Apple (AAPL) is preparing to undertake a pretty unpleasant AI test.
Google has unveiled the Pixel 11 series. With Gemini Intelligence incorporated much more deeply into the smartphone experience, it offers customers an AI assistant that can comprehend what they’re doing across messaging, calendars, maps, and other services, then help take action.
That’s important, since Apple is likely to launch an overhauled Siri powered in part by Google’s Gemini models.
That is, Google is not merely one of Apple’s AI providers. And it gives consumers a sneak peek of what a more powerful AI phone experience looks like before Apple launches its own version.
For Apple investors, there’s a more pointed question than whether the future Siri is just better than the existing one.
Can Apple use that same underlying AI tech and transform it into an experience appealing enough to protect the iPhone’s largest competitive advantage: a huge, loyal, installed base?
Google products director Rick Osterloh told CNBC that Pixel and iPhone are heading in “very different directions” and that Google believes AI might eventually be the main way people use phones, computers, and other gadgets.
Apple can’t afford to have Siri feel like a catch-up feature if that’s where the market is headed.
“For the last 10 to 15 years, not a lot has changed in how you use laptops and mobile phones,” Osterloh told CNBC. “But we think that’s about to change dramatically.”
Apple’s Siri reset now has a clearer benchmark
The Google Pixel 11 provides Apple with something it never had before: a live demo of the kind of AI experience it now has to match, CNBC noted.
Gemini Intelligence can extract information from messages, calendars, maps, and other Google services and advise or take next activities, such as researching travel choices or creating a restaurant reservation.
This is a significant leap from how most users now use AI. Instead of firing up a chatbot, asking a question, and then doing the task manually elsewhere, Google is putting Gemini further into the operating system so it can work across apps.
That’s just the sort of functionality Apple has been promised for Siri.
The irony here is that Apple is anticipated to leverage Google’s own models to help deliver it.
Now for Apple, the difficulty is integration, not model quality. If the two businesses are working with the same AI family, the competitive edge could be in how well each links that intelligence to the operating system, apps, user data, and device ecosystem.
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The big advantage Apple has is scale. Apple already has more consumer-facing handsets with generative AI capabilities than any other brand, Counterpoint Research told CNBC.
Apple doesn’t need to win the AI phone race by converting Android consumers first. It could unlock new AI possibilities for a vast installed base of iPhones.
It’s important to note, though, that Apple has spent years cultivating a reputation for smooth hardware-software synergy. So if its redesigned Siri is slower, less capable, or less intimately linked than Gemini on Pixel, people may notice right away.
Apple’s biggest strength could also become its biggest pressure point
The iPhone ecosystem is one of the biggest moats in consumer tech.
The user typically owns an iPhone, an Apple Watch, AirPods, a Mac, or an iPad. That makes it expensive and inconvenient to switch, and that has helped Apple sustain amazing customer loyalty.
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AI might either reinforce that advantage or proceed to destroy it. If Siri becomes seriously helpful across Apple’s ecosystem, the firm gets another layer of lock-in. A user who can ask Siri to coordinate messages, trips, appointments, apps, and devices could have even less incentive to quit.
But if Google can make Gemini considerably more powerful on Android, AI becomes a new incentive to think about switching.
That’s why Osterloh’s assertion that Pixel and iPhone are headed in “very different directions,” as Gadget Review noted, is so important.
Google is wagering that stronger AI integration may be a product differentiator, not merely a software function.
Now it’s up to Apple to show that the iPhone can make the same technology feel uniquely Apple.
Apple may have the installed base, but Google has the early showcase
The timing is especially awkward for Apple.
The Pixel 11 gives Google a chance to show off its latest AI features before Apple rolls out its revamped Siri experience.
Such developments can affect consumer expectations. If customers start to expect AI assistants to grasp context, work across apps, and take action automatically, the bar for Siri is raised quite a bit.
Apple can no longer simply make Siri smarter at answering questions. It needs to make Siri valuable enough to transform how people use the iPhone.
Google says the transition is coming soon. People may someday use phones, laptops, and other gadgets primarily through Gemini, Osterloh added.
Should that forecast come true, the smartphone interface may shift more significantly than it has in years. Programs may still be crucial, but consumers may increasingly rely on an assistant to determine which programs and services to run in the background.
That is another level of platform strength.
Today, Apple owns the iPhone interface. And tomorrow, the AI assistant on top of that interface could be just as critical.
Rising hardware costs make Apple’s AI challenge even tougher
There’s one more thing Apple investors need to monitor. The whole consumer-electronics business is afflicted with the same memory loss that is afflicting Google.
Shortages in RAM and flash memory are causing companies to hike the pricing of devices; Google expects further price increases, Osterloh told CNBC.
That matters for Apple, since AI-enabled iPhones require more memory and more powerful components.
If hardware costs continue to rise, Apple may be forced to make a tough compromise. It may absorb greater costs and compress margins, or pass those costs to consumers in the form of higher iPhone prices.
Either way, purchasers need to perceive AI as a big reason to upgrade, and that it is not happening now.
AI is just the sixth or seventh reason people replace a smartphone right now, CNBC noted, although AI has been climbing. That means Apple may need to educate consumers on why AI matters and convince them to pay more for gadgets.
What Apple investors should watch
- Rebuilt Siri: It remains to be seen whether Apple can match Google’s deeper agentic capabilities.
- Gemini integration: Apple will reveal the degree to which it can make Google’s AI technology feel native to the iPhone.
- Installed base: Apple’s huge population of AI-capable devices remains a major advantage.
- Upgrade demand: AI still is not a top reason most consumers replace smartphones.
- Memory costs: Higher component prices could pressure margins or force price increases.
- Ecosystem advantage: Apple needs Siri to strengthen its existing lock-in, rather than give Android a new selling point.
So, the imminent introduction of Google’s Pixel 11 matters to Apple for a reason that has less to do with Pixel sales. It gives Apple a picture of the competitive bar against which its next Siri will be measured.
Google gets to show off Gemini first, while Apple has the largest installed base.
Now both are seeking to answer the same question: Can AI become important enough to transform how people use their phones?
The stakes are especially high for Apple stockholders.
The company won’t have to invent the best AI model, but it will need to make the iPhone the ideal platform to use it.
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