> Amazon Alexa is a “colossal failure,” on pace to lose $10 billion this year... “Alexa was getting a billion interactions a week, but most of those conversations were trivial commands to play music or ask about the weather.” Those questions aren’t monetizable.

Google expressed basically identical problems with the Google Assistant business model last month. There’s an inability to monetize the simple voice commands most consumers actually want to make, and all of Google’s attempts to monetize assistants with display ads and company partnerships haven’t worked. With the product sucking up server time and being a big money loser, Google responded just like Amazon by cutting resources to the division.

https://arstechnica.com/gadgets/2022/11/amazon-alexa-is-a-co...

Moving to using much more resource intensive models is only going to jack up the datacenter costs.

I only have a single internet-enabled light in my house (that I got for free), and 90% of the time when I ask the Assistant to turn on the light, it says "Which one?". Then I tell it "the only one that exists in my house", and it says "OK" and turns it on.

Getting it to actually play the right song is on the right set of speakers is also nearly impossible, but I can do it no problem with the UI on my phone.

I don't fear a future where computers can do every task better than us: I fear a future where we have brain-damaged robots annoy the hell out of me because someone was too lazy to do anything besides throw an LLM at things.

THIS!

The desperate wish to believe that AI is a silver bullet is fuel on a fire that was already going.

I'm starting to doubt they use their own product at home.

Alternative it is hit with

"Would you like Spongebob, Spongebob Sponge on the Run, the spongebob squarepants movie, or Bob Espanja Pantalones Cuadrados

It's weird because Gemini is so impressive multimodally but even the Gemini powered assistant can't figure out which lights to turn out, telling the TV to "play" doesn't mean turning it on (it means unpausing it!), just an incredibly frustrating experience.

Almost every company today wants their primary business model to be as a service provider selling you some monthly or yearly subscription when most consumers just want to buy something and have it work. That has always been Apple's model. Sure, they'll sell you services if need be, iCloud, AppleCare, or the various pieces of Apple One, but those all serve as complements to their devices. There's no big push to get Android users to sign up for Apple Music for example.

Apple isn't in the market of collecting your data and selling it. They aren't in the market of pushing you to pick brand X toilet paper over brand Y. They are in the market of selling you devices and so they build AI systems to make the devices they sell more attractive products. It isn't that Apple has some ideologically or technically better approach, they just have a business model that happens to align more with the typical consumers' wants and needs.

Personally, Google lost me as a search customer (after 25 years) when they opted me into AI search features without my permission.

Not only am I not interested in free tier AI services, but forcing them on me is a good way to lose me as a customer.

The nice thing about Apple Intelligence is that it has an easy to find off switch for customers who don't care for it.

Not even only that, but the setup wizard literally asks if you'd like it or not. You don't even have to specifically opt-out of it, because it's opt-in.

This sort of nagging and spam should be illegal.

The biggest bucket in that "service" category is just Apple's 30% cut of stuff sold on their platform (which it also must be noted, both complements and is reliant on their device sales). That wouldn't really be considered a "service" from either the customer perspective or in the sense of traditional businesses. Operating a storefront digitally isn't a fundamentally different model than operating a brick and mortar store and no one would call Best Buy a "service business".

Where I think you are ultimately correct is that some companies seem to just assume that 100% of interactions can be monetized, and they really can't.

You need to deliver value that matches the money paid or the ad viewed.

I think Apple has generally been decent at recognizing the overall sustainability of certain business models. They've been around long enough to know that most loss-leading businesses never work out. If you can't make a profit from day one what's the point of being in business?

Apple doesn't have a paid tier for Apple Intelligence.

It's a feature and a free API developers can utilize, not a service.

Apple's services have a 75% profit margin, compared to under 40% for products (hardware).

It depends. I guess you can argue this is true purely from scale. However, we should also keep in mind there are a lot of different things that Apple and tech companies in general put under "services". So even when you see a big number under "Service Revenue" on some financial report, we should recognize that most of that was from taking a cut of some other transaction happening on their devices. Relative to the rest of their business, they don't make much from monthly/yearly subscriptions or monetizing their customers' searches/interactions. They instead serve as a middleman on purchase of apps, music, movies, TV, and now even financial transactions made with Apple Card/Pay/Cash. And in that way, they are a service company in the same way that any brick and mortar store is a service company.

Apple's services revenue is larger than Macs and iPads combined, with a 75% profit margin, compared to under 40% for products (hardware).

Yeah, they serve as a middleman...an incredibly dominant middleman in a duopoly. 80% of teenagers in the US say they have an iPhone. Guess what, all that 15-30% app store revenue is going to Apple. That's pretty much the definition of a service juggernaut.

I also don't agree with you about the lack of selling Apple services to non-Apple users. TV+ is a top-tier streaming service with huge subscriber numbers, and their app is on every crappy off-brand smart TV and streaming stick out there. Yes, there really are Android users who subscribe to Apple Music - 100 million+ downloads on the Google Play store, #4 top grossing app in the music category.

You seem to operating under the notion that anything that isn't a device sold is a service. I think that definition is too broad to have any real value and that we should look at the actual business model for a product to determine its categorization. I'm not sure what else to say if you're just going to dismiss that as "pedantic".

But either way, it should be obvious that "services" (however they are defined) are a smaller part of Apple's business than they are for Microsoft, Google, Meta, Twitter, Oracle, Open AI, Anthropic, and most other players in both the general tech and AI spaces.

HOWEVER, you would never know this though given the Apple Store experience! As I was dealing with the board swap in my phone last month, they would have these very loud/annoying 'presentations' every like half hour or so going over all the other apple intelligence features. Nobody watched, nobody in the store wanted to see this. In fact when you consider the history of how the stores have operated for years, the idea was to let customers play around with the device and figure shit out on their own. Store employee asks if they need anything explained but otherwise it's a 'discovery' thing, not this dictated dystopia.

The majority of people I heard around me in the store were bringing existing iphones in to get support with their devices because they either broke them or had issues logging into accounts (lost/compromised passwords or issues with passkeys). They do not want to be told every constantly about the same slop every other company is trying to feed them.

Where everyone else sells you stuff to make money, they make money to create great stuff.

There lies the problem. Worse, someone may solve it in the wrong way:

I'll turn on the light in a minute, but first, a word from our sponsor...

Technically, this will eventually be solved by some hierarchical system. The main problem is developing systems with enough "I don't know" capability to decide when to pass a question to a bigger system. LLMs still aren't good at that, and the ones that are require substantial resources.

What the world needs is a good $5 LLM that knows when to ask for help.

Useful Douglas Adams reference: [1]

[1] http://technovelgy.com/ct/content.asp?Bnum=135

This is the monetization wall they have to figure out how to break through. The first inkling of advertising is immediate turn off and destroy, for me.

Me: "Alexa, is cheese safe for dogs?"

Alexa: "Today, prominent politician Nosferatu was accused by the opposition of baby-cannibal sex trafficking. Nosferatu says that these charges are baseless as global warming will certainly kill everyone in painful ways by next Tuesday at exactly 3pm. In further news, Amazon has added more advertisements to this device for only a small additional charge..."

If I wanted to feel like crap every time I go to the kitchen I'd put a scale in there. /s

I find this a really interesting observation. I feel like 3-4 trivial ways of doing it come to mind, which is sort of my signal that I’m way out of my depth (and that anything I’ve thought of is dumb or wrong for various reasons). Is there anything you’d recommend reading to better understand why this is true?

I would say the current generation of LLMs that "think harder" when you tell them their first response is wrong is a training grounds for knowing to think harder without being told, but I don't know the obstacles.

an LLM just needs to return something that is good enough for average person confidently to make money. if an LLM said "I don't know" more often it would make less money. because for the user this is means the thing they pay for failed at its job.

The person I responded to, who seems like someone who definitely knows his stuff, made a comment that implied it was a technically difficult thing to do, not a trivially easy thing that's completely explained by "welp, $$$", which is why I asked. Your comments may point to why ChatGPT doesn't do it, but they're not really answering the actual question, in context.

Especially where the original idea (not mine) was a lightweight LLM that can answer basic things, but knows when it doesn't know the answer and can go ask a heftier model for back-up.

By the way model's don't "know". They autocomplete tokens.

> Your comments may point to why ChatGPT doesn't do it

Any commercial model which is most of them...

https://arxiv.org/abs/2509.04664

Amazon at one point was going to have a big facility in Boston as I recall focused on Alexa. It's just an uninteresting product that, if it were to go away tomorrow I wouldn't much notice. And I certainly wouldn't pay an incremental subscription for.

This is the part that hasn't made much sense to me. Maybe just.. have a better product?

As you quoted above, "most of those conversations were trivial commands to play music or ask about the weather." Why does any of this need to consume provider resources? Could a weather or music command not just be.. a direct API call from the device to a weather service / Spotify / whatever? Why does everything need to be shipped to Google/Amazon HQ?

So there's no way for them to do anything without sending it off to the datacenter.

It was out of date 6 years ago.

"This breakthrough enabled us to create a next generation Assistant that processes speech on-device at nearly zero latency, with transcription that happens in real-time, even when you have no network connection." - Google, 2019

https://blog.google/products/assistant/next-generation-googl...

https://en.wikipedia.org/wiki/Nuance_Communications#Acquisit...

In my experience none of these voice assistance are accurate enough to trust with my money

This just doesn't translate to other job types super well, at least, so far.

1) They thought an assistant would be able to operate as an "agent" (heh) that would make purchasing decisions to benefit the company. You'd say "Alexa, buy toilet paper" and it would buy it from Amazon. Except it turns out people don't want their computer buying things for them.

2) They thought that an assistant listening to everything would make for better targeted ads. But this doesn't seem to be the case, or the increased targeting doesn't result in enough value to justify the expense. A customer with the agent doesn't seem to be particularly more valuable than one without.

I think that this AI stuff and LLMs in particular is an excuse, to some extent, to justify the massive investment already made in big data architecture. At least they can say we needed all this data to train an LLM! I've noticed a similar pivot towards military/policing: if this data isn't sufficiently valuable for advertising maybe it's valuable to the police state.

I think this also hits an interesting problem with confidence: if you could trust the service to buy what you’d buy and get a good price you’d probably use it more but it only saves a couple of seconds in the easy case (e.g. Amazon reorders are already easy) and for anything less clear cut people rightly worry about getting a mistake or rip-off. That puts the bar really high because a voice interface sucks for more complex product comparisons and they have a very short window to give a high-quality response before most people give up and use their phone/computer instead. That also constrains the most obvious revenue sources because any kind of pay for placement is going to inspire strong negative reactions.

Edit: IMO Apple is under-investing in Siri for that role.

Paraphrased: if you do things with the explicit goal to optimize revenue, it harms your business success. If you do things that optimize user experience and delight customers, it will provide more value long-term.

Voice assistants are in that latter camp, I believe. (And I think of this quote constantly as Tim Cook crams more ads into the ecosystem)

If anyone knows of an open-source alternative I could stitch together, I am all ears!

I have pretty strong views on privacy, and I've generally thrown them all out in light of using AIs, because the value I get out of them is just so huge.

If Apple actually had executed on their strategy (of running models in privacy-friendly sandboxes) I feel they would've hit it out of the park. But as it stands, these are all bleeding edge technologies and you have to have your best and brightest on them. And even with seemingly infinite money, Apple doesn't seem to have delivered yet.

I hope the "yet" is important here. But judging by the various executives leaving (especially rumors of Johnny Srouji leaving), that's a huge red flag that their problem is that they're bleeding talent, and not a lack of money.

Somebody will figure out how to use it—complementing Cloud-side matmul, of course—and Apple will be one of the biggest suppliers.

The reason why local LLMs are unlikely to displace cloud LLMs is memory footprint, and search. The most capable models require hundreds of GB of memory, impractical for consumer devices.

I run Qwen 3 2507 locally using llama-cpp, it's not a bad model, but I still use cloud models more, mainly due to them having good search RAG. There are local tools for this, but they don't work as well, this might continue to improve, but I don't think it's going to get better than the API integrations with google/bing that cloud models use.

[0]: https://github.com/ggml-org/llama.cpp/discussions/4508

They also already practice a concept of computational offloading with the Apple Watch and iPhone; more complicated fitness calculations, like VO2Max, rely on watch-collected data, but evidence suggests they’re calculated on the phone (new VO2Max algorithms are implemented when you update iOS, not watchOS)

So yeah; I can imagine a future where Apple devices could offload substantial AI requests to other devices on your Apple account, to optimize for both power consumption (plugged in versus battery) and speed (if you have a more powerful Mac versus your iPhone). There’s good precedent in the Apple ecosystem for this. Then, of course, the highest tier of requests are processed in their private cloud.

And don't worry, I'm sure some enterprising electricity company is working out how to give you free electricity in exchange for beaming more ads into your home.

* If you trust the OS vendor, why wouldn't you trust them to handle AI queries in a responsible, privacy respecting manner?

* If you don't trust your OS vendor, you have a bigger problem than just privacy. Stop using it.

What makes people think that on-device processed queries can't be logged and sent off for analysis anyway?

I envy your very simple, sedentary life where you are never outside of a high-speed wifi bubble.

Look at almost every Apple ad: It's people climbing rocks, surfing, skiing, enjoying majestic vistas, and all those things that very often come with reduced or zero connectivity.

Apple isn't trying to reach couch potatoes.

From there, AI integration is enough of a different paradigm that the existing apple ecosystem is not a meaningful advantage.

Best case Apple is among the fast copies of whoever is actually innovative, but I don't see anything interesting coming from apple or apple devs anytime soon.

The problem for other companies is not necessarily that data center-borne GPUs aren't technically better; its that the financials might never make sense, much like how the financials behind Stadia never did, or at least need Google-levels of scale to bring in advertising and ultra-enterprise revenue.

[1] https://apps.apple.com/us/app/resident-evil-3/id1640630077

Until the first Cambridge Analytica-sized privacy story hits a major cloud LLM provider, maybe.

With "Apple Intelligence" it looks like Apple is setting themselves up (again) to be the gatekeeper for these kind of services, "allow" their users to participate and earn a revenue share for this, all while collecting data on what types of tasks are actually in high-demand, ready to in-source something whenever it makes economic sense for them...

Apple has the ability and hardware to deeply integrate this stuff behind the scenes without buying in to the hype of a shiny glowing button that promises to do literally everything.

i think at this point it's pretty clear that their AI products aren't bad because it's some clever strategy, it's bad because they're bad at it. I agree that their platform puts them in a good place to provide a local LLM experience to developers, but i remain skeptical that they will be able to execute on it.

On the other hand all devs having to optimize for lower RAM will help with freeing it up for AI on newer devices with more.

Consumers don't care about whether an LLM is local, and one that runs on your phone is always going to be vastly worse than ChatGPT.

I see zero indication that Apple is going to replace people going to chatgpt.com or using its app.

All I see Apple doing is eventually building a better new generation of Siri, not much different from Google/Alexa.

People definitely will care that such private data stays safely on the phone. But it’s kind of a moot point since there is no way to share that kind of data with ChatGPT anyway.

I think Apple is not trying to compete with the big central “answer machine” LLMs like Google or ChatGPT. Apple is aiming at something more personal. Their AI goal may not be to know everything, but rather to know you better than any other piece of tech in the world.

And monetization is easy: just keep selling devices that are more capable than the last one.

So I don't see what unique advantage this gives Apple. These days people's data lives mostly in the cloud. What's on their phone is just a local cache.

Sorry, this just made shivers run up my back.

If I ask Gemini a question, I definitely want it to be able to search everything in my calendar, Gmail, Drive.

No shivers here. Do you get shivers from using the search box on your Google Drive too?

No clue how many google smart speakers sold either, but not reason to think it's lower than homepods really, they're 1/3 the price.

You can do that right now, on the stock market. Sometimes it's good to put your money where your mouth is, that forces you to correct your world view.

   it will become Generally Obvious that Apple has the best consumer AI story among any tech company.

Local LLMs will never be better than cloud LLMs. They can close the gap if/when cloud LLM progress stalls.

Let's not conflate Apple's failure in cutting edge transformer models with good strategy.

That being said, if people spend all their time interacting with LLMs for nearly everything, which is the direction we seem to be going in, what locks them in the Apple ecosystem?

I think you have steve jobs colored glasses.