Sculley: Apple's AI Lag Threatens Cook's Reign, OpenAI's Rise

Apple's AI Lag Threatens Tim Cook's Leadership

Apple is facing mounting pressure to innovate in artificial intelligence, with former CEO John Sculley warning that the company's lag in AI could threaten Tim Cook's reign. Sculley, speaking at the Zeta Live conference in New York, highlighted OpenAI as a major competitor, emphasizing the need for Apple to catch up in the AI race.

Sculley criticized Apple's AI efforts, stating that AI "has not been a particular strength" for the company. Despite early initiatives like the launch of Siri in 2011 and the hiring of AI head John Giannandrea in 2018, Apple has struggled to make significant progress. Wall Street analysts have echoed these concerns, urging Apple to match the AI advancements of other tech giants.

Apple's Struggles in the AI Race

The release of ChatGPT in 2022 caught Apple off guard, exposing its vulnerabilities in the AI market. The company's "Apple Intelligence" AI strategy, unveiled in June 2024, failed to impress investors, and Siri's AI upgrades have been delayed until 2026. Giannandrea, once seen as a key figure in Apple's AI ambitions, has been sidelined, further complicating the company's efforts.

In a desperate move, Apple considered using AI technology from competitors like Anthropic or OpenAI to power Siri. However, recent earnings reports, which included $800 million in tariff costs, did little to reassure investors about the company's future in AI.

Tim Cook's Response and Market Impact

CEO Tim Cook has assured investors that Apple is restructuring and acquiring companies to close the AI gap. However, Apple's stock has declined about 1% this year, while competitors like Nvidia and Microsoft, a top OpenAI investor, have seen significant gains. Nvidia is up nearly 40%, and Microsoft is up 22%, highlighting the growing divide between Apple and its AI-focused rivals.

Some analysts have suggested that Cook should step down due to the lackluster AI progress, arguing that new leadership could revitalize Apple's innovation efforts.

OpenAI's Competitive Edge

Sculley pointed to OpenAI's agentic AI as a major threat to Apple, noting that subscription-based models are increasingly outperforming traditional apps. OpenAI's recent acquisition of Jony Ive's startup, Io, for $6.5 billion further solidifies its competitive edge. Ive, Apple's former design chief, will now create AI-first devices for OpenAI, drawing on his experience designing iconic products like the iMac, iPod, iPhone, and iPad.

Ive's focus on a family of AI-first products, without the distractions of Apple's broader ecosystem, could give OpenAI a significant advantage in the market.

The Transition to Agentic AI

Sculley believes that Apple's next leader should prioritize a transition from apps to agentic AI, emphasizing the importance of subscription models that cater to ongoing customer needs rather than one-time sales. This shift, he argues, is essential for Apple to remain competitive in a market increasingly dominated by AI-driven solutions.

As the AI landscape continues to evolve, Apple's ability to adapt and innovate will be critical to its future success. With OpenAI and other competitors rapidly advancing, the pressure is on for Apple to deliver meaningful AI progress.