March found that about half of Americans feel “more anxious than excited” about AI in their daily lives. Alphabet CEO Sundar Pichai said on a recent episode of the “Hard Fork” podcast that people are “understandably” anxious about what kind of future the technology will create, and said the scale of the change is unprecedented.

P3 Adaptive’s Colley said there was a “backlash” but that companies “perceived to be friendly” could benefit from changing their perspective.

With the entire technology industry focused almost singularly on AI, rewarding what Wall Street sees as AI winners and punishing laggards, companies are investing as if the technology is inevitable and it only matters who gets there first.

“They all learned the hard way the cost of missing a segment,” Colley said.

Gil Luria, a technology analyst at DA Davidson, said that despite OpenAI’s competition for companies, the company still has a significant lead over Google and other companies in the consumer market thanks to ChatGPT’s viral success. He said the rollout of Apple’s Siri app is “very likely to drive many consumers away from both ChatGPT and Gemini.”

And Apple’s addition of expressive voices to Siri “could trigger a device upgrade cycle if these features gain strong consumer acceptance,” JPMorgan Chase analysts wrote in a note Tuesday.

Apple still has a lot to prove, and that task will soon fall to incoming CEO John Ternus, the company’s longtime head of hardware who will succeed Tim Cook in September.

Matt Rogers, co-founder of Nest and former iPhone engineer under Steve Jobs, said Ternas has a high mountain to climb.

“Apple played it safe,” Rogers, now CEO of waste management company Mill, said of the WWDC announcement. “As John Tarnas takes over, he will need to lead the company in a direction that makes AI useful, trustworthy, and native across the devices people already use.”

clock: Apple stock plummets after WWDC