At a Fintech conference in New York put on by Fordham University in the spring of 2017, an AI expert made a bold prediction: Someday there would be a company with a market cap of one trillion dollars. He predicted that this valuation, which at the time seemed incredible, would be based on that firm’s extensive use of AI.
He was correct in at least one regard: Apple became the world’s first trillion-dollar company a little over a year later. But what of the second part of the prediction? Was Apple’s staggering valuation due to the power of AI? Are AI and, more broadly, data analytics, the key drivers of business growth?
Apple uses data analytics and AI extensively. Siri combines speech recognition and expert systems to give you reminders based on your location. Apple Music studies your listening habits and assembles playlists accordingly. Apple Fitness+ uses data from the Apple watch to help users build health. In 2018, Apple’s head of AI, John Giannandrea, was appointed to the company’s executive team.
Yet the same press release announcing Giannandrea’s appointment offers a fundamental insight into why Apple has been so successful. It notes that Apple “leads the world in innovation” — not AI. The company has spent decades creating entirely new product arenas and pioneering new business models around music sales (iTunes), app subscriptions (the App Store), cloud storage (iCloud), and digital payments (Apple Pay). It’s easy to forget that just 20 years ago, computers made up nearly all of Apple’s business. Last year, Mac products contributed just 10.4% of the company’s revenue.
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This article was produced by Footnote in partnership with Babson College and Baruch College (CUNY).