Guys, I don’t think Tim Cook knows how to monetize AI keeps showing up in conversations for a reason. The story below covers what is actually happening, where the trade-offs sit, and what a careful reader should take from it.
Apple exceeded expectations when it reported its quarterly earnings on Thursday, revealing that it made $143.8 billion in revenue for a 16% year-over-year increase. As analysts peppered CEO Tim Cook with softball questions during Apple’s earnings call, one analyst dared to ask the question that seemingly no one in Silicon Valley is willing to ask.
“When I think about your AI initiatives, you know, it’s clear there are added costs associated with that… Many of your competitors have already integrated AI into their devices, and it’s just not clear yet what incremental monetization they’re seeing because of AI…,” started Morgan Stanley’s Erik Woodring.
Could there be a tinge of nervousness underneath this Finance Man’s probably-very-financey facade? In what I can only imagine must have been a Herculean display of courage, Woodring asked the question that lurks only in the darkest, dampest recesses of investors’ minds.
“So, how do you monetize AI?” he asked.
You’d think this would come up more. You would be wrong. Instead, Big Tech has taken a largely vibes-driven approach to AI development. Take OpenAI, for instance, which may seem like it’s on top of the world, given how ChatGPT has embedded itself into the cultural consciousness. But the company isn’t planning to make any money until 2030. Analysts from HBSC are even doubtful about that timeline, especially since it will need another $207 billion in funding, estimates say. Ask anyone in tech how OpenAI is planning to break even, and you’ll be met with the verbal equivalent of the ¯\_(ツ)_/¯ emoticon.
But good ol’ Tim “$143.8 billion in revenue” Cook was having a good afternoon, so maybe he’d finally spill the beans about how any of these companies are planning to recoup their investments.
His answer was disappointing.
“Well, let me just say that we’re bringing intelligence to more of what people love, and we’re integrating it across the operating system in a personal and private way, and I think that by doing so, it creates great value, and that opens up a range of opportunities across our products and services,” Cook said.
So, there you have it, folks. Apple will monetize AI by creating “great value.” And, crucially, that will “open up a range of opportunities.” Which we will experience in “products and services.” Cool!
Well, shout-out to that Morgan Stanley guy for trying.
