As Apple enters AI race, iPhone maker turns to its army of developers for an edge
A view of Apple’s new iPhone 16 at an Apple Store on the Regent Street in London, United Kingdom on September 20, 2024.
Rasid Necati Aslim | Anadolu | Getty Images
As Apple prepares Apple Intelligence to jump into Silicon Valley’s AI race, it’s relying on one of its strongest advantages: Its army of 34 million app developers.
IPhone users will get their first taste of Apple Intelligence, the company’s artificial intelligence system, later this month. The company is relying on Apple Intelligence to be the strongest selling point for the iPhone 16, its latest generation of smartphones.
Apple’s AI isn’t as advanced as the state of the art coming out of the most advanced labs, such as rivals like OpenAI’s ChatGPT, Google’s Gemini and Meta’s Llama. Apple isn’t using the biggest models, nor can it pull off some of the more show-stopping tricks of the bleeding-edge voice models — OpenAI’s latest can sing, for example.
Where Apple is hoping to distinguish its AI is that Siri may actually be able to do things on your phone — send emails, decipher calendars and take and edit photos. That’s something other company’s AI chatbots cannot currently do, and to accomplish this, Apple is beckoning its army of third-party developers to fine tune their apps to collaborate with Apple Intelligence. Eventually, Siri may be able to trigger any action in an app that a user can take, part of the company’s long term vision for Siri, Apple said in June.
“Siri will have the ability to take hundreds of new actions in and across apps,” said Apple’s Kelsey Peterson, director of machine learning, in the Apple Intelligence launch video.
Apple can easily make this happen for its own apps, but for Apple Intelligence to interact with the millions of non-Apple apps, it needs developers to embrace a new way of programming their apps. This means developers will need to create as many as hundreds of snippets of additional code called App Intents.
Apple has a strong history of getting its developers to support new platform initiatives, and it’s running a well-worn playbook to get them on board — personal attention from developer relations, a party-like atmosphere at the company’s annual developer’s conference and most importantly, it dangles App Store promotion that can lead to millions of downloads for developers who get on board.
If third-party developers jump on board and the Siri system works as advertised, it could represent one of Apple’s biggest and most durable advantages in the AI race.
“You should be able to string things together and kind of get that future we’ve all been envisioning where you can use Siri conversationally, to do a bunch of things at once,” said Jordan Morgan, an iOS developer who’s written a tutorial about App Intents.
Whether Apple is successful at cajoling its millions of developers is a critical question, and the stakes are high for the company.
The company is relying on Apple Intelligence, which only works on last year’s iPhone 15 Pro or iPhone 16 models that came out this year, to spur a wave of upgrades and boost flat iPhone sales. If Apple’s improved Siri is poorly supported by developers or it fails to impress, it could cool iPhone sales, and customers could wind up choosing to use a rival’s voice assistant through an app instead of the built-in Siri.
Apple Intelligence photos
Apple Inc.
What are App Intents?
Inside the Music app, for example, Apple has built about 10 intents, including actions like “Add to Playlist,” “Play Music,” or “Select Music.” A single app intent should define a single action, programmers say.
If you take a caffeine tracking app, for example, one intent would be the ability to show an overview of exactly how much caffeine the user has logged today, Morgan said.
When that App Intent is finished, Apple’s various “system experiences,” such as widgets, live activities, control center and Shortcuts, will be able to quickly display a current running tracker of how much caffeine has been logged without the user ever opening up the tracking app.
System search is another big draw for some developers. App Intents will allow apps to surface specific emails or other more granular data inside Spotlight, Apple’s system search.
App Intents don’t take that long to write, developers say, often requiring only a few lines of code.
In previous years, Apple recommended that developers adopt App Intents for their most important features, said Michael Tigas, the developer of Focused Work, a productivity app.
“Now, if there’s a way to adjust your app to perform any general action then you should create an App Intent for it,” Tigas said.
Fortunately for developers, they still have time to write all the code necessary for App Intents. While Apple Intelligence is starting to roll out next month, the biggest improvements to Siri aren’t scheduled to be released until next year.
Apple has to incentivize developers
Apple’s new Siri system will better understand questions even if a user makes a speaking error, a direct result of Apple’s work with language models, a relative of the large language models that power systems like OpenAI’s ChatGPT.
That means that Siri will be much more flexible in understanding the hundreds of different ways a user could phrase, for example, “apply a photo filter to an image I took yesterday.”
Apple has to train and test its model to understand the range of the most likely commands and questions for any given category of apps.
A downside to Apple’s approach is that only a few categories of apps will be supported by the new Siri at first, starting with photo and email apps. Eventually, Siri will support apps that focus on books, journaling, whiteboards, managing files, word processing, browsers, camera and photos, the company said.
Developers are already imagining how they might plan for users to interact with their apps with their voices.
A representative for Superhuman, a premium email app, told CNBC that it plans to use Apple’s AI system to enable questions about the contents of emails, such as “Hey Siri, when does my flight depart?” or “Hey Siri, when am I meeting with James to review his proposal?”
There’s a downside to Apple’s plan in the eyes of some developers who worry that users will spend less time inside their apps or confuse Apple Intelligence with the AI features they’ve built themselves.
“If this story were only about App Intents, developers would worry that their products might be reduced to the role of the plumbing that powers Siri, and leave them unclear on how to build sustainable businesses around it,” Igor Zhadanov, CEO under of Readdle, which makes email app Spark, wrote in an email.
Another drawback is that Apple Intelligence features will only be available on the latest iPhones, a small subset of the total iPhone user base. That limited market of iPhone users may discourage developers from investing time and effort into supporting the technology in the near term.
“Apple are limiting these kinds of Apple Intelligence features to the new 2024 iPhones and the expensive models from last year, so you won’t be able to build something for the masses anyway,” Tigas said.
WATCH: Apple Intelligence will mark a ‘renaissance of growth’ for the company, says Wedbush’s Dan Ives
Intuit CEO Sasan Goodarzi speaks at the opening night of the Intuit Dome in Los Angeles on Aug. 15, 2024.
Rodin Eckenroth | Filmmagic | Getty Images
Intuit shares fell 6% in extended trading Thursday after the finance software maker issued a revenue forecast for the current quarter that trailed analysts’ estimates due to some sales being delayed.
Here’s how the company performed in comparison with LSEG consensus:
- Earnings per share: $2.50 adjusted vs. $2.35 expected
- Revenue: $3.28 billion vs. $3.14 billion
Revenue increased 10% year over year in the quarter, which ended Oct. 31, according to a statement. Net income fell to $197 million, or 70 cents per share, from $241 million, or 85 cents per share, a year ago.
While results for the fiscal first quarter topped estimates, second-quarter guidance was light. Intuit said it anticipates a single-digit decline in revenue from the consumer segment because of promotional changes for the TurboTax desktop software in retail environments. While that will affect revenue timing, it won’t have any impact on the full 2025 fiscal year.
Intuit called for second-quarter earnings of $2.55 to $2.61 per share, with $3.81 billion to $3.85 billion in revenue. The consensus from LSEG was $3.20 per share and $3.87 billion in revenue.
For the full year, Intuit expects $19.16 to $19.36 in adjusted earnings per share on $18.16 billion to $18.35 billion in revenue. That implies revenue growth of between 12% and 13%. Analysts polled by LSEG were looking for $19.33 in adjusted earnings per share and $18.26 billion in revenue.
Revenue from Intuit’s global business solutions group came in at $2.5 billion in the first quarter. The figure was up 9% and in line with estimates, according to StreetAccount. Formerly known as the small business and self-employed segment, the group includes Mailchimp, QuickBooks, small business financing and merchant payment processing.
“We are seeing good progress serving mid-market customers in MailChimp, but are seeing higher churn from smaller customers,” Sandeep Aujla, Intuit’s finance chief, said on a conference call with analysts. “We are addressing this by making product enhancements and driving feature discoverability and adoption to improve first-time use and customer retention.”
Better outcomes are a few quarters away, Aujla said.
CreditKarma revenue came in at $524 million, above StreetAccount’s $430 million consensus.
At Thursday’s close, Intuit shares were up about 9% so far in 2024, while the S&P 500 has gained almost 25% in the same period.
On Tuesday Intuit shares slipped 5% after The Washington Post said President-elect Donald Trump’s proposed “Department of Government Efficiency” had discussed developing a mobile app for federal income tax filing. But a mobile app for submitting returns from Intuit is “already available to all Americans,” CEO Sasan Goodarzi told CNBC’s Jon Fortt.
Goodarzi said on CNBC that he’s personally communicating with leaders of the incoming presidential administration.
On the earnings call, Goodarzi sounded optimistic about the economy.
“Our belief, which is not baked into our guidance, is that we will see an improved environment as we look ahead in 2025, particularly just with some of the things that I mentioned earlier around just interest rates, jobs, the regulatory environment,” he said. “These things have a real burden on businesses. And we believe that a better future is to come.”
WATCH: H&R Block, Intuit shares fall after report Trump administration is considering a free tax-filing app
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