Apple at 50: The next bet is AI

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As Apple turns 50 , the company that once defined personal computing — and later reshaped the modern smartphone industry with the iPhone — is staring at a quieter, but potentially more consequential transition.The next decade may not be about a single breakthrough device, but about whether Apple can evolve into an AI-first, services-led company without losing its hardware edge.Apple’s growth over the past five decades has come in distinct waves. The Apple II and Macintosh established computing, the iPod and iTunes reshaped media, and the iPhone created the modern mobile economy. More recently, growth has been steadied by services and wearables rather than a single breakout device.“Apple will focus on… growing revenue based on users, so they can sell more subscriptions, more services,” Francisco Jeronimo, VP for Data and Analytics at IDC EMEA, told The Economic Times. “This is one of the fastest growing components of the company… and it guarantees a low churn from users.”In a January 2025 note, Morgan Stanley analysts led by Erik Woodring wrote that “services remains Apple’s most durable growth driver,” citing high-margin subscriptions and ecosystem lock-in as key advantages. The note projected mid-teens growth in services over the next few years.That aligns with broader industry estimates. Nabila Popal, Senior Director at IDC, said services are “the fastest growing group,” though she does not expect them to overtake hardware revenues “in the next five years… but perhaps closer to 10 years,” contingent on how Apple executes its AI strategy.The opportunity, as Jeronimo points out, is still underpenetrated: “The percentage of users using those services is still very low… so there’s a massive opportunity for them to grow.”Even as services scale, Apple’s hardware ecosystem remains the core engine — and the foundation for everything else.“Smartphones… will remain an anchor for Apple’s revenues rather than a major growth driver,” said Prachir Singh, Senior Research Analyst at Counterpoint Research. Future improvements, he added, are likely to be “incremental.”That puts pressure on Apple to find new hardware categories. Not necessarily to replace the iPhone, but to expand the ecosystem around it.Jeronimo frames it as a strategy of “companion devices”: “When someone buys an iPhone, it’s likely they will buy a Mac… an iPad… an Apple Watch.” New devices — from smart glasses to rings — are about “slicing the cake into more pieces” to grow the installed base.Reports from Mark Gurman at Bloomberg and analyst Ming-Chi Kuo suggest Apple is working on several such bets like foldable iPhones, smart home hubs, and lightweight AR glasses. But timelines remain uncertain, with Kuo indicating foldables may not arrive before 2026 and true AR glasses closer to the end of the decade.Wearables, however, are seen as a nearer-term growth lever.“Wearables… have significant scope to become more intelligent,” Singh said, pointing to advances in battery efficiency and AI as enablers. But success will hinge on use cases, not just hardware.Jeronimo points to the Apple Watch as a template. “When they understood that the opportunity was with healthcare and well-being, the sales really went through,” he said. “That’s the same with other wearables… they need to bring the right use case for people to say, ‘I need this.’”That challenge is already visible in Apple’s mixed reality push. The Vision Pro, while technologically advanced, has struggled with adoption due to limited use cases and high pricing — a reminder that not every Apple product becomes an iPhone-scale success.Still, Singh sees spatial computing as “a longer-term opportunity… 5–10+ years,” with a potential portfolio ranging from high-end headsets to more accessible smart glasses.If there is one theme that cuts across every analyst conversation, it is that Apple’s future will be defined by how it handles AI.“This will be the defining year of Apple’s AI strategy,” Popal said, pointing to upcoming updates to Siri and deeper integration with external models. “If executed right, it won’t matter how late Apple was… the moment is now.”Jeronimo is more blunt about the stakes. AI, he said, is “probably the technology that is more detrimental for Apple long term, if they don’t get it right.”The shift is not just technical — it’s about how users interact with devices. “Smartphones are not smart anymore,” Jeronimo said. “AI enables a completely different experience… moving from apps to an intelligent assistant that acts on your behalf.”In that world, the interface itself changes. Users no longer open apps — they ask, and the system responds, pulling context from across services, devices, and data.Apple has begun moving in that direction with its “Apple Intelligence” push, combining on-device processing with cloud-based models. But critics argue it is playing catch-up.Even so, Jeronimo cautions against writing Apple off. “Apple was never the company that brought features first — they want to provide the best experience,” he said. “Consumers don’t care where it comes from… they care about the experience.”That could mean more partnerships. Both Jeronimo and Popal point to a model where Apple integrates multiple AI systems — potentially including those from Google or others—while positioning Siri as the interface layer.If executed well, Popal said, such an approach “may be the saving grace for Apple and provide consumers choice.”Overlaying all of this is the question of leadership.Tim Cook has led Apple for over a decade, steering it through supply chain crises, regulatory scrutiny, and a transition toward services. According to Popal, “there is no reason for anyone to demand a change” so far, given Apple’s consistent growth under his leadership.But succession is inevitable — and increasingly discussed.John Ternus, Apple’s senior vice president of hardware engineering, is widely seen as a leading candidate. Popal describes him as “a great suitor given his 20-year Apple tenure, technical expertise and involvement” across major products.If he does take over, the expectation is continuity, not disruption.“I doubt leadership change… will create a material shift in culture,” Popal said, noting that any successor is likely to be an internal candidate “ingrained in Apple’s vision.”Jeronimo agrees saying that Apple’s strength lies in leaders who understand its long-term philosophy. “They need someone who really knows the company… rooted to the basics,” he said, adding that the next CEO must also be “a visionary” capable of navigating new technological shifts.For all its strengths — brand, ecosystem, capital — Apple faces a familiar risk if it fails to adapt to a paradigm shift.“We’ve seen multiple times… companies that were at the top… like Nokia and BlackBerry,” Jeronimo said. Apple, he added, is acutely aware of those examples.For IDC, the biggest risk is clear. “Apple’s ability to execute a strategy in an AI-first world will be its next defining… moment,” Popal said. “That is the biggest risk.”Apple’s first 50 years were defined by category-defining products. Its next decade may be defined by something less visible, but more profound like the transition from a hardware company to what Popal calls “a leading AI-integrated solutions and services company.”That shift will not hinge on a single device. It will depend on whether Apple can connect its ecosystem — devices, services, and AI — into a seamless experience that users don’t just use, but rely on.Or, as Jeronimo puts it, the goal is simple, even if execution is not. Keep building products and services that “continue to excite their customers” — and stay ahead of whatever comes next.