Who decided these features should go in the WWDC keynote, with a promise they’d arrive in the coming year, when, at the time, they were in such an unfinished state they could not be demoed to the media even in a controlled environment? Three months later, who decided Apple should double down and advertise these features in a TV commercial, and promote them as a selling point of the iPhone 16 lineup — not just any products, but the very crown jewels of the company and the envy of the entire industry — when those features still remained in such an unfinished or perhaps even downright non-functional state that they still could not be demoed to the press? Not just couldn’t be shipped as beta software. Not just couldn’t be used by members of the press in a hands-on experience, but could not even be shown to work by Apple employees on Apple-controlled devices in an Apple-controlled environment? But yet they advertised them in a commercial for the iPhone 16, when it turns out they won’t ship, in the best case scenario, until months after the iPhone 17 lineup is unveiled?

“Can anyone tell me what MobileMe is supposed to do?” Having received a satisfactory answer, he continued, “So why the fuck doesn’t it do that?” For the next half-hour Jobs berated the group. “You’ve tarnished Apple’s reputation,” he told them. “You should hate each other for having let each other down.” The public humiliation particularly infuriated Jobs. Walt Mossberg, the influential Wall Street Journal gadget columnist, had panned MobileMe. “Mossberg, our friend, is no longer writing good things about us,” Jobs said. On the spot, Jobs named a new executive to run the group. Tim Cook should have already held a meeting like that to address and rectify this Siri and Apple Intelligence debacle. If such a meeting hasn’t yet occurred or doesn’t happen soon, then, I fear, that’s all she wrote. The ride is over. When mediocrity, excuses, and bullshit take root, they take over. A culture of excellence, accountability, and integrity cannot abide the acceptance of any of those things, and will quickly collapse upon itself with the acceptance of all three.

We still believe that there will be a separation between the “application layer” companies and foundation model providers, with model companies specializing in scale and research and application layer companies specializing in product and UI. In reality, that separation hasn’t cleanly happened yet. In fact, the most successful user-facing applications out of the gate have been vertically integrated.

We predicted that the best generative AI companies could generate a sustainable competitive advantage through a data flywheel: more usage → more data → better model → more usage. While this is still somewhat true, especially in domains with very specialized and hard-to-get data, the “data moats” are on shaky ground: the data that application companies generate does not create an insurmountable moat, and the next generations of foundation models may very well obliterate any data moats that startups generate. Rather, workflows and user networks seem to be creating more durable sources of competitive advantage.

Some of the best consumer companies have 60-65% DAU/MAU; WhatsApp’s is 85%. By contrast, generative AI apps have a median of 14% (with the notable exception of Character and the “AI companionship” category). This means that users are not finding enough value in Generative AI products to use them every day yet.

generative AI’s biggest problem is not finding use cases or demand or distribution, it is proving value. As our colleague David Cahn writes, “the $200B question is: What are you going to use all this infrastructure to do? How is it going to change people’s lives?”