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Apple ( AAPL ) showcases AI integration at developer conference

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Revamped Siri, potential OpenAI partnership among

highlights

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Apple ( AAPL ) aims to allay investor doubts in AI race with

Microsoft ( MSFT )

By Aditya Soni, Stephen Nellis

June 10 (Reuters) - Apple ( AAPL ) kicked off its annual

developer conference on Monday, where the technology giant is

expected to showcase how it is integrating artificial

intelligence across its software suite, including a revamped

Siri voice assistant and a possible tie-up with ChatGPT owner

OpenAI.

More is at stake at the Apple Worldwide Developers

Conference (WWDC 2024) than in previous such events, as the

iPhone maker seeks to reassure investors that it has not lost

the AI battle to Microsoft ( MSFT ) even though it may have

forfeited a few rounds.

Apple ( AAPL ) will have to show the vast majority of its more than 1

billion users - most of whom are not tech aficionados - why they

would want the new breed of AI that has swept Silicon Valley,

analysts said.

The company began the event by showing off the latest

original series coming on its Apple TV+ streaming service.

It also demonstrated Vision OS 2, the latest software for

its mixed-reality headset that uses machine learning to create

natural depth photos. It introduced new gestures for the device,

along with increasing the size of the virtual monitor available

in Vision Pro.

"Apple ( AAPL ) will put on a show," said Ryan Reith, analyst at

market research firm IDC. "If they nail the landing, the

potential is to get the consumer actually interested in AI

because so far it has been mostly about enterprise."

Apple ( AAPL ) has been using AI behind the scenes for years to power

features on its devices, such as the ability of its watches to

detect crashes and falls. But it has been reluctant to tout how

this technology boosts functionality in its devices, as

Microsoft ( MSFT ) has done with the help of its early bet on OpenAI.

Microsoft ( MSFT ) overtook Apple ( AAPL ) as the world's biggest company by

market capitalization in January, and Apple's ( AAPL ) shares have

trailed those of other Big Tech companies this year. AI chip

giant Nvidia ( NVDA ) briefly overtook Apple ( AAPL ) last week as the

world's second-most valuable company, underscoring for some

investors a shift in power in the tech world.

"Apple's ( AAPL ) early reticence toward AI was entirely on brand.

The company has always been famously obsessed with what its

offerings did for its customers rather than how it did it," said

Forrester analyst Dipanjan Chatterjee.

"But then the AI silence got deafening. All that will change

on June 10," he said.

Apple ( AAPL ) uses the developer conference at its Cupertino,

California, headquarters each year to showcase updates to its

own apps and operating systems as well as to show developers new

tools they will be able to use in their apps.

SIRI MAKEOVER

Apple ( AAPL ) is expected to enable Siri to essentially control many

apps on a user's behalf. This has proven tricky as Siri needs to

understand the user's exact intentions and also how the app

works.

For example, if a user asks Siri to delete an email, Siri

needs to understand which email the user wants to delete and how

that function works on, say, Microsoft Outlook versus Gmail.

Apple ( AAPL ) tried to make Siri smarter in 2018 with tools that

allowed developers to code into their apps ways for Siri to have

more control, but few showed interest.

Now, Apple ( AAPL ) is expected to revamp Siri's underlying software

with generative AI. Media have reported that Apple ( AAPL ) and OpenAI

struck a deal to integrate the ChatGPT maker's technology into

Apple's ( AAPL ) next iPhone operating system, iOS 18.

Some Apple ( AAPL ) investors are confident that the AI new features

will boost sales of new iPhones at a time when the company is

grappling with strong competition in China and slower growth in

the U.S.

"This should translate into a strong hardware refresh cycle

for Apple ( AAPL )," in 2025, said Dan Eye, chief investment officer at

Fort Pitt Capital Group, which holds Apple ( AAPL ) shares. Eye expects

Apple ( AAPL ) to limit some AI features on older models to entice people

to buy newer phones.

CHIPS FOR AI

Earlier this month, Apple ( AAPL ) unveiled a new AI-focused chip in

its latest iPad Pro models and analysts expect the company to

offer details to developers on how they can use the chip's

capabilities to support all the new AI computing.

The company may also begin to talk about its own

cloud-computing capabilities amid reports that Apple ( AAPL ) was

planning to use its own chips inside data centers for the first

time.

Apple ( AAPL ) recently hired Sumit Gupta, a former Google and IBM ( IBM )

executive who worked on AI data center development at

both firms.

By using its own chips for cloud services, Apple ( AAPL ) can roll

out advanced AI features that devices cannot handle alone,

without requiring expensive processors from Nvidia ( NVDA ). The approach

also retains many of Apple's ( AAPL ) privacy and security features that

are baked in to the design of its in-house chips.

The developer conference runs until Friday.