Apple’s Q4 results show the enterprise tide turning to local AI

While delivering record Q4 revenue, Apple’s financial results revealed a $33 billion cost associated with memory price inflation, representing the true cost of the growing bubble of AI data center investments.  The results also showed something that threatens those same data center investments — a sea change in how enterprises are approaching AI. Inference costs, security, and data governance concerns may finally be dampening enthusiasm for cloud-based AI services. Enterprises go local Apple revealed several major enterprise clients who are turning to its products as solutions for local inference. The company told us that Gap Inc. is running AI loss-prevention models entirely on Mac minis to eliminate cloud token costs, while world-famous auction house Christie’s is using Mac Studio to run local pricing estimate models. Apple’s wider enterprise wins matter too. It told analysts and investors that as well as purchasing 25,000 iPads for pilots and mechanics, American Airlines is deploying over 37,000 iPhone 17 devices to flight attendants for in-flight purchases with Tap-to-Pay. In education, it revealed a huge deal with the Department of Education in the Philippines, which will deploy 170,000 MacBook Neos to teachers and staff. All these deployments help the company build up its mindshare, which should translate into future customer success and help it stay relevant in fast-changing times. But it’s really Apple’s pivot into AI that is tempting business users to make these purchases.  The hardware and the economics It’s not trivial that the company’s M-series and A-series processors are highly performant. It matters that you can patch together four Macs to create a powerful on-premises AI system more than capable of handling even highly complex AI calculations.  “From Mac to iPhone to iPad, we are proud that our products are the best platforms in the industry for AI for both first-party and third-party applications, and we’re excited about the opportunities that creates,” CEO John Ternus said. Look at it this way: If a Mac costs a few thousand bucks but can deliver the equivalent of tens of thousands of dollars of inferencing tokens during its lifespan, then it’s a bargain, not a cost. What Apple confirmed is that at least some enterprise purchasers are paying attention to this. Monetizing both ends Of course, the other side to AI is the need to build it, so it also matters that when it comes to the deployment of its AI APIs from within applications created by third-party developers, Apple is providing a lot more clarity. It is giving developers building apps with under two million downloads direct access to its powerful server-side LLMs completely free of token costs, it said. It has also introduced a three-tiered system for developers needing to use its Private Cloud Compute infrastructure. The company is also putting a little more flesh on its plans to charge end user customers for heavy access to its server-side queries through iCloud+.  What that means is that while delivering hardware capable of running on-device AI, Apple is also building an end user market for AI inferencing the Apple way, and equipping developers with the tools they need to attract end users to make use of its inferencing capacity in the first place. It is monetizing both ends of the story, while also enabling all parties to build success. That’s not just about building and maintaining AI relevance for Apple. It’s also about building up new business opportunity. Ternus pretty much confirmed this, telling analysts during the Q4 financial call, “in the beginning, iCloud tiers were largely about storage, but we’ve been adding more capabilities and features to it.” Siri agentic AI Ternus also talked up Siri AI. “With Siri AI, we really have the kind of the Siri that we always wanted,” he said. “It’s primarily request-based today, but as we talked about at WWDC, it’s built on a modern orchestrator-driven architecture that gives us real room to expand its capabilities over time. As far as agentic capabilities, we think these are promising tools for users. We just want to make sure that users are aware of what they’re giving access to.” Now please subscribe to my daily, human-curated Apple-related news headline feed at The Core, or follow me on BlueSky, LinkedIn, or Mastodon.