Apple achieved the best fiscal year in its history in terms of revenue and earnings per share, driven by strong growth in iPhone and Mac sales. However, the real story behind these numbers lies not just in sales volume, but in how the company is repositioning itself in the artificial intelligence race; it is adopting an approach aimed at capitalizing on the AI boom without entering the heavy infrastructure spending conflict that consumes its competitors' budgets.
A Completely Different Spending Model
While major tech companies are pumping astronomical sums into data centers, Apple is following a more conservative and capital-efficient (CapEx) path. In the last quarter, Apple spent only about $2.2 billion, a very small figure compared to the $77.3 billion spent by Amazon and the $51.4 billion spent by Alphabet in the same period. This contrast reflects Apple's strategy, which does not rely on building everything from scratch, but rather on a hybrid model that combines:
- On-device processing: Relying on the capabilities of the devices themselves to run AI models, which reduces the need for the cloud.
- Private servers: Using its own infrastructure for tasks that require greater capabilities.
- External partnerships: Integrating technologies from other providers, such as using Google's Gemini technology in the Siri assistant.
AI as a Driver for Device Upgrades
Apple views artificial intelligence as the biggest motivator for consumers to upgrade their devices. This impact has begun to appear clearly in the computer sector; John Ternus pointed out that Mac Mini and Mac Studio devices are experiencing their own "AI moment." Companies such as Gap and Christie’s are leveraging these devices to run entirely local AI models to avoid ongoing cloud processing costs.
This trend boosts device sales, as Mac revenue rose by 24% to reach $10.8 billion, while iPhone revenue jumped by 17.5% to record a figure of $57.6 billion in the quarter ending in September.
Diversification of Income Sources and Potential Threats
Apple is not content with just selling devices; it plans to transform AI usage into continuous cash flows through:
- App Store commissions: Apple is expected to earn more than $1 billion from generative AI app fees by 2026.
- Subscriptions: Planning to charge fees for expanded access to advanced AI features that require cloud processing.
However, the company faces challenges; including rising memory costs that may pressure profit margins, and attempts by companies like OpenAI to bypass App Store commissions by directing subscribers to pay directly through their websites.
What Does This Mean for Users and the Market?
Apple is changing the rules of the game by shifting the focus from "comprehensive cloud AI" to "Edge AI." For users, this means that AI features will be faster and more private because they are processed on the device itself, but it may also mean that acquiring the latest capabilities will require purchasing modern devices or paying additional monthly subscriptions. For the market, Apple is proving that controlling the interface through which people use artificial intelligence may be more profitable than owning the models themselves or building massive data centers.