Apple's biggest problem is over-engineering and taking too long to ship. The Apple Car failed because they aimed for a fully autonomous vehicle instead of an iterative luxury EV. Similarly, the Vision Pro could have launched years earlier and been more successful with less "fit and finish."

Apple is deliberately avoiding the massive, capital-intensive data center build-out pursued by its rivals. The company is betting that a more measured approach, relying on partners and on-device processing, will appear strategically brilliant as the market questions the sustainability of the AI infrastructure gold rush.

Apple crushed competitors by creating its M-series chips, which delivered superior performance through tight integration with its software. Tesla is following this playbook by designing its own AI chips, enabling a cohesive and hyper-efficient system for its cars and robots.

Apple's seemingly slow AI progress is likely a strategic bet that today's powerful cloud-based models will become efficient enough to run locally on devices within 12 months. This would allow them to offer powerful AI with superior privacy, potentially leapfrogging competitors.

Apple is developing an AirTag-sized AI pin to diversify its hardware offerings. This move is not just about a new product but a strategic hedge to ensure Apple remains relevant if user interaction with AI shifts away from the smartphone, mitigating risk to its core iPhone business.

Apple isn't trying to build the next frontier AI model. Instead, their strategy is to become the primary distribution channel by compressing and running competitors' state-of-the-art models directly on devices. This play leverages their hardware ecosystem to offer superior privacy and performance.

Apple's internal AI software, including Siri, has faced significant delays. The strategic partnership to use Google's Gemini model has given Apple the confidence to accelerate its AI hardware roadmap, like the new wearable pin, by decoupling hardware innovation from its slower internal software development.

According to Bloomberg's Mark Gurman, Apple's 2018 hiring of Google's AI chief was a strategic disaster that left the company far behind in AI. The subsequent multi-billion-dollar deal to integrate Google's Gemini model into Siri is a stark admission of this failure, forcing Apple to rely on a direct competitor for core functionality.

The abandoned Apple Car project, despite being a failure, had a critical strategic benefit: it spurred the development of the Neural Engine. Originally conceived to power a self-driving car's AI, the chip was adapted and integrated into the iPhone, giving Apple a foundational piece of AI hardware it would have otherwise lacked.