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Even before President Trump’s tariffs threatened to upend Apple’s manufacturing business in China, the company’s struggle to make new products was leading some people inside its lavish Silicon Valley headquarters to wonder whether the company had somehow lost its magic.
The tariffs, which were introduced April 2, caused Apple to lose $773 billion in market capitalization in four days and briefly lose its standing as the most valuable publicly traded company in the world.
Apple had hoped to revive its fortunes over the past year with a virtual reality headset, the Vision Pro, and an artificial intelligence system called Apple Intelligence. Sales of the headset have been a disappointment, however, and the signature features of the A.I. system have been postponed because it didn’t work as well as the company had expected.
Apple has been a decade since the releases of Apple’s most recent commercial successes: the Apple Watch and AirPods. Its services like Apple TV+ and Fitness+, which it introduced in 2019, lag behind rivals in subscriptions.
Half of its sales still come from the iPhone, an 18-year-old product that is incrementally improved nearly every year.
While Vision Pro sales have been disappointing, Apple’s issues with Apple Intelligence exposed dysfunction inside the organization.
It was the first time in years that Apple hadn’t shipped a product it had unveiled.
The A.I. stumble was set in motion in early 2023. Mr. Giannandrea, who was overseeing the effort, sought approval from the company’s chief executive, Tim Cook, to buy more A.I. chips, known as graphics processing units, or GPUs, five people with knowledge of the request said.
The chips, which can perform hundreds of computations at the same time, are critical to building the neural networks of A.I. systems, like chatbots, that can answer questions or write software code.
Apple declined to comment.
Apple’s issues underscored how its reputation for innovation, once considered a fundamental element of its brand, has become an albatross, fueling angst among employees and frustration among customers.
Apple needs to understand what happened because this is bigger than just rearranging the deck chairs, said Michael Gartenberg, a technology analyst who previously worked as a product marketer at Apple. If ever there’s been an example of over-promising and under-delivering, it’s Apple Intelligence.
Some details of Apple’s changes to its Siri team and challenges were previously reported by Bloomberg and The Information.
It was the first time in years that Apple hadn’t shipped a product it had unveiled.
Apple hasn’t canceled its revamped Siri. The company plans to release a virtual assistant in the fall capable of doing things like editing and sending a photo to a friend on request, three people with knowledge of its plans said.
Some of Apple’s leaders don’t think the delay is a problem because none of Apple’s rivals, like Google and Meta, have figured out A.I. yet, these people said. They believe there’s time to get it right.
As the clock ticks on fixing Siri, Apple will be defending the assistant’s current shortcomings. Last month, customers filed a federal lawsuit accusing Apple of false advertising. Since then, its commercials about Siri have gone dark.
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