Apple's AI Struggles: Can Siri's Overhaul and New Partnerships Revitalize Its Tech Leadership?

As of last week, Apple Inc. (AAPL) shares saw a slight dip of 0.09%, marking a three-day losing streak of 0.78%. Despite a weekly gain of 6.55%, Apple stock has declined 15.47% year-to-date, bringing its latest market capitalization to $3,155.34 billion.

Apple's struggle in the artificial intelligence (AI) arena poses a significant threat to its dominant position in the smartphone market and may undermine its broader ambitions in robotics and next-generation hardware, according to reports from sources familiar with internal discussions. Although former Google executive John Giannandrea's appointment in 2018 was initially seen as a promising move for Apple's AI strategy, progress has stalled, especially in the fields of generative AI and large language models (LLM).

Under Giannandrea, Apple's scattered AI teams were initially unified, heightening expectations for a transformation of Siri. However, the anticipated advancements in AI failed to materialize as Apple continues to lag behind competitors. The recent introduction of “Apple Intelligence” in 2024 promised smarter writing tools, summarization capabilities, and an enhanced Siri, yet delays have plagued its rollout. Some features did not coincide with the iPhone 16 launch, and the improved Siri remains absent due to significant flaws revealed during tests, further complicating timelines.

Apple's cautious approach to AI investments, coupled with an organizational culture resistant to significant AI integration and strict data privacy policies, has inhibited AI development. Unlike Google or Meta, Apple's stringent data access restrictions hinder the creation of competitive large models. Moreover, the acquisition of essential hardware like GPUs for advanced model training has been sluggish.

In a bid to restructure, the leadership of Siri has shifted from John Giannandrea to Mike Rockwell, head of the Vision Pro headset project. Apple is looking to collaborate with external AI firms like OpenAI and Anthropic to bolster its AI capabilities. Engineers are redesigning Siri using a new system based entirely on large language models, and Apple is testing an internal chatbot aiming to rival ChatGPT.

Going forward, Apple's strategy at the 2025 Worldwide Developers Conference (WWDC) is expected to focus on incremental AI improvements rather than groundbreaking innovations. Challenges persist, but Apple insiders remain confident in the company's ability to catch up, citing strengths in hardware integration, a vast user base, and brand influence. Yet, many acknowledge Apple can no longer afford to be a mere follower in the AI space.

In addition to ongoing developments, insiders disclosed plans for an AI-driven battery management system in the iOS 19 rollout, set for September. This feature intends to address long-standing issues with iPhone battery life by adjusting energy consumption based on user habits, drawing on accumulated battery data. The move aligns with Apple's strategy to integrate AI deeply into core functionalities and accommodate forthcoming thinner iPhone models.

Despite setbacks, Apple Intelligence remains central to Apple's AI strategy, with select iOS 19 functionalities powered by the platform. Additionally, Apple aims to extend AI integrations to smartwatches, despite some high-energy-demand models not being fully supported. Significant UI adjustments in upcoming software versions, including iOS 19 and macOS 16, are anticipated, alongside enhancements enabling seamless connections in public settings.

While honing AI features and UI changes, Apple engineers work diligently to rectify bugs from previous versions. With an initial testing phase rounding off in late May, these innovations are slated for unveiling at June's WWDC, with full release anticipated alongside new iPhones in September.