Apple Sees Revenue Potential In Third-party AI Apps
Apple says AI could drive device upgrades and create opportunities in third-party apps, though it has not explained what those opportunities would be.
Apple sees several ways artificial intelligence could increase revenue, including device upgrades, its own features and opportunities involving third-party apps and partnerships. Speaking on the company’s latest earnings call, CFO Kevan Parekh did not specify how Apple might make more money from outside AI apps, according to TechCrunch.
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What Apple said about AI
Parekh described AI capabilities as a possible reason for customers to replace their devices or switch to Apple products. He also pointed to potential revenue from first-party offerings and third-party apps. TechCrunch notes that Apple left the third-party part of that plan undefined.
The subject received unusual attention on the call. According to The Verge, financial research platform AlphaSense counted 45 mentions of AI or Apple Intelligence, a record for an Apple earnings call. The Verge reports that Apple posted its best fiscal year for revenue and earnings per share, with September-quarter iPhone revenue up 17.5% from a year earlier to $57.6 billion and Mac revenue up 24% to $10.8 billion. Apple has not said how much of that growth, if any, came from demand for AI.
Possible routes to revenue
The Verge identifies several ways Apple could benefit as people use more AI: selling devices that run AI tools, collecting fees when customers subscribe to AI apps through its payment system, and eventually charging for greater use of Apple’s own features. On the call, Apple said it plans to set usage limits for server-based features, including Siri AI and intelligent photo editing, and offer expanded access for purchase in the future, according to The Verge.
App Store revenue is not guaranteed to grow alongside AI use. TechCrunch reports that legal and regulatory changes have affected Apple’s commissions in some markets, while mobile gaming has created a headwind for services. Parekh said September-quarter App Store performance was similar to the prior year, even as paid subscriptions reached a record and third-party app subscriptions posted double-digit growth. The Verge also notes that AI companies can direct customers to pay outside Apple’s system, avoiding its commissions.
Hardware and spending
Apple’s approach also makes its computers part of the AI story. According to The Verge, Gap runs AI on Mac Mini computers for loss prevention across hundreds of stores, while Christie’s uses local models on Mac Studio computers for work that includes pricing estimates. The Verge says developers and hobbyists have also taken interest in the Mac Mini as a way to run models locally.
That hardware opportunity comes without infrastructure spending on the scale of some competitors, The Verge reports. Apple spent $2.2 billion on capital expenditures last quarter, compared with $77.3 billion at Amazon and $51.4 billion at Alphabet. Those are companywide figures, not AI-only spending. Apple’s costs could still rise as more people use server-based features; Parekh said it is too early to predict how many requests will need servers rather than processing on a device.
Sources
This story was compiled by AI from the reports below. Read the originals for the full details.