Why health might be Apple’s AI profit center

Like me, analysts expect Apple to eventually charge for access to some Apple Intelligence features, which is why I think the biggest opportunity for the company involves AI-augmented fitness and healthcare.

First, the thesis: Analysts Neil Shah (Counterpoint Research) and Ben Wood (CCS Insight) both told CNBC they believe Apple will eventually attempt to monetize Apple Intelligence, potentially as part of its Apple One bundle of services.

Shah points out that AI has the potential to become more personalized to users over time. This is particularly true for Apple, which has been designing Apple Intelligence from day one to prioritize privacy in all it does. The company has even begun making servers to drive some of its AI services, and as the services those servers provide become more sophisticated, it makes sense to charge for the more advanced tools it offers.

Privacy + AI = ?

The winning combination of Apple Intelligence along with the personal data gathered by the company’s devices and the continued research that makes it possible for AI to work with information without ever actually seeing the inherent data can’t be ignored. It’s that combination (along with the health sensors inside Apple Watch) that make AI-augmented digital health services ripe for monetization.

Think about the services Apple already offers that relate to health. Fitness+ might be the fee-based service, but it is supported by the Health app, years of in-depth research into wearable devices and health, and amazing technological manifestations to protect heart health, women’s health — even fall detection, crash detection, and Emergency SOS via Satellite. Many of these features already rely on various forms of machine intelligence, but generativeAI (genAI) can be far more creative in using the data points Apple’s devices collect — privately and only visible to you.

If Apple does choose to monetize these AI products, it won’t have had to look terribly far for inspiration. Palantir founder Peter Thiel sat on the same tech advice panel as Apple CEO Tim Cook, and the former company is working extensively in AI in healthcare, particularly (and contentiously) with the UK’s National Health Service (NHS).

The NHS is also working closely to develop ways to use AI to support its services. “We’re already seeing great applications of AI technology, and more work is under way to fully harness its benefits and use AI safely and ethically at scale,” the NHS said.

But while Palantir seems to need plenty of NHS data to run its operations, Apple’s approach seems to require less of that because Apple strives to ensure it sees as little as possible. 

Would you pay for AI-augmented digital health?

Now, I don’t want to get into a relative conversation about the differences between Palantir and Apple’s approach to data privacy. I’m not a Palantir expert. But what does seem clear is that Apple’s billions of users might well be willing to pay for smart digital health services, and Apple Intelligence could deliver this.

Based on Apple’s direction of travel in digital health so far, these services would almost certainly focus on preventative health intelligence rather than actual remedies.

The intelligence would exist to provide early warning of symptoms, and to recommend what actions customers could take to handle a health crisis/intervention. Another manifestation (perhaps in conjunction with Apple’s satellite communications services) could be an international medical and emergency system for travellers.

Apple doesn’t need to base its AI monetization on health, of course. It has plenty of other strings for its bow. But one thing is certain — no company will spend tens of billions building cutting-edge services without attempting to recoup that investment down the line. With that in mind, I can’t believe Apple, which famously charges “reassuringly high” amounts even for things like spare iPhone charging leads, isn’t going to find some way to make money from Apple Intelligence.

Reading the room

Wherever it chooses to make that money back, I think it will look to where its core values around privacy, security, and intentionality in AI make the most difference. The company’s seemingly deliberate approach to introducing new features meets the public mood of a population that is becoming increasingly mistrustful of tech firms.

That means the solutions it has introduced so far provide value to most users while also protecting their privacy. Those services are almost certainly the thin end of a multi-billion dollar AI wedge, and Apple, more than most, understands the need to provide solutions that don’t scare customers. (Apple Pay on iPhone was also one of these, back in the day. Now it is the most dominant mobile payment system because Apple introduced it gently.)

This calm, measured intentionality will become increasingly visible over the coming two to three years as Apple puts the pieces in place to deliver fee-based Apple Intelligence services. 

Fees aren’t the only way in which Apple will hope to profit from AI. 

There are other options

Part of its payola should come in accelerating hardware sales as it ships the first end-to-end mobile-to-Mac ecosystem with AI inside and processors to power it up. 

Apple will also be hopeful that its developer communities identify amazing new ways to deploy the large language models (LLMs) it has created within their apps. That’s great for developers, of course, but also gives Apple the competitive edge it needs to maintain hardware sales while also grabbing its slice of App Store revenue action.

But crucial to all of this is that Apple’s AI should be seen as a service, which is what Apple is going to try to build on once the initial Apple Intelligence release is done. That’s going to merit the introduction of additional premium AI tools and services aimed at what people are already doing with their devices.

These could include more advanced email analysis tools to help productivity professionals stay on top of increasingly demanding in-boxes. They might extend to premium automated Keynote presentation design and creation tools.

But the most likely space in which Apple will explore the opportunity for more sophisticated AI inside its devices will be around personal health, at the intersection of science, privacy, and digital arts.

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