Jack Sprat

“Jack Sprat” – A cartoon that illustrates how current incumbent FANGS are struggling to integrate AI hardware and software seamlessly, providing an opportunity for new entrants. 

Apple has long excelled at hardware/software integration, for example, 90% of iPhone users say the integration between Apple devices (e.g. iPhone + Mac + AirPods) is a key reason they stay within the Apple ecosystem. Yet, Apple has lagged in software over the last couple of years, most notably in the AI field where reports indicate that Siri’s accuracy and response speed are 25% and 30% worse than ChatGPT.

Meanwhile, Google’s Gemini AI outperformed ChatGPT-4 on benchmarks like MMLU, scoring 90% accuracy vs. GPT-4’s 86%, and now serves 350 million monthly users, yet its Pixel phones hold just 4% of the North American market – underscoring Google’s persistent hardware challenges.

Despite their shortcomings in certain areas, Apple, Google, and other FANG companies have collectively invested tens of billions of dollars into building out their AI capabilities – acquiring cutting-edge startups, hiring top talent, and scaling massive compute infrastructure to stay competitive in the race for AI dominance.

However, just as Apple redefined interaction with the iPhone and AirPods – and Google attempted with Pixel and Assistant-enabled devices – OpenAI has an opportunity to own the full stack: integrating its AI models with purpose-built hardware that prioritizes voice-first interaction, context awareness, and multimodal understanding.

Early indications of something in the works include OpenAI’s collaboration with Jony Ive, famous for designing the iPhone, and its recent hiring of hardware engineers, UX researchers, and supply chain experts.