Tim Cook Admits Siri Needs More Time

In a candid revelation during Apple's earnings call, CEO Tim Cook admitted that the tech giant needs "more time" to enhance Siri's AI capabilities. Despite being a trailblazer as the first AI assistant on smartphones, Siri now faces mounting criticism for falling short against competitors like Amazon's Alexa.

Cook reassured analysts, stating, "We need more time to complete our work on these features so they meet our high-quality bar." However, when pressed for specifics on the delay, he noted, "It’s just taking a bit longer than we thought." This acknowledgment sheds light on the challenges Apple is grappling with in the rapidly evolving AI arena.

Siri's Setbacks Amid Apple Intelligence Issues

The setbacks surrounding Apple’s AI initiative, known as Apple Intelligence, have not gone unnoticed. Reports of miscommunications, or "hallucinations," in news alerts have sparked further concerns about Siri's performance. Luc Julia, one of Siri’s co-designers, suggested that Apple's pursuit of perfection might be slowing down advancements. Julia stated, "Generative AI is famously hard to completely control," highlighting the inherent difficulties in refining such technology.

Despite these hurdles, Cook emphasized that users appreciate Apple Intelligence, noting that iPhone 16 sales saw a significant boost in regions where the system was launched compared to areas that lacked it.

Impact of Tariffs and Supply Chain Shifts

In the same call, Cook addressed the financial implications of tariffs, forecasting a staggering $900 million increase in costs for the coming quarter, primarily due to existing tariff policies. He revealed that India is now the primary source for the majority of iPhones sold in the U.S., while other devices like iPads and Macs are predominantly sourced from Vietnam — a strategic move to diversify Apple’s supply chain.

Legal Woes and Antitrust Challenges

Adding to Apple's challenges, a federal judge recently accused the company of being in "willful violation" of a previous court ruling related to the Epic Games lawsuit. The ruling mandated that Apple allow developers to manage their own payment methods, thereby bypassing the hefty 30% commission. The judge's critical stance has prompted an investigation into Apple for potential criminal contempt.

Cook responded defiantly, asserting that Apple has complied with court orders, and confirmed plans to appeal the ruling.

Strong Earnings Yet Shares Slip

Despite these legal challenges and concerns over Siri, Apple reported impressive earnings for the quarter with a net income of $24.78 billion, equating to $1.65 per share, an 8% increase from the previous year. With total revenue reaching $95.4 billion, this marks a 5% rise. Yet, in after-hours trading, Apple shares fell 4%, closing at $204.86.

Looking at product revenue, iPhone sales grew 2% to $46.8 billion, while iPad sales surged 15% to $6.4 billion. The company, however, saw a 5% dip in wearables and accessories revenue, which totaled $7.5 billion. As Apple navigates these turbulent waters, one question remains: can Siri rise to the challenge?