Report: Apple scales back its AI ambitions and sticks to selling hardware

Competitors do the hard work of innovation, while Apple takes its share through App Store commissions.

After the launch of ChatGPT in 2022, many companies shifted to an AI-focused strategy, pouring billions of dollars into AI initiatives and centering their efforts around it. However, this approach didn’t work out well for all firms, and some have learned the hard way that they need to return to the basics. One of those companies is Apple.

As reported by Mark Gurman in this week’s Power On newsletter, Apple’s leadership is fully aware of its shortcomings in the AI market and acknowledges that the company is unlikely to become a leader in the AI race. Instead, Apple is adopting a new approach inspired by its past. Gurman says Apple’s new strategy, which will be unveiled at the Worldwide Developers Conference on June 8, is “selling highly profitable hardware and making money off the services that run on it.”

Apple is aware that few users may be willing to pay for a Siri subscription. Instead, the iPhone maker aims to embed just enough AI features into its hardware to prevent users from switching to Android, while opening the gates of Siri and Apple Intelligence to third-party services. “This approach leverages Apple’s hardware, makes its products more customizable and keeps the company in control of its ecosystem,” Bloomberg added.

The iOS 27 Extensions feature plays a key role in Apple’s new strategy. The feature allows users to install their preferred third-party AI chatbots and run them within Siri. Gurman says the feature will have a dedicated section in the App Store, enabling Apple to generate revenue through its 30% commission. At the same time, Apple is moving forward with revamping Siri by partnering with Google and using Gemini technology to bring more in-house AI capabilities to its users.

In short, Apple knows it’s not going to catch up with Google, OpenAI, and Meta in the AI race. So, it is sticking to its core strength, which is selling hardware, while maintaining control over its ecosystem and taking a cut from third-party AI apps and extensions on the App Store. This may seem like a solid strategy, but it remains to be seen how it will play out.

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Posted Monday 30 March 2026 at 5:29 am AEST (my time).

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