Intel’s plunging stock price, which as of noon New York time on Tuesday was the lowest it has been since 2010, could cost the chip giant its coveted spot on the Dow Jones Industrial Average (DJIA).

It comes at a very difficult time for Intel, as it is trying to maintain its enterprise relevance in the face of more effective generative artificial intelligence (genAI) campaigns from the likes of Nvidia.

Reuters reported that Intel, which was the second technology company to join the DJIA in the late 1990s, was “likely to be removed from the Dow” because of a “near 60% decline in the company’s shares this year that has made it the worst performer on the index and left it with the lowest stock price on the price-weighted Dow.”

Analysts and financial observers were mixed on the ultimate implications for enterprise IT executives. On the one hand, Intel’s installed enterprise base is so huge that it is not likely to face any imminent danger. That gives Intel a couple of years to turn things around.

But genAI is the perception problem. If they are seen as lagging in that space, that perception could hurt them severely.

However Ryan Shrout, president of Signal65, thinks Intel’s huge installed base will provide a buffer. He spent almost five years at Intel before departing in September 2023, with his final role being Intel’s senior director for client segment strategy in the graphics and AI group.

“Even though Intel appears to be so far behind in the world of technology based on their earnings report and the race versus Nvidia in the AI space, you have to keep in mind that something like 80% of the client market — laptops and PCs — use Intel chips,” Shrout said. “Even in the data center CPU space, 70% or so are using Intel Xeon processors. If Intel disappeared tomorrow, nobody has the capacity to fill that gap.”

But Shrout echoed analysts and pointed to AI strategy, or at least the perception of that strategy, as the overwhelming cause of Intel’s current difficulties. 

“The competition that’s come into the market was allowed to come in because Intel didn’t see the writing on the wall for the AI movement. That’s a self-inflicted blind spot,” Shrout said. 

Intel has taken various steps to try and strengthen its financial numbers, such as recently having suspended its dividend and laying off about 15% of its employees, along with splitting its foundry operations from its design teams. 

“Intel CEO Pat Gelsinger and key executives are expected to present a plan later this month to the company’s board of directors to slice off unnecessary businesses and revamp capital spending,” said a Reuters report. “The plan will include ideas on how to shave overall costs by selling businesses, including its programmable chip unit Altera, that Intel can no longer afford to fund from the company’s once-sizeable profit.”

Forrester senior analyst Alvin Nguyen, who oversees their Intel coverage, said that he is still a fan of Intel’s long term strategy, but he sees various problems with their execution.

“Foundry is very expensive. It’s capital intensive,” Nguyen said. “They have made a big bet on the foundry business. If it works, they will have the best semiconductor fab process [in the industry]. If they win the foundry battle, people will look at them differently.”

Some have questioned whether Intel was wrong to decline to invest in OpenAI, but Nguyen said that he thinks it might have been the right decision for Intel. Indeed, he saId, “I am wondering if Microsoft today is questioning the wisdom of their decision [to invest in OpenAI].”

Nguyen added that Intel’s “push towards AI everywhere seems like a smart bet.” He added that Intel’s lack of position within mobile and IoT devices is a problem.

As for the prospect of Intel being removed from the DJIA, Nguyen doubted it would make much of an impact. “It’s just a status symbol. If they lose their Dow status, it’s more of a reputational hit than anything else,” he said.

Nguyen agreed with Shrout that Intel’s massive current installed base will insulate the company for at least a couple of years, giving them time to turn things around. 

“Intel is still in danger and the more hits they take, the worse their position,” Nguyen said.

Another Intel industry analyst is Mario Morales, the IDC group vice president for semiconductors and enabling technologies. 

“There is an ongoing battle for survival at Intel,” Morales said, adding that he thinks that splitting the company and selling off divisions may be the best move. “The parts of Intel are more valuable as pieces than as a whole.”

Morales’ sources have reported that Intel is “actively talking with more than 100 customers, but none of them have yet committed” to more major purchases, he said.

A critical problem for Intel in the perception realm is that they have been outsourcing too much; the manufacturing of both its Lunar Lake and Arrow Lake CPUs were almost entirely outsourced to Taiwan Semiconductor Manufacturing Company Limited (TSMC).

“Even Intel’s own products are being built somewhere else,” Morales said, suggesting that such a move is sending the wrong message to enterprise CIOs. This is happening just as those executives are thinking about creating their own on-prem operations for genAI deployments, in an attempt to gain more control than they now have in the cloud.

“Intel has always had a lot of technology that can enable genAI. They simply had the wrong product mix,” Morales said. As the industry moved from CPUs to GPUs, Intel didn’t move quickly enough, he said.

On an optimistic note, Morales said that there is industry precedent for exactly such a turnaround. Some ten years, AMD faced similar issues and overcame them.

“In 2014, AMD was a month or two away from bankruptcy,” Morales said, stressing that “because AMD was so close to death,” its CEO halted a wide range of side projects that were not central to their customers. 

“Intel has to suffer the tough pill [and decide that] ‘If we can’t lead (in a segment), then we can’t be in those spaces,’” Morales said. “It is well beyond a wakeup call. They are already late.”

In another interesting move that hints at a symbiotic relationship, ChatGPT maker OpenAI has reportedly followed Apple to become a lead customer for TSMC processors. Given the industry lead Apple has achieved with Apple Silicon, the move could be seen as tacit enthusiasm, rather than symbiosis, but follows reports Apple might stake an investment in OpenAI.

These moves by the biggest names in tech underscore the profound difference generative AI (genAI) has made in artificial intelligence, which has taken what’s been part of the industry for decades and placed it at the forefront of the zeitgeist. That Open AI plans to work with TSMC can also be seen as justification of the integrity of Apple’s approach to silicon design, as it concedes the computational power these processors provide while meeting real world needs in terms of energy supply.

The first OpenAI chips under the purported deal are set to slip off the lines some time in 2026.

A new platform battle?

As Apple stands at the cusp of becoming the world’s biggest multi-platform AI ecosystem, the move also hints at new competition down the road.  After all, it was only earlier this year that OpenAI CEO Sam Altman was reported to be getting into chip manufacturing. Now, the company has booked into early production of chips using TSMC’s A16 process, which are expected to enter production in 2026. 

Despite using the same foundry, the processors won’t be the same as Apple’s and will be designed apparently by Broadcom and Marvell.

While it is very possible that OpenAI wants to use its chips inside its own servers, it is also plausible it might also have plans to introduce its own devices, or to offer up its AI inside chips as options to other computer hardware manufacturers.

It takes energy to make things happen

Everyone with a passing interest in genAI recognizes that the scale of energy consumption required to deliver server-based services using the tech is very, very high. Even at this point in genAI deployment, the energy being used is higher than that required by some smaller nations — and those demands will only increase.

With that in mind, Apple’s M-series chip message around computational performance per watt turns out to be even more prescient than earlier believed. After all, if genAI is to be woven into global use, it must meet those needs without using all the world’s energy; reducing energy demands is mandatory. This also implies tech firms will continue to make major investments in renewable energy supply to drive those server farms, and suggests the carbon offset market will be forced to prove its legitimacy, rather than continuing to be a kind of 21st century equivalent of Papal Indulgences (as George Monbiot once described it).

Power, profit, people

The chips Apple makes deliver excellent computational performance at significantly less power than rival processors. Once Apple’s production moves to TSMC’s A16 process, you’ll see another 8-10% spike in performance for up to 20% less power, a report claims.

That’s great for Mac, iPad, and iPhone users — who doesn’t want more powerful devices that use less energy? But for server-based services handling millions of requests daily, that power difference affects both environmental performance and operational costs in terms of energy bills.

With that in mind, OpenAI doesn’t need to be looking to become a hardware competitor to unlock value from chip design; its own running costs will be reduced dramatically through the introduction of more efficient chips — particularly as the number of people it serves grows from millions to billions.

While people in tech might see AI everywhere, most people haven’t begun using genAI tools and services just yet — something which is going to change within the next few weeks as Apple ships its AI-ready devices, starting with the next iPhone.

But if the direction of travel is anything to go by — a trajectory in which Apple and Microsoft seem set on investing in a company that could yet compete with both of them — it seems the people at the summit of Tech Power Mountain don’t merely see OpenAI as a service provider, but as a peer player in the future of IT. We just have to hope that neither they, nor the AI, are hallucinating.

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Download the September 2024 issue of the Enterprise Spotlight from the editors of CIO, Computerworld, CSO, InfoWorld, and Network World.

According to credible rumors, Snap and Meta will soon unveil their next-generation AI glasses.

Snap might introduce its fifth-generation Spectacles at the Snap Partner Summit on Sept. 17. Features like a wider field of view and improved battery life could grace a production run of fewer than 10,000 units for developers. (The current 4th-generation Spectacles are also for developers only; Snap never sold them to the public.)

Meanwhile, Meta could well unveil its “Orion” project at its Connect conference, scheduled for Sept. 25-26. According to the latest tech chatter, Orion glasses are expected to be highly advanced augmented reality (AR) glasses with immersive technology and a design that makes them look like standard glasses. While Orion glasses won’t be available for sale right away, Meta is prepping around 1,000 units for demonstration and early developer exploration.

Both companies hope to kickstart a third-party developer ecosystem for high-quality AI-driven AR glasses that anyone can wear every day in polite society as ordinary eyeglasses. And while the developers are working on apps, the companies will work hard to bring down the costs of manufacturing the products.

This generation of glasses combines an AI voice assistant with AR holographic visuals plus all the features and functionality of Bluetooth earbuds (calls, podcasts, etc.). In theory, this is the Holy Grail of wearables — fantastic power, rich user interfaces, and invisible and inaudible to everyone around you. Wearing such glasses will make you feel like you know everything and are constantly aided by powerful AI.

Meanwhile, Meta’s Ray-Ban Meta glasses are the surprise hit of the year. The glasses look more or less like regular Ray-Bans but offer multimodal AI and an audio interface. They’re inexpensive because they don’t attempt visual output, only sound.

While the Ray-Ban Meta glasses are well-designed and well-made and equipped with quality speakers and microphones, the basic concept is easily replicable. Chinese companies accessing lower-cost components can make much cheaper glasses containing batteries, Bluetooth connectivity, speakers, microphones, and an app that connects to the hardware and gains access to generative AI (genAI) chatbots through APIs.

In other words, good-enough AI glasses are relatively easy and inexpensive to produce. That’s why the success of Ray-Ban Meta glasses has Chinese companies taking notice.

Wait, what’s happening in China?

Smaller Chinese companies are focused on the growing market for AI-powered smart glasses, aiming to compete directly with Ray-Ban Meta smart glasses. They’re coming from companies you probably never heard of:

• Superhexa: Backed by Xiaomi, Superhexa is a Chinese startup that has launched “Jiehuan” branded AI glasses that provide access to large language models (LLMs) and offer voice-guided navigation and AI chat features.
• Solos: Hong Kong-based Solos has introduced its AirGo Vision smart glasses, which enable voice access to Open AI’s ChatGPT. The glasses also have a detachable camera, which enables multimodal AI via GPT-4o.
• Even Realities: This Shenzhen-based startup makes G1 glasses featuring LED microdisplays. Although they don’t have speakers, they do output information in the form of visible green text.
• Liweike: Based in Hangzhou, China, this company developed smart AR glasses, unfortunately branded as Meta Lens S3 glasses. They integrate sports functionality with AI-powered voice interaction with the company’s AI chatbot. One standout feature is an integrated 120-degree ultra-wide 2K high-definition sports camera.
• Sharge: This company’s OptoX AI Glasses have a camera, speakers, and all the trimmings. Users can access ChatGPT-4o by talking and listening. Also, they can function like a dashcam, constantly recording and deleting while retaining only the last 30 minutes of video, which you can watch or keep.

As you can tell from this list, some companies are making audio-only AI glasses, some of which will cost less than $100. Other glasses add holographic heads-up displays, which could cost a few hundred dollars a pair. At least two of these products offer both cameras and interaction with the advanced GPT-4o chatbot, able to essentially do all the stuff from the May 13 OpenAI Spring Update (everything, of course, except get Scarlett Johansson’s voice), but through glasses instead of a smartphone.

Great glasses or cheap glasses?

To oversimplify the coming AI glasses market, the American companies will make them great, and the Chinese companies will make them cheap. The result will be an incredible selection of variable features, quality, and styles.

As a result, we’ll quickly arrive at a place where the question won’t be, “Why buy AI glasses?” It’ll be: “If you’re going to buy glasses, why wouldn’t you buy AI glasses?”

The AI glasses revolution will also eviscerate the in-the-ear earbud market and might damage the smartwatch industry. With audio in your glasses, why put plastic in your ears? And with apps, notifications, and information hovering holographically in space in front of your eyeballs, who needs it on your wrist.

Smartphones could even be affected. If a big holographic display in the lenses provides the main interface, then a big-screen smartphone might be unnecessary.

The emergence of AI glasses as a ubiquitous category creates interesting and valuable possibilities for enterprise and business apps running on the platforms, everything from factory training and instructions to board room presentation teleprompters.

Beyond that, we might eventually see the rise of BYOG — bring your own glasses — policies. Companies will also need to cope with this generation of glasses’ privacy and security implications. The prescription glasses employees rely on to see clearly will often have cameras and microphones capable of secretly recording anything. (Even Ray-Ban Meta glasses have a bright light that indicates when the camera is taking a picture or recording video, a system easily foiled, according to hundreds of how-to videos on TikTok.)

Social implications will abound. Today, we’re still trying to figure out the social norms around looking at a smartphone during a conversation. What happens when people can be looking right at you but secretly distracted by online content only they can see?

AI glasses are about to significantly impact business, society, and culture. This will become clear when Snap and — more importantly — Meta will likely demonstrate the future of AI glasses to developers and the public.

Salesforce, which offers cloud-based customer relationship management (CRM) software, is eyeing a new pricing model that would require customers to pay per AI chat every time Salesforce’s AI-based services are used for a conversation, According to The Register.

Speaking to investors, Salesforce CEO Marc Benioff has said that his goal is for the company to introduce 1 billion AI agents into the user environment through the Agentforce AI platform by the end of fiscal year 2026. And thinks the price per call will be around $2.

The pricing model is designed to reflect the value Salesforce believes its AI services offer and to give customers greater flexibility.

Apple isn’t paying OpenAI to carry support for the generativeAI (genAI) firm’s Chat GPT within Apple Intelligence, but it might instead invest in the Microsoft-backed company.

The Wall Street Journal reports that Apple is in talks to take part in a new funding round for OpenAI. If it follows suit, it will join Microsoft, Nvidia, and Thrive Capital in making an investment in the company, which would have a value of more than $100 billion.

A growing sense of union?

Such an investment would strengthen Apple’s existing partnership with OpenAI, announced at WWDC with the news that Apple Intelligence will integrate with ChatGPT, which will provide services Apple does not. 

The relationship meant Apple Fellow Phil Schiller briefly (almost) joined Microsoft on the OpenAI board, though in the end both Cupertino and Redmond stepped down from those seats.

Microsoft has allegedly invested $13 billion to acquire a 49% stake in OpenAI since 2019 and uses ChatGPT within its Copilot software. ChatGPT itself now has more than 200 million weekly users, a number that’s expected to swell once Apple ships iOS 18 this fall.

Apple is smart about intelligence

Word of Apple’s potential investment comes as the company prepares to introduce its next iPhone and new operating systems on Sept. 9. 

iOS 18 is expected to deliver Apple Intelligence (beta) support to US English users a few weeks after the iPhone launch, with Apple introducing additional AI features over time. With Apple Intelligence, Apple’s partnership means users can access ChatGPT from its devices, with the added security of no user requests or IP addresses being stored. 

(It is interesting that OpenAI chose to release its ChatGPT desktop app first on Macs shortly after the iOS integration was announced.)

That compromise between utility and privacy will protect average users, while for business users Apple will introduce MDM support that lets access to such features be disabled on managed devices; that’s something many in IT felt necessary in some data protection scenarios. 

Talking heads…

Reaction to Apple’s potential investment is interesting. Bank of America pointed out that, “a large direct investment by Apple into OpenAI could raise concerns on a potential AI partnership as a long-term alternative to Google search.”

The bigger picture is even more interesting. Apple Intelligence will be made available across all Apple’s big computing platforms: iPhones, including iPhone 15 and iPhone 16, and also M-series iPads and Macs. This wide array of supporting devices means the feature will be available to tens of millions of systems from day one, which also means ChatGPT will be natively supported on them.

This has led to a series of highly positive predictions from analysts. Wedbush Securities analyst Daniel Ives predicts a historic AI-driven iPhone upgrade cycle, arguing that 25% of the world (based on his estimates) will be engaged in AI requests using Apple devices.

Morgan Stanley analyst Erik Woodring also sees Apple Intelligence unleashing pent-up demand and estimated the potential upgrade market is around 40% larger than it was prior to the last hugely successful iPhone release, when 5G was added to the system. This also follows some relative weakness in recent iPhone sales as consumers await the new AI phone. 

Will it still be US-only?

Of course, one wildcard to these events is availability.

At present, Apple Intelligence is limited to the US, or to users outside the US willing to set their devices to US English. That means iPhone shoppers outside the US will not gain access to this integrated AI, which will limit the upgrade frenzy. Apple may already have a plan for this, perhaps extending the service to other English-speaking nations. 

However, the regulatory environment around these tools remains in flux, with new regulations emerging from nations worldwide; that state of uncertainty has already prompted Cupertino to announce it won’t ship these features into the EU until clarity over regulations is in place.

One more thing

The biggest takeaway remains this: Within a matter of weeks, Apple will be unique in offering a fully integrated AI experience across a range of platforms, from smartphones to computers and tablets. Serendipitously, these tools will be available at the same time Windows upgrades intensify, which allows Apple to work to switch PC users to its fully integrated, multi-device, multi-platform ecosystem.

It’s quite possible, if Apple gets this right, that its platforms could end up providing the privacy and security users and business need to fully exploit the potential of AI across every viable computing platform. With such a prize in sight, don’t be too surprised to see activity — and M&A — intensify in the coming months.

More from Jonny Evans

• Apple gives IT the power to switch off Apple Intelligence
• When was the last time a Mac caused a business disaster?
• What to expect at Apple’s Sept. 9 ‘Glowtime’ special event

Please follow me on LinkedIn, Mastodon, or join me in the AppleHolic’s bar & grill group on MeWe.