Workflow
Apple Needs ‘Time' to Upgrade Siri; Services Revenue Dampened by Cost Hikes
AAPLApple(AAPL) PYMNTS.com·2025-05-02 00:55

Core Insights - Apple CEO Tim Cook stated that the company requires more time to enhance Siri's AI capabilities, acknowledging criticisms regarding its performance compared to competitors like Amazon's Alexa [2][3] - Apple anticipates a 900millionincreaseincostsforthefiscalthirdquarterduetotariffs,despiteeffortstoshiftiPhoneproductiontoIndiaandsourcingotherproductsfromVietnam[5][6]−Appledisagreeswithafederaljudge′srulingthatthecompanyisin"willfulviolation"ofa2021injunctionrelatedtotheEpicGameslawsuitandplanstoappeal[7][9]SiriandAIDevelopment−TimCookemphasizedtheneedforadditionaltimetomeethigh−qualitystandardsforSiri′sfeatures,whichhavefaceddelays[2]−CriticismhasbeendirectedatApple′sAIinitiative,particularlyregardingissueslikehallucinationsinnewsalerts[2][3]−Despitechallenges,CooknotedthatmarketswithAppleIntelligencesawstrongersalesoftheiPhone16comparedtothosewithoutit[4]FinancialPerformance−Intherecentquarter,Applereportedearningsof900 million increase in costs for the fiscal third quarter due to tariffs, despite efforts to shift iPhone production to India and sourcing other products from Vietnam [5][6] - Apple disagrees with a federal judge's ruling that the company is in "willful violation" of a 2021 injunction related to the Epic Games lawsuit and plans to appeal [7][9] Siri and AI Development - Tim Cook emphasized the need for additional time to meet high-quality standards for Siri's features, which have faced delays [2] - Criticism has been directed at Apple's AI initiative, particularly regarding issues like hallucinations in news alerts [2][3] - Despite challenges, Cook noted that markets with Apple Intelligence saw stronger sales of the iPhone 16 compared to those without it [4] Financial Performance - In the recent quarter, Apple reported earnings of 24.78 billion, or 1.65pershare,reflectingan81.65 per share, reflecting an 8% increase year-over-year, with total revenue of 95.4 billion, up 5% [11] - iPhone revenue increased by 2% to 46.8billion,whileMacrevenueroseby746.8 billion, while Mac revenue rose by 7% to 7.9 billion, and iPad sales grew by 15% to 6.4billion[11]−Wearables,home,andaccessoriesrevenuedecreasedby56.4 billion [11] - Wearables, home, and accessories revenue decreased by 5% to 7.5 billion [11] Supply Chain and Tariffs - Cook indicated that India is now the primary source for most iPhones sold in the U.S., with iPads, Macs, and Apple Watches primarily sourced from Vietnam [6] - Apple is diversifying its supply chain to reduce reliance on any single country [6] Legal Challenges - A federal judge criticized Apple for not complying with a previous injunction regarding App Store commissions, leading to potential investigations for criminal contempt [9][10] - Apple is also facing an antitrust lawsuit from the Justice Department, alleging misuse of its market power against developers [10]