OpenAI, the maker of ChatGPT, held a “Spring Update” event on Monday, where it announced a new desktop app, updated web UI, and the launch of its most advanced model, GPT-4o.
The demo showed how high-end devices, ranging from Macs and iPhones, can benefit from AI. By integrating voice, text and images, the demo also highlighted the ability of AI to significantly enhance productivity.
Much of the demo used Apple's (AAPL) “coherent” iPhone to reduce latency in real-time interactions.
In this context, analysts at Bank of America reiterated a Buy rating on AAPL, saying they expect the tech giant to be a “net beneficiary of AI at the edge” with “upside gross margin and momentum in services.”
Sam Altman, CEO of OpenAI, also said in a blog post that his company has created “the best model in the world available for free in ChatGPT, with no ads or anything like that.”
“This may mean that OpenAI will monetize using other means and may not create a model similar to the licensing relationship between Apple (NASDAQ:) and Google (although such an arrangement cannot be completely ruled out),” analysts at Bank of America wrote.
Furthermore, they highlighted that OpenAI's GPT-4 model supports up to 1 trillion parameters compared to 175 billion parameters for GPT-3.
On-device models can handle between 7 and 10 billion parameters, however, the cloud provides the richest AI experience, analysts at Bank of America emphasized. However, monetization for AI platforms like OpenAI may involve advertising, subscriptions, or an app store model that exploits developer revenue from AI-enabled apps.
Currently, Apple's Siri software combines on-device processing with offloading to Apple's servers.
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Analysts at Bank of America also noted that the demo did not demonstrate practical latency or whether the on-device processing power and connection speeds were sufficient to support the use cases highlighted.
“In our opinion, Apple will increase the local processing power on the iPhone 16 with potentially increased RAM that could result in superior performance compared to previous models, creating a need for upgrades,” they said.