Tim Cook announced Apple will charge users for AI features through iCloud subscriptions. The phone costs $1200. The AI costs extra per month. Forever.
This marks the first time a company has successfully convinced consumers that the technology inside the device they already purchased should also require a recurring payment to function. Gyms tried this model in the 1990s. It worked because people are cowards who fear confrontation at the cancellation desk. Apple studied that business model and thought, what if we removed the treadmill entirely?
Cook called the hybrid AI strategy a "competitive weapon" which is technically accurate if you consider charging your own customers twice for the same product a form of warfare. The enemy is your credit card. The battlefield is your monthly statement. The casualties are retail traders who convinced themselves Apple stock would split again if they just believed hard enough.
Siri AI launches soon. It will presumably do all the things regular Siri does now, except you'll pay $9.99 monthly to watch it fail to set a timer. The hybrid approach means some AI runs on-device and some runs in the cloud, which is a fancy way of saying Apple figured out how to make you pay for both the hardware and the software that makes the hardware work.
Outgoing CEO Tim Cook seems confident. He should be. He built a trillion-dollar company by selling people glass rectangles that cost $40 to manufacture. Now he's selling them the invisible math inside the glass rectangle. Separately. While the phone still costs $1200.
Somewhere a retail trader is loading up on AAPL calls because "iCloud revenue growth" sounds like a thesis. That trader owns four subscription services he forgot to cancel and an iPhone 11 he's still paying off.
Photo by Brecht Corbeel on Unsplash
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