Apple Lost the AI Race

Summary

Marques Brownlee stages a debate — with studio producer Andrew Manganelli jumping in — over whether Apple lost or won the AI race. The “lost” case is easy to make: when ChatGPT triggered the industry-wide paradigm shift, Google, Meta, and even Bing scrambled to ship, while Apple went silent and “literally refused to say AI in their events for months.” Two years of Apple Intelligence promises later, the new Siri had to be rebuilt from the ground up with help from Google. The classic defense — that Apple always sits back, lets early adopters work out the bugs, then steps in late with a polished ecosystem version — gets skewered too: Apple Intelligence so far has been writing tools, AI photo editing, and Genmoji, which the video dismisses as gimmicks nobody buys a phone for.

The counterargument reframes the whole question: the definition of “the AI race” is too narrow. Being OpenAI is one race; making the hardware everyone runs AI on is another. The fastest, most secure generative AI happens on device, and as local models improve, users will go to the cloud less and less — and Apple sells the machines that future runs on. Apple doesn’t make search engines either, yet it sells the device you do the Googling on. In that light, Apple Intelligence doesn’t have to be great; it just has to be good enough for investors to believe Apple is competitive, because you’re still buying an iPhone. Nvidia’s push to make ChatRTX a thing shows everyone wants a piece of that hardware pie.

The synthesis: there are two races. In race number one — frontier AI software — Apple “already took the L,” and in a world where company A pays company B a billion dollars a year, company B already won. In race number two, the finish line is on the horizon and Apple has a head start because it still makes the iPhone. The new Siri beta shows the ecosystem play (it pulls from iMessage, Calendar, and Photos in a way the ChatGPT app can’t), but it doesn’t excel at anything ChatGPT or Gemini doesn’t already do, can’t work in the background, and has far less personal context. The closing question: does an AI company build hardware good enough to pull people off the iPhone, or does Apple make its AI good enough to keep them there?

Highlights

”Apple waited for the first 100 million ChatGPT users to work the bugs out?”

“Oh, oh, oh, that’s what Apple Intelligence is? Apple waiting for the tech to get good enough for the first 100 million users of ChatGPT to work the bugs out? Like that can’t be right.” — Marques Brownlee, 2:00

Clip command

yt-dlp --download-sections "*2:00-2:45" "https://www.youtube.com/watch?v=eWKY0OnPByg" --force-keyframes-at-cuts --merge-output-format mp4 -o "apple-late-adopter-ai.mp4"

”I don’t think Apple Intelligence has to be that good”

“Yeah. Okay, hot take. I don’t think Apple Intelligence has to be that good.” — Marques Brownlee, 2:59

Clip command

yt-dlp --download-sections "*2:59-3:44" "https://www.youtube.com/watch?v=eWKY0OnPByg" --force-keyframes-at-cuts --merge-output-format mp4 -o "apple-intelligence-good-enough.mp4"

”And who’s gonna make that device? Apple.”

“So, in the future someday, you will basically never have to go to the cloud, you’ll do all your stuff on device. And who’s gonna make that device?” — Marques Brownlee, 4:04

“Like, they don’t do search engines either, and they sell you the device that you do the Googling on.” — Marques Brownlee, 4:12

Clip command

yt-dlp --download-sections "*4:04-4:47" "https://www.youtube.com/watch?v=eWKY0OnPByg" --force-keyframes-at-cuts --merge-output-format mp4 -o "apple-on-device-endgame.mp4"

”In a world where company A pays company B a billion dollars a year, company B already won”

“In race number one, the competition is so far ahead, Apple’s kind of already took the L. But they can’t look like they’re losing, so they have eventually cobbled together enough of an AI suite to not be embarrassing anymore. But I think it’s pretty clear that in a world where company A pays company B a billion dollars a year, company B already won.” — Andrew Manganelli, 4:56

Clip command

yt-dlp --download-sections "*4:56-5:30" "https://www.youtube.com/watch?v=eWKY0OnPByg" --force-keyframes-at-cuts --merge-output-format mp4 -o "company-b-already-won.mp4"

”Nothing prevents OpenAI from making a phone and taking everything from Apple”

“But also, there’s nothing to prevent OpenAI from coming along and making a phone and taking everything from Apple, the iPhone company. There are so many rumors of them working on something like that already.” — Marques Brownlee, 5:30

Clip command

yt-dlp --download-sections "*5:30-6:09" "https://www.youtube.com/watch?v=eWKY0OnPByg" --force-keyframes-at-cuts --merge-output-format mp4 -o "openai-phone-threat.mp4"

Key Points

The premise: Apple obviously lost (0:07) - Two years of scrambling on Apple Intelligence without delivering; “it’s so obvious that they lost”
The new Siri debacle (0:29) - Apple announced new Siri, didn’t deliver for two years, then started over from the ground up with help from Google
“AI race” is defined too narrowly (0:54) - Being OpenAI/ChatGPT is one race; making the hardware everyone runs AI on is another
Everyone moved fast except Apple (1:19) - Google went crazy, Meta turned the burners on, Bing was insane — Apple said nothing and avoided the word “AI” for months
The classic Apple late-mover defense (1:43) - Sit back, let early adopters find the bugs, then step in late with an ecosystem-polished version
AI was never a threat to Apple’s core business (2:29) - “They are the iPhone company and they sell the iPhone”
Apple Intelligence has been “kind of a joke” (2:45) - A trillion-dollar company watched ChatGPT, Gemini, Claude, and Meta spin up and still shipped little
The good-enough-for-investors thesis (3:04) - Apple Intelligence only has to convince investors Apple is competitive, because you’re still buying an iPhone
AI phone features are gimmicks (3:25) - Writing tools, AI photo editing, Genmoji — nobody buys a new phone for them
On-device is fastest and most secure (3:44) - Bigger, more capable models live in the cloud, but local models keep improving
The cloud becomes optional (3:57) - As on-device models get better, you go to the cloud less and less
Apple sells the AI machines of the future (4:12) - Local models with tons of memory need hardware, and Apple will be there to sell it — just like it sells the device you Google on
Nvidia wants the same pie (4:12) - ChatRTX is Nvidia’s play for a piece of the on-device AI hardware market, especially outside the US
Two races, two outcomes (4:56) - Race one (frontier AI software): Apple took the L. Race two (AI hardware): finish line far off, Apple has a head start
The billion-dollar tell (4:56) - If company A pays company B a billion dollars a year, company B already won
OpenAI phone rumors (5:30) - Nothing stops OpenAI from building hardware and taking everything from Apple; rumors say they’re already working on it
Siri’s ecosystem advantage (5:46) - New Apple Intelligence beta pulls from iMessage, Calendar, and Photos in a way the ChatGPT app can’t
Siri’s ceiling (6:09) - No background tasks, no coding, no persistent memory without the Notes app — basic stuff ChatGPT on iPhone already does
The closing question (6:29) - Will an AI company make hardware good enough to pull people off the iPhone, or will Apple make its AI good enough to keep them?

Mentions

Companies

Apple (0:07) - The subject of the entire debate: loser of the AI software race, potential winner of the AI hardware race
OpenAI (0:54) - The benchmark for winning the software race; later a potential hardware threat with phone rumors (5:30)
Google (0:29) - Helping Apple rebuild Siri from the ground up; “starts going crazy” after ChatGPT (1:19)
Meta (1:19) - “Turns the burners on” in the post-ChatGPT scramble
Samsung (3:00) - Alternative phone maker with better AI assistants for AI-focused buyers
Xiaomi (3:00) - Another AI-forward phone alternative
Nvidia (4:12) - Pushing ChatRTX to grab a piece of the on-device AI hardware pie

Products & Technologies

Apple Intelligence (0:07) - Two years of scrambling; “kind of a joke so far” (2:45)
Siri (0:29) - Announced, delayed two years, rebuilt with Google’s help; new beta integrates iMessage/Calendar/Photos (5:46)
ChatGPT (1:19) - The paradigm shift that started the race; its iPhone app already does what Siri can’t (6:18)
Bing (1:19) - “Insane for a couple of weeks” in the early scramble
Gemini (2:45) - One of the AI products Apple watched spin up; matches Siri’s abilities (6:00)
Claude (2:45) - Cited alongside ChatGPT, Gemini, and Meta as the products Apple failed to answer
iPhone (2:29) - Apple’s core business and its head start in the hardware race
Genmoji (3:25) - Exhibit A of gimmicky Apple Intelligence features
ChatRTX (4:12) - Nvidia’s on-device AI play
iMessage, Apple Calendar, Photos (5:46) - Personal data sources Siri taps that the ChatGPT app cannot
Notes app (6:18) - Siri’s only memory mechanism — it can’t remember anything about you without it

People

Marques Brownlee (0:07) - Host, arguing both sides of the Apple won/lost debate
Andrew Manganelli (3:00) - MKBHD producer, pressing the “Apple lost” case and the two-races framing

Surprising Quotes

“They literally refused to say AI in their events for months.” — Marques Brownlee, 1:19

“But this AI stuff was never a threat to Apple’s core business. Like you said it yourself, I watched your videos, they are the iPhone company and they sell the iPhone.” — Marques Brownlee, 2:29

“Yeah, no, I basically think it just has to be good enough for investors to believe Apple’s competitive or just doing something with AI, but it doesn’t have to be amazing for Apple to still be winning. Because you’re still buying an iPhone.” — Marques Brownlee, 3:04

“What do you think Nvidia wants to make ChatRTX a thing so bad? They want a piece of that hardware pie too, especially outside the US.” — Marques Brownlee, 4:12

“It also doesn’t remember anything about you without making notes in the iPhone’s Notes app. So it just has way less of that personal context. Like, that’s just basic stuff you can already do today with the ChatGPT app on the iPhone.” — Andrew Manganelli, 6:18

Transcript

Marques Brownlee: 0:07 Yo, I was just thinking about all this AI race stuff and how everything’s gone from zero to 100 and then Apple, they’ve just kind of been scrambling the past two years trying to build Apple Intelligence and haven’t really done very well yet. I just feel like it’s so obvious that they lost.

Marques Brownlee: 0:24 Won.

Marques Brownlee: 0:26 What? No, they lost.

Marques Brownlee: 0:27 No, they really won.

Marques Brownlee: 0:29 Wait, sorry, no. Are you trying to say that Apple, the one that announced the new Siri and then didn’t deliver on it for two years until they had to start over and build it from the ground up with help from Google, that Apple won the AI race?

Marques Brownlee: 0:54 See, I think your definition of the AI race is a little bit too narrow. Like obviously being OpenAI and having ChatGPT is one thing, but making the hardware that everyone runs AI on is a different thing.

Marques Brownlee: 1:19 Yes, but also I don’t think you can ignore how hard Apple has lagged here. Like I remember when ChatGPT first came out and everybody saw this as like the obvious huge paradigm shift, so if you’re a tech company you gotta move fast. So they did. Google starts going crazy, Meta turns the burners on, Bing was insane for a couple of weeks I remember all this action. And then Apple, just nothing. Just nothing from them. They literally refused to say AI in their events for months.

Marques Brownlee: 1:43 I know, but think about it, it’s Apple, right? Their thing has never been being on the bleeding edge of tech. They always sit back, let the early adopters figure out what the pros and cons and the bugs are, and then they’ll step in late with their own version taking it to the next level for their ecosystem, right?

Marques Brownlee: 2:00 Oh, oh, oh, that’s what Apple Intelligence is? Apple waiting for the tech to get good enough for the first 100 million users of ChatGPT to work the bugs out? Like that can’t be right.

Marques Brownlee: 2:11 But okay, obviously it’s past the early adopter phase. But not every technology has to be adopted like some kind of race. Like obviously tech companies are trained to see emerging stuff as a threat.

Marques Brownlee: 2:29 But this AI stuff was never a threat to Apple’s core business. Like you said it yourself, I watched your videos, they are the iPhone company and they sell the iPhone.

Marques Brownlee: 2:45 Okay, but you would expect still the company with trillions of dollars to spend would still see ChatGPT spin up and then Gemini and Claude and Meta and all this other stuff and would think, okay, number one, this is here to stay, and number two, we should build a version of our own that’s cohesive with our ecosystem. But Apple Intelligence has been kind of a joke so far.

Marques Brownlee: 2:59 Yeah. Okay, hot take. I don’t think Apple Intelligence has to be that good.

Andrew Manganelli: 3:00 Okay, but what if I’m not buying an iPhone? Like, what if I’m someone who really cares about AI? Then there’s so many other phones that I would buy before an iPhone, right? I would buy a Google phone, or a Samsung phone, or a Xiaomi phone. They all have the AI assistants and the writing tools and the, I don’t know, the photo editing, all this AI stuff that’s way better than what Apple’s been making.

Marques Brownlee: 3:03 What?

Marques Brownlee: 3:04 Yeah, no, I basically think it just has to be good enough for investors to believe Apple’s competitive or just doing something with AI, but it doesn’t have to be amazing for Apple to still be winning. Because you’re still buying an iPhone.

Marques Brownlee: 3:25 Yeah, but dude, everything you just mentioned is such a gimmick. Like no one’s actually buying a new phone just to use that stuff, really. Like it almost feels like Apple’s just playing along just to, you know, have some stuff that’s comparable. Oh yeah, here’s some writing tools, here’s some photo editing with AI and then of course the Siri improvements, you know, Genmoji.

Marques Brownlee: 3:44 And Genmoji, of course. But here, tell me if you agree with this. All of the fastest, most secure generative AI stuff happens on device, right?

Andrew Manganelli: 3:52 Yeah, and then the bigger, more capable models, that’s what you go to the cloud for.

Marques Brownlee: 3:57 Exactly. So as these on-device models get better and better, you go to the cloud less and less, right?

Andrew Manganelli: 4:03 Yeah.

Marques Brownlee: 4:04 So, in the future someday, you will basically never have to go to the cloud, you’ll do all your stuff on device. And who’s gonna make that device?

Andrew Manganelli: 4:11 Apple.

Marques Brownlee: 4:12 Maybe. Honestly, I don’t think maybe. I think definitely. Like, in this future where all these early adopters finally get their local on-device models doing tasks for them and running everything locally with tons of memory on these machines, Apple’s gonna be there to sell those machines. That’s where they fit into this AI puzzle. And just because they don’t do the software doesn’t really mean they’re losing. Like, they don’t do search engines either, and they sell you the device that you do the Googling on. So, yeah. What do you think Nvidia wants to make ChatRTX a thing so bad? They want a piece of that hardware pie too, especially outside the US.

Andrew Manganelli: 4:47 Okay, so what I, what I think I hear you saying is there’s actually two different races.

Marques Brownlee: 4:55 Yeah.

Andrew Manganelli: 4:56 In race number one, the competition is so far ahead, Apple’s kind of already took the L. But they can’t look like they’re losing, so they have eventually cobbled together enough of an AI suite to not be embarrassing anymore. But I think it’s pretty clear that in a world where company A pays company B a billion dollars a year, company B already won.

Marques Brownlee: 5:17 Fair enough.

Andrew Manganelli: 5:18 But in race number two, the finish line is way out on the horizon and Apple does have a bit of a head start because they still make the iPhone.

Marques Brownlee: 5:30 And Apple is going to protect that iPhone’s position with everything they’ve got. Now, they could still win that race in a way. But also, there’s nothing to prevent OpenAI from coming along and making a phone and taking everything from Apple, the iPhone company. There are so many rumors of them working on something like that already.

Andrew Manganelli: 5:46 Yeah. Okay, so Apple’s going to enter a new product category and they’re going to do it the exact same way they always do, which is by making it work the best with the iPhone. And actually, that’s what they’re doing with the—have you tried the beta, the new Apple Intelligence stuff? Like Siri pulls from iMessage and Apple Calendar and Photos in a way that the ChatGPT app cannot. 6:00 on the iPhone, never could. But Siri doesn’t like excel at anything that ChatGPT or Gemini doesn’t already do.

Andrew Manganelli: 6:09 Like we’re not coding apps or anything with Siri. It doesn’t even work in the background, so you can’t leave it and come back later for larger requests like you can in the others. It also doesn’t remember anything about you without making notes in the iPhone’s Notes app. So it just has way less of that personal context. Like, that’s just basic stuff you can already do today with the ChatGPT app on the iPhone.

Marques Brownlee: 6:29 Yeah, okay, so the real question is do you think an AI company’s gonna come along and make some new hardware that’s so good that I can get people to switch from the iPhone? Or do you believe Apple could make their AI good enough to keep people on the iPhone?

Andrew Manganelli: 6:58 Hey, what y’all talking about?