John Gruber on Apple's AI dilemma: Siri AI is fine for normal users, but Apple has no path to the frontier

Speaker 1: A hustler. I don't know. Skier or something. Anyway, fun little trip down memory lane. We have Jon Gruber from Daring Fireball in the waiting room. Let's bring him in to the TVP in Ultra Dome for the second time. Welcome back to the show, John. How are you doing?

Speaker 5: Good. How are you guys? We're Great to see

Speaker 2: How's your summer been? Yeah.

Speaker 1: Hot. Hot? Has the has has the tech news been overwhelming or underwhelming this summer compared to previous summers? Oh,

Speaker 5: I'd say much

Speaker 1: busier. I wouldn't say overwhelming, but but definitely busier. It feels like the I don't know. I mean, at least the the there's like the traditional news, which is like a company does a thing. There's a process. Something launches. That felt that has felt very light recently, but then there is like the meta drama of like situational awareness blowing up and that stuff has been really, really crazy, like the hugging face hack and mythos and all these different stories that are sort of not planned in the same way of there's a release cycle. We all got to talk about the thing that goes through the PR term. You know?

Speaker 5: Yes. I don't think that there was a marketing schedule for when they're going to have a, Hey, our AI broke out of the sandbox and attacked a major partner of ours during a testing run.

Speaker 1: Well, it just depends if you believe in, like, the Truman Show thesis. So the simulation theory was like, now have the hedge fund explode.

Speaker 2: That will be the entertaining Well, the funny thing is there what there there actually was people that were making the allegation that the hack was just marketing.

Speaker 5: I think they don't mind. So I don't think there's a conspiracy and that it was fake or deliberate, but I do think there's a strong sense of, Oh, no. You mean that the news cycle for the next twenty four hours is going to be about how scarily effective intelligent our model is. You know, I do think that there is a

Speaker 2: laughing all the way to the bank aspect of it, even though it wasn't deliberate. Yeah, or like a parent watching their kid and like the, you know, play sports and like the kid runs up like, you know, a bunch of points on the other team and the and the coach has to talk to the parent and say like, hey, look, like your son is very good, but like he's gotta pass the ball a bit more. And like, it's not really that sportsmanlike to, you know, run up the score that crazy. You should focus on, you know Teamwork?

Speaker 5: Yeah.

Speaker 1: I heard while we're on conspiracy theories, I heard a funny one that the person that's the most happy about situational awareness blowing up is potentially Apple because they've been under all this pressure from memory. Situational awareness was, of course, very long memory. There's a flywheel there where the stock goes up. The memory gets more expensive. Now I I feel like the the the real take here is that, in fact, pumping up memory stocks is the best way to lower the price of memory because they will all fund CapEx, and that will ultimately make Apple devices cheaper. But how do you think about the pressure that Apple has been under around component pricing, supply chain pricing getting caught flat footed versus just reacting to what's happening in the world?

Speaker 5: It is extraordinary. And I really do think that to go the other way, I think Tim Cook's public remarks on it as being a once in a 100 year flood situation and that he's been looking at this market his entire career and there is no comparison point. And RAM in particular has always gone through these boom and bust cycles. And this is just a boom with a CapEx expenditure fueling it that is just such an extraordinary amount of money that it's like nothing else. I don't know that even though that Apple was caught flat footed, it's the situation you just can't prepare for. If you live on a floodplain, you take precautions and you build levies and you take out, you pay insurance that's based on that. If you don't live anywhere where there's ever been a flood before, you don't pay exorbitant amounts of money for flood insurance. You don't build levies and if something happens where you still experience a flood, well, then it's a catastrophe. Wouldn't even Catastrophe is a strong word, but Apple having to go through I guess it was just a month ago, but it feels like just speaking to how the summer is going, it feels like a while ago. But for them to come out and say, We're going to have to raise prices and then a week later raise prices mid cycle. Apple just does not do that. And for Apple, that's like a minor catastrophe. But I don't know what else they could do. I don't think there's any point where you could look back eighteen months ago and say, oh, well, Apple should have really foreseen this and somehow done something different. What could they have done?

Speaker 1: How how much do you see the the leasing program as a direct response to higher prices? Is this do do you think the leasing program is something that was rolled out because the prices were raised so abruptly? Or is this something that they've always been sort of moving towards this program was probably in the works three years ago, and Apple works on a long time cycle. And so this is just the natural arc of things because they've refresh had program where you could effectively subscribe for pre memory price spike, right?

Speaker 5: Yeah. They had the old iPhone upgrade program Yeah. Which was just for iPhones. And I think they've seen it as a success. And so I think this was sort of a natural 2.0 way of you know, and it's no no I mean, they're the ones who discontinued the old iPhone upgrade program the day that the new Apple upgrade program for all of their major products come out. I mean, you can even get like I think you can even get like AirPods on Apple upgrade. It's not just I for don't know. I think so. Interesting. Certainly like all the Macs, all the iPads. I think this was in the works. I do think that they've been mean, the whole consumer market is moving towards there's a lot of competition in paying over It's, you know, and for a while, I think that it was sort of at the consumer level just locked into credit cards. You get a credit card, you buy something and you pay the credit card company over time. And I think a lot of people just looked at that and thought, we're leaving money on the table because they're buying our products. It's not just Apple, but everybody is looking at that and thinking, well, is crazy. They're charging these consumers 13% or 14% APR. Well, how do we get involved in that? And Apple specifically, now they have the Apple Card, which is, I don't know, seven, eight, nine years old. I mean, it's been a while and they've had a program through that where if you buy an iPhone, you get twenty four months of zero interest. I think the big change though, it's all clearly about the fact that for so many people, I don't even want to pass judgment on them, but I think for some of them they are mathematically disinclined to be able to extrapolate a monthly payment by the terms they're agreeing to and realize this is what you're going to pay over time. Sure, sure. They just look at the monthly payment and they say, I pay that, and they look at the lump sum payment of $1,200 for the iPhone they want, and they say, I can't pay that. But if I agree to this, I can get a new iPhone. I can walk out of the store with an iPhone fifteen minutes from now. And so I think Apple just looked at that and thought, well, how can we offer something that's attractive? And the lease, I think the big difference with the lease is clearly that the monthly payment is even lower than the buy over time of the old iPhone upgrade program. But in either case, it is good for the consumer. And I know some really smart people who are like, I'm doing this because there's no interest on it. And if you do get a new iPhone every year, it is just an easy way to you don't really lose anything. You're not paying any interest penalty and you just have like an easy system and they mail you the box to send the old one back in every year. So I think it's just a way for Apple to sort of kneecap the number of people who were buying their iPhones with credit cards and paying interest penalties over time. So I think it's better for everybody. It feels like I could bundle the leasing program, the MacBook Neo

Speaker 1: into a Apple is going down market strategy. Do you think there are other plays that they will make to sort of calcify that strategy or really deliver on it? Or is this sort of like you think it's a pretty mature strategy that they have?

Speaker 5: I think it is incremental, let's say. There's these are not major moves. Even the MacBook Neo. I mean, I think the MacBook Neo is one of the certainly the most interesting Mac product since the Apple Silicon in 2020.

Speaker 1: Mhmm.

Speaker 5: There were a couple of times where MacBook Air has dropped to like eight ninety nine or something like that, but that nine ninety nine starting point had been the starting point for a base MacBook Air for, I don't know, at least fifteen years. And so when you consider inflation, the price has been coming down, but not down in the way that like, what's the entry model for an HP laptop or something like that, which is like $400 So to drop the entry price, not just by like $100 or $200 but all the way down to $599 I guess it's up to $699 now with the price increases, but still that is significantly lower. And I think they've been doing the same thing. Think on the iPhone side, the switch from selling SE models, iPhone SE that only get updated every three or four years to an annual schedule of having whatever the current number is, they stick an E at the end, 16E, 17E, there will be an 18E next year. Those are really low prices for a brand new iPhone that has the latest silicon. Mean, it doesn't have the greatest camera, but so many people do not care about the camera. And that camera on the e phones, it is fine. It's one camera on the back. It's a 1x camera that you can get 2x optical with the fancy sensor system that they have. It takes great photos. But it's the same sort of thinking where they're not going to sell years old products as their, fine, here's our affordable stuff. It's here's brand new stuff. It's just less technically advanced silicon wise, but it is brand new, right? The Neo is months old and it's at a record price. So they're incrementally moving down market. But I think only insofar as they think that there's people with money to spend. Yeah.

Speaker 2: Jordy? What percentage of the employees and the team over at Apple do you think are excited, truly excited about AI and think that it can make the Apple ecosystem significantly better over time? It feels like to me there's, like, very it feels like to me that the whole company is, ah, like why is this happening to us? Instead of saying like, hey, this is this useful set of tools that can make our software better, that can make our devices more magical to use. I that's a good And I do the last think thing I would say is, like, there's I don't know anyone who's excited about AI that's saying, like, I gotta go work at Apple because they have the best devices in the world. They have billions of users. Biggest opportunity. This is such an amazing opportunity. Like, if if I want to work on consumer AI, I have to go work there. Like, that's just I don't know anyone like that.

Speaker 5: Yeah. I think that's true. I don't either. But I don't know that it's a problem. And I do think clearly AI is where Apple was caught flat footed. I don't see how else you could describe that. And I think as time goes on, back at the WWDC from two years ago, 2024, when they first announced Apple Intelligence and then announced the stuff that eight months later was supposed to be rolling out and they were like, you know what, we're going to have to postpone this by a year. And really when they postponed it and said it'll be coming in the coming year, this is the coming year, right? And it still isn't really out. It's in the public betas this summer. It's coming out this fall. So they announced something that they were saying was going to come out to consumers be in people's hands in the first half of twenty twenty five and it's coming out at the end of twenty twenty six. And in this market, in the AI market, that is a big miss time wise. Now, ten years from now, will people look back at this and say, Wow, that was a huge gap of time? Probably not. When people look at the new Siri AI that's in the OS 27 betas right now, is anybody who really is juiced into the whole AI system saying, wow, they've really taken the lead here in any way. No, absolutely not. Right? This is very basic stuff. But it all does work. Is and it's going to be the intro to LLM based generative AI for hundreds of millions of Apple customers. Hundreds of millions of them have never used any of the stuff. However popular ChatGPT and Claude remain in the App Store, there are hundreds of millions of Apple users who've never used this. And I've been using ChatGPT in particular for years. I'm definitely not amongst my peers in the tech media. I use it less than most, but I'm pretty familiar with it. But I have to say testing it this summer ever since WWDC for all of the basic bitch questions, the Siri AI is great. And just being able to squeeze the side of the phone is a great way to do it. And I honestly think it's like what triggered OpenAI to have the fiasco of a launch of the new desktop app for ChatGPT? Clearly the biggest driver of that is their fear of missing out with Claude and Anthropic taking the lead as if you just polled everybody who watches TBPN, who's in the lead right now, I think it's very clear. I mean, think you'd be kind of nuts not to say anthropic. Yeah. It's verifiable based on Payroll. Revenue run rate. Yeah. So should Yeah. It's the state of things. Right? You just lick your finger, put it in the air, and who's got the momentum. Right? And that's put OpenAI seem to have, and still, I think, are panicking over that. They really seem to have formed a sense of self, which was that they had already won. Think somewhere around eighteen months ago or so, that whole company had the, We've won this already. We're just mopping up the chessboard at this point. And now they found out that they're in a long term race and they're not. So that's clearly the biggest driver is that they looked at the way Anthropic has bundled up Claude and Claude code and said, We need to do something more like that. But I do think, I absolutely think part of it is that the Siri AI app that Apple is rolling out, which visually, you just look at it, it looks like ChatGPT, right? It's black and gray. At a glance, if I showed it to you in May before WWDC and I just quick showed you a screenshot of it, you'd say, Oh yeah, that's ChatGPT. No, it's Siri AI. And I think that in the Apple world, we call it Sherlocking because there was the Sherlock thing twenty years ago where there was a Apple had an app called Sherlock and some third party developers made a much better version called Watson, and then the new version of Sherlock came out. Sherlock was Apple's first. Oh. Then there was a third party thing called I've heard the story the other way. I always forget it flipped. Yeah. Thank you. This is helpful. Right. No. And the third party one was called Watson and it was way cooler. And then the next version of Sherlock was like Watson. And it was sort of It's like tough luck to the outsider, but it's like everybody looked at Watson and was like, Oh, this is the way Sherlock should be. And Apple looked at it and thought, This is the way Sherlock should be. And Apple had this stance that was quite outspoken about it. Like Craig Federighi, I think it was with Joanna Stern last year, said that Apple did not see chatbots as a good interface to AI. That's right. Yeah. They're just like, You know what? It is a great interface to AI, so why don't And we make one I sort of think ChatGPT sees that for non advanced usage, nobody's going to go to these third party ones when Siri can answer that. No, is it exciting and is it where the people who want to work at the frontier want to work? Do they want to work at Apple? No. Why would you? They don't really have a product that's even aiming for that. But Siri AI isn't aiming for that. It's just aiming for the type of trivia questions that people just ask as like a one off, two off chat session. And it does a fantastic job. And it has these integrations with stuff like if you use Apple Mail, if you use iMessage, it finds stuff in your iMessages just like they promised. It really does work. All of the stuff that's in my Apple Notes, I ask questions about it and it just finds the answer to it. It's really, really useful. Is this impressive to people who've been following AI for the last three, four years? Not at all. But this is the Apple way, is take something that is super exciting, super cutting edge, and boil it down to its basic bitch core and put it in a way a usable interface that people will be normal people will be able to understand

Speaker 2: and give it to everybody. Okay. Let's Derek? Let's play it out a bit further because I'm curious where you where you imagine Siri AI goes. I've always felt similar to you in that, there's so many questions that you don't need, incredible, advanced intelligence. You just need a simple answer to something. And I can see a lot of that flowing through flowing through Siri. But where does this product go over time? Is this something because if you play it out far enough and the product gets enough traction, then at what point is Apple competing not just with other LLM providers, but competing with Google itself? And then they say, oh, we're for privacy and all these things, but then at what point do they say, hey, this is costing us a lot of money to run, we gotta start running ads. And then at that point, do we do targeted ads or non targeted ads, or do they try to take the moral high ground and say we're better than ads, even though they run ads in maps and they run ads in the app store and all these things. So play it out for me. How does this go? Let's assume that it's a success to the degree that they keep investing in it for many, many years to come.

Speaker 5: The ad question is interesting because obviously Apple never had to or never decided to make a search engine for Safari and they just sat on, you know what, we'll just have Google as the default and Google will pay us for the traffic acquisition and we all know from various court cases that how you know, however much they'd like to keep it under the radar, it's like 25,000,000,000 a year now and it had been in that range. You know, It's been a lot of money for a lot of time. And for a while in the early era of Tim Cook's services narrative, even though it was a lower number ten years ago, it was a huge percentage of Apple's quote unquote services. So Apple's Tim Cook said to Wall Street, our growth area is services and their services number kept going up, but it was really for a long while just the Google traffic stuff. Why would Google keep paying this much money? Because when people would search, see the Google results and what does Google show them? Ads. And there's a very simple, this is kind of, you see how this works for everybody. There's a sort of flywheel. Google gets all this traffic from the terrific audience, the demographically attractive Apple user audience and is obviously very profitable at showing ads and search results. They pay a significant portion of that to Apple to have it as the default in Safari and everybody just keeps searching in Google and everybody can kind of bitch about the ads that have gone into the search results, but people still use Google. What happens with Siri where there are no ads? How does that financial relationship work with Apple and Google for the back end? Like who's paying for it? That's a real mystery. And they've very and I every it's one of those questions where when the like Apple just reported results at the end of last week. Every time I've I I never listen because I find those calls in they're forty five minutes long and they feel like forty five hours to me. So I skimmed the transcript and I'm like, I would love if somebody could ask. And I don't think that they would answer,

Speaker 2: there's any kind clue about how It's interesting to me because Google is like, we're going to help Apple because we want to try to commoditize the LLM space because we're behind and our business is threatened for the first time because a billion people are using effectively another search engine, an answer engine. Right? They're using ChatGPT, they're using some Gemini, they're using some Claude, but like, obviously, by and large, that usage is going somewhere else besides Google. And so Google makes the call to support Apple and Apple's effort to try to commoditize the assistant category. But then through that, if you assume that partnership is gonna be successful, then what happens to their existing Apple partnership? And then what happens to search over time? And then even with even with a a group demographic, of, like, customers, like iPhone customers, if you there's a lot of people that are not gonna sign up and say, oh, I'll spend another $20 a month on on AI with Apple. Right? People already complain about the twice a month you see a charge from Apple, it's like, what's that charge? So the big question to me is Apple right now, to me, is positioning the entire company around being against ads and really pushing privacy. I see random out of home ads for Safari and it's finally private browsing. That is already counter positioned against Google, who is now their partner. And then eventually, I just think if you wanna serve this product to the entire Apple user base, they're probably gonna, it will probably make sense to do ads. Then at that point, do they dance with Google again and and use, like, the Google Ads network? But it's so hard to see where this actually goes.

Speaker 5: They are, but Apple is dipping its toes into ads, right? The App Store is ground zero for this, where when you search in the App Store, they have a big ad in the top spot now. And sometimes, if you're searching for, let's say, Signal Signal is the example I always go to because they don't pay. They don't seem to pay. But if the Signal group or whatever the organization is, Balance Signal, pays for an ad on the keyword signal, you can buy your own name as the top result, and then you get an ad, and then you get the second spot too because that's where you naturally show up. Or you search for Roblox or something that kids play and sometimes there's gambling apps that show up in number It's crazy. And now they've added a second spot in the third spot. For most things you search for in the app store, the top spot is a paid ad, often paid for by the app you're searching for, but they're still paying. Now they're like double dipping because Apple's taking the commission from the App Store transactions and making you pay to get the top spot. The second spot is the top natural search result and the third spot is another paid ad now. And I think that's off brand for Apple. I really do. I think it is I always go back to HBO which it just was When I was a kid, it just seemed too good to be true that you could watch movies and there were no commercials. What's the catch? Got to get your parents to spend whatever $10 at the time in the 80s, like $10 a month extra on the cable bill. But it seemed like such an amazingly good bill. Good deal. That's always been sort of the Apple thing. It's like, Oh, well, MacBooks cost more than other laptops and iPhones cost more than other iPhones. What do you get? Well, part of the experience is you don't get inundated with ads. And I go back to the Safari thing with Google search. It has been such a good deal for Apple. It is 20 to $25,000,000,000 in cash that just comes in. It is almost no margin. You can say that you could subtract mean almost 100% margin. Right? What's the salaries of the team that makes Safari and WebKit compared to $25,000,000,000 a year? It as close to 100 percent margin as anybody could reasonably get. It is year after year and it doesn't look like Apple is serving you the ads. You're just Joe Schmo Apple customer. You use Safari on your iPhone because it's the default browser. You search, you see ads. It looks like Google is showing you the ads but it's like Apple gets all this money and their hands are free. That really can't happen with Siri, right? They could partner with Google to have Google sell the ads but it's coming through the Siri It would be in theory in the future, it would be coming through the Siri interface. I don't think they'll ever do it. I don't think they'll ever put ads in Siri. And I think if anything, they'll put like a cap on the number of queries you can do that need the server. And I think ultimately,

Speaker 2: Yeah. The question is you just play it out, play it out, play it out. And how much of a threat like, is Google creating an even bigger monster than the one they were trying to, you know, keep down in Chateauty. Right? Like, if you make if you help make Siri a massive success and there's no ads, and I have gone a year ago, I didn't use ChadGBT for really any product based searches. Like I just still thought that Google was just objectively better if was looking up a car or a piece of clothing or anything like that. And more and more and more of that of those kind of searches, I've just ended up in chat because they have better images now and I can be like, hey, I'm looking at this exact type of product. Just go find it for me. Find me the cheapest version of it. And so you would expect that Apple Apple's like maybe like two years ish behind or maybe eighteen months behind in terms of AI capabilities, but I could imagine eighteen months from now Apple becomes pretty good at finding you a product that you want and you have Apple Pay built in. It's like they have your address. That's crazy. And so you potentially just fully cut Google out in a way that doesn't even necessarily, that becomes a cost center for Apple and sort of cannibalizes Google search revenue but doesn't even necessarily get Apple that much out of it itself. And then and then like you were saying with like on the App Store, you're right in that searching for an app and then being flooded with a bunch of what feels like spam on an Apple surface area, the Apple, the company that's meant to be dedicated to just giving you the most magical product experiences, it doesn't feel Apple at all searching on the App Store anymore because Apple knows exactly the app I'm looking for and yet they're serving And me junk, it's usually like And

Speaker 5: the Apple monetization for the App Store should just be the commission they charge on all the transactions through the App Store. And that's controversial enough and has been the source of antitrust and all sorts of complaints. But at least in terms of, well, how do you profit from the App Store? The story was very simple. They take 30% to 15% of every transaction and that should be good enough because you're paying and at some level as a consumer, have to assume that you're paying at least a little bit more for everything you buy through the App Store because Apple is taking that commission. And to double dip and show It'd be like HBO. You pay extra money and in the middle of the movie they'd have one commercial interruption, right? And it's like with the World Cup where, oh, they still don't have commercial breaks but they have hydration breaks. Right? That's sort what it feels like with the app store showing you these ads when you search. It's like, I'm just trying to find a freaking thing. How about you just fix search? And their search still kind of sucks. Jordi, I think your big question is what's in it for Google? Why is Google helping Apple here? And I it is from Google's And I don't think anybody knows. I really don't think anybody knows where any of this is going to be four years from now. It's so fast moving. But I think Google would rather dance with Apple who they know and they know what Apple culturally wants to do. Don't think there's any kind of Apple is doing AI research. They have AI teams and I think Apple would obviously love to handle as much of this on their own as they could. But is Google seriously, is anybody seriously afraid that four years from now Apple is going to be the producer of the leading edge models, the frontier models? Models, nobody. And I don't think anybody really thinks there's even like that they've got a path to that or that they're even trying for it. So I think Google is comfortable working with them where, well, in a way that they would just prefer to kneecap OpenAI Anthropic. And if there is, if Apple was fishing around for a partner, like we need somebody who knows their shit to give us an LLM back end so that Siri is actually useful. And I think Google was willing to cut them a sweetheart deal to say, Let's do And if entrenches Siri for a decade to come as something that a billion iPhone users around the world are relying on, we can handle that. We know Apple. We're not worried. That's not going to We'll still figure out a way that we'll make money. We'll still have everybody who's not using Apple products. But a world where like that two year ago deal with OpenAI, which now makes you laugh deterioration with to say the least between Apple and OpenAI at a corporate level. But if that had continued and it was OpenAI who was partnering with Apple to do this in a way and again, the original deal two years ago had ChatGPT branding in the answers, and it was like a Yeah.

Speaker 2: The whole thing is so funny because you got Google being like, okay, we need to help Apple because we need to help Apple attack ChatGPT because ChatGPT is threatening us. But if we if we are if Apple's really successful, then they'll end up threatening our core business. And Apple's like, well, I we also wanna take we also wanna try to kneecap ChatGPT because they're now building devices, but then it Google and Apple's relationship is just like headed on a pretty interesting path and I and I can't imagine I I think they both companies will look back and be like, man, you remember those days where I could just give you tens of billions of dollars, and we could just be friends? And then, you you play it all out, and it doesn't seem as friendly.

Speaker 5: Yeah, and I think basically it comes down to Google is very comfortable playing in a world where the technology is commodity level and that they can, because of their scale, they can not just succeed but thrive in a commodity world, right? Is the actual computer science behind Google search significantly better than what Microsoft has with Bing? No, not really. It's just that the scale is there on Google's side and so it's perpetuating. I think that if AI works out that way There was somebody at Google years ago who you know, Google invented all of this technology that we now consider AI, all the LLM stuff. But there was a paper that came out of Google where one of the scientists argued that there is no moat around this technology. No one company is really going to own this. I think it's an open question whether that's true or not. Superintelligence hypothesis is that if somebody gets to the breakthrough super intelligence first, that super intelligence will accelerate their AI at a pace that nobody else can keep up with and no one will ever be able to catch. I don't think that's where it's going and I don't really It just goes back to what we were talking about half an hour ago with the hugging face thing and chat GPT. It's like, oh, coincident. And this is what makes people roll their eyes and think it's a marketing stunt. Is then three or four days later, Anthropic came out with, Well, we went back and looked at our logs and we found Claude broke into somebody four months ago. We didn't even know it. They're even Steven. I just think ultimately Google looks at this as, Let's just shut those guys up. Let's let this bubble burst. We'll still be here. They won't. Apple will certainly still be here. Apple is the one big company with no exposure in this bubble. Yeah. That's true. And I think Apple's bet is back to there is no moat here. If they don't own this technology, it's fine. Yeah. And I kind of think it's shaking out that way, at least for Apple's business. Yeah. Well, last question.

Speaker 2: And you can answer in thirty seconds. Do you think Alright. Do you think Apple will make an acquisition of an AI company, could be an acquihire or product, but I'm thinking more acquihire, north of $10,000,000,000. No.

Speaker 1: I think we're just gonna have a 100,000,000. Yeah. One

Speaker 2: Okay. Then let's bring it down. 1,000,000,000. Because there's just not that many there's not that many great teams, to be honest, that you could get for less than I mean, bought Siri. That was a 100 And I was kind of expecting them to try to pick up Poka, which Cognition just bought. Poka was like a really nicely that worked in iMessage. And that felt like a no brainer for them to just bring in some talent that is excited about AI, that's already working in the Apple ecosystem.

Speaker 5: Yeah. I would look at it on the silicon side, I think because I think that as this gets commodified, I think that something like the PA Semi acquisition that led to Apple Silicon, that's who Apple, I suspect, is hunting for, is somebody who has a breakthrough spitball idea. And, again, at this point, $1,000,000,000 probably isn't that much, so something in that range. Like, I would think hardware, something that Apple can do for silicon. Yeah. If you have really optimized silicon serving,

Speaker 1: you know, lagging models that are a year or two old, like, the inference cost can actually be pretty low, then that changes all the calculations about ads that you were talking about.

Speaker 5: Thank you so much for And, joining ultimately, I think

Speaker 1: it's why Apple's staying out of the CapEx race and building out these data centers. It was just ways. The idea of why are we going to spend all this incredible sums of money, all of our free cash flow to build data centers that are going to be completely technically outdated five years from now. Yeah. Well, I want to have you back to have a great debate about electron versus native apps. We got to go through all this. Get to the bottom of what's going on with these AI labs. They have such powerful coding agents, and yet they can't ship native code, apparently. We'll get to the bottom of that next time you're on the show. But thank you so much for taking the time to come chat with us. Great. Have a great rest of your summer, And Yeah. Too cool out there. Thanks so much. Yeah. Talk to you soon. Goodbye. Cheers. Let me tell you about Figma.