> I think a ton of iOS apps will be replaced by ChatGPT/Claude

Sure, but I don't think it's usually the apps that people pay much money for. And on top of that, app store revenue is (from a rough estimation) 6-7% of total revenue (although it's high-margin). Apple would be entirely fine.

And if you're right that the phone of the future will be reimagined as centred around being an AI assistant: innovative device design, user experience, hiding technology, integrating software/hardware/cloud are all things that Apple is historically pretty good at (with hiccups and bad periods for sure, but other companies certainly aren't better in general).

▲ ethbr1 2 days ago | parent | next [-]

> app store revenue is (from a rough estimation) 6-7% of total revenue (although it's high-margin)

~15-20% of Apple's total profits at ~75% margin.

Investors are not going to like if that suddenly starts shrinking.

▲ dpoloncsak 2 days ago | parent | next [-]

Im not sure of the numbers, but I'd imagine a large portion of that are from their in-app-purchase fee, like taking cut from Spotify subscriptions and such. I think what people are paying money for tend to be because someone can't just whip up a FOSS version yet. Music licenses, branded games, cloud storage...

An LLM can probably whip up a music player app, but won't have the licenses to provide you the music.

An LLM can probably whip up someone akin to a free and single player Genshin Impact, but the whales want attention from other players.

An LLM can probably whip up some sort of SFTP from phone <-> Desktop for pseudo-cloud storage, but you still need to provide disk space

▲ benoau 2 days ago | parent | prev | next [-]

The catch here is this revenue is already being factored-out of their stock price because of the current status quo in America where apps can use third party payments without commission for at least ~8-9 more months and possibly for good, and they have been rushing to establish alternative services revenue to plug that hole.

The other avenue that AI is hitting their services revenue is the Google Search deal, it's a revenue sharing agreement and AI is eroding that revenue on Google's side.

▲ williamdclt 2 days ago | parent | prev [-]

I'd be surprised if Apple wasn't in a position to profit from AI in one way or another at least as much as they'd lose on the app store profits

▲ benoau 2 days ago | parent [-]

Their ability to profit "one way or another" is contingent on their ability to keep third party payments out entirely or make them so expensive nobody can use them - and that tactic doesn't seem likely to survive much longer.

▲ williamdclt 2 days ago | parent [-]

> Their ability to profit "one way or another" is contingent on their ability to keep third party payments out entirely or make them so expensive nobody can use them

Why? Off the top of my mind (far from an expert and not thinking about it very hard), they can profit from AI in the following ways that have nothing at all to do with the app store:

    - selling the best devices for local AI (which they kind of are with apple silicon and mac minis)
    - selling devices (mostly phones probably) with excellent AI integration that are superior to the competition (remains to be seen, but that's the sort of thing that Apple tends to be better at than the competition)
    - selling AI-powered services (not super convinced, I don't think Apple is excellent at services)

For example if they capture 10% more of the global phone market because iPhones became that much better than alternatives thanks to AI integrations, that'd probably offset decline in app store revenue.

Just throwing random ideas and numbers here, just making the point that shifting environment can weaken a revenue stream while strengthening (or enabling) others

	▲	benoau 2 days ago \| parent \| next [-]
		Sure they can keep selling hardware and try to sell their own services, but none of these are as high-margin or scalable as fees on everyone else's services. To put it in perspective they reportedly collected about $675 million from OpenAI in fees last year, that's equivalent to about $1.5-$2 billion revenue in hardware sales and TBD for AI services but certainly over $1 billion. https://www.macrumors.com/2026/03/20/apple-made-nearly-900m-...
	▲	satvikpendem 2 days ago \| parent \| prev [-]
		Services revenue is way more lucrative.

▲ aurareturn 2 days ago | parent | prev [-]

  all things that Apple is historically pretty good at

But do they have a better, more efficient, smarter AI model? Can they keep up with Anthropic and OpenAI's models?

Not to mention, Apple is going to want to not disrupt itself so they're going to deliberately slow down which opens up the opportunity for someone else.

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thepryz 2 days ago | parent | next [-]

They don't necessarily need to keep up. Apple's been working on building the APIs and underlying system that will allow AI models to be selected much like you select a default search engine in your browser. They've also been more focussed on developing small, special purpose models for on device processing of images, text, etc. and the silicon to accelerate them.

OpenAI, Anthropic, and others can spend billions on the infrastructure to train the models at a time when the technology is still immature and largely inefficient and then Apple can simply license the models as needed, giving the user the choice while potentially protecting their privacy. Once there's relative maturity in the industry, they can either continue to license the models, distill their own from them, or even train their own using others' infrastructure. To me, it's a smarter long term strategy even if it temporarily gives up their control of key technology.

Personally, it seems to be the smarter play and aligned with how Apple usually does things. They're usually not first to market but they're first to introduce a refined product that make people forget about everything that came before it.

	▲	aurareturn 2 days ago \| parent [-]
		I don't think the advantage is in iOS APIs. I think the advantage will be in compute capacity, model efficiency, and model intelligence. I get what Apple is trying to do. But it will still open them up to massive disruption and potential new entrants into mobile devices.

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_bohm 2 days ago | parent | prev | next [-]

Does it matter whether or not they have a better model? Is frontier-level intelligence needed for the kind of day-to-day tasks people use their phones for? I’m not convinced this will be a big differentiator in this area.

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aurareturn 2 days ago | parent [-]

I think it will be. Smarter, more efficient to inference, faster to inference. I don't think Apple will win any of these categories.

Therefore, I don't think they will be able to compete well in the new world.

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segfaultex 2 days ago | parent | next [-]

Training frontier models is heinously expensive. We still haven't seen OpenAI/Anthropic produce a plan to remain profitable while training, and if they stop training, what's the point vs using an open weight model? They have to keep training in order to stay ahead.

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givinguflac 2 days ago | parent | prev [-]

You still haven’t given a single example of anything that an app would be replaced by that any normal user would want, ever. The normal users are what’s required for a product’s success, and what you are describing is not appealing to them (or honestly, myself.) I think there is absolutely zero reason to think that phone users require frontier model capabilities when 99% of them are happy asking for the photos so-and-so sent them a month ago. Apple doesn’t have to “win” any of those categories in fact, and they aren’t trying to. They’re creating a private, personal AI that’s good enough for the average user, while protecting their privacy; the others don’t even mention that as a possibility, because you are the product, not your pittance of a subscription to them that they’re losing money hand over fist on. Your argument completely forgets that economics is a thing.

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aurareturn 2 days ago | parent [-]

Check my post history.

	▲	givinguflac 2 days ago \| parent [-]
		Literally read it, found nothing. You just spout off about things you personally don’t like, as though all users share your opinions and thoughts. Check the thread. You’ll see what I mean.

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williamdclt 2 days ago | parent | prev [-]

> But do they have a better, more efficient, smarter AI model

Why this question? I don't think that the way that anyone expects Apple to profit off AI is from selling models