The reason for this is simple, Apple can bring AI to the consumer’s pocket by the billions, and is rumored to be sitting on one of the best AI models on the market today with comparable performance as OpenAI’s ChatGPT.
Apple’s installed active device base surpassed 2 billion in February this year, and “reached an all-time high in every geographic segment” at the end of the June quarter, according to comments from CFO Luca Maestri. The iPhone’s installed base also “grew to a new all-time high,” and is estimated to have nearly 1.5 billion active devices worldwide, after adding around 500 million active devices since 2019 – an 11.4% CAGR since then.
The opportunity for Apple to capitalize on AI arises from the combination of growth within Apple’s installed device base, along with increased engagement and adoption of paid subscriptions over time. Consumer interest in AI surged earlier in 2023 with ChatGPT garnering over 100 million active users and more than 1 billion visits monthly. Apple’s installed base offers the chance to more than 10x the number of individuals with readily available access to AI.
In Apple’s case, it has nearly three times the paid subscription base as Microsoft that it could target with an AI product, via a stand-alone service or in one of its three pre-existing service bundles. Regardless of the route that Apple chooses, there remains billions in revenue potential.