On January 9, 2007, the world changed forever.
That’s when Steve Jobs, wearing his signature black turtleneck, walked out on the stage at the Moscone Center in downtown San Francisco and introduced a revolutionary consumer electronics device…
…the first iPhone.
In 2007, you could already buy a BlackBerry that connected you to the internet.
You could browse the Web on a small display… fetch emails… and even play songs you’d downloaded to the phone.
But it wasn’t until the iPhone – and its large touchscreen – came along that people really got excited about using the internet.
Fast forward to today, and we all have touchscreen phones in our pockets that allow us to do just about anything we like online – stream videos, post to social media accounts, book airline tickets, or navigate new cities using maps.
Without smartphones, we’d still be able to go online. But we wouldn’t all have the internet in our pocket.
The internet wouldn’t be ever present in our lives like it is today. And Meta, Snapchat, TikTok, and other companies that rely on us accessing the internet through our phones wouldn’t be in business.
That’s why news that the company behind ChatGPT, OpenAI, is in talks with the storied designer of the first iPhone, Jony Ive, is so exciting. They want to create what’s being billed as the “iPhone for AI.”
If OpenAI gets it right, it could dethrone the iPhone’s 16-year reign. That would bring in a new era of AI devices and change the way we go about our day-to-day lives.
Three Phases of the AI Boom
The details of the new project are still unclear…
What we do know is that OpenAI and Ive want to create a new device that is a “natural and intuitive experience.”
We also know that SoftBank, the giant tech investing firm run by Masayoshi Son, is backing the project with $1 billion.
If the project works out, it will be a key milestone in my roadmap for playing the AI boom ahead.
Regular readers will know what I mean. But for new folks, the AI boom will play out in the same three phases the internet boom did – hardware, software, everywhere.
During the hardware phase, Nvidia, Advanced Micro Devices, and other chipmakers will ship the specialized semiconductor needed to make ChatGPT and other AI systems run.
AI systems – like our brains – need to be able to run a lot of computations at the same time. And the regular chips that go into our smartphones, tablets, and TVs don’t cut it.
So, a whole new infrastructure needs to be put in place. It’s like how we had to lay undersea cables and build giant data centers packed with servers before we could run the internet at scale.
During the software phase, OpenAI, Google, Microsoft, and other large software companies will use those chips to create AI-powered consumer apps.
AI assistant ChatGPT is the best known of these. But Google has its own version, Bard. And Microsoft is rolling out Copilot. It’s an AI assistant feature that will augment Word, Excel, PowerPoint, Teams, and its other Microsoft 365 apps.
But to get everywhere – mass AI adoption – we need a device like the iPhone that puts AI in everyone’s pockets.
It’s too early to say whether OpenAI’s device will be the next iPhone. But we need to start thinking about how an AI-based device could reshape our world… and what it means for us as investors.
So let’s dive in…
You Can Wear This AI Pin
Today, AI piggybacks off existing technologies. You can access it through your browser or app.
But these were designed to surf the Web, not to interact with AI.
You can already talk to the latest version of ChatGPT. And it talks back.
As I covered on September 27, it can also “see.”
You can give it an image. And it can make sense of it.
One example online showed a tester troubleshooting how to adjust his bike seat.
He took a photo of the bike and asked how to lower the seat height.
ChatGPT was able to correctly tell him what tool he needed… and walk him through how to do it.
We don’t know what the OpenAI/Ive device will be. But it could be as different as the iPhone was from the BlackBerry.
It might not be a phone at all. It might be a pin.
Take Humane’s AI Pin device…
It’s a wearable device you pin onto your clothing.
During a 14-minute presentation, co-founder Imran Chaudhri used the AI Pin to take a call, review emails, and get shopping recommendations.
What was so impressive is that the pin doesn’t have a screen. All you have to do is talk to it. And it projects answers on your hand…
Humane CEO Imran Chaudhri uses his wearable AI Pin device
Source: TED
And Chaudhri, like Ive, is a former Apple design whizz.
He was a designer and inventor at Apple for over 20 years. He worked on the iPad, iPhone, and Apple Watch. And he’s named on thousands of patents.
So, Ive may be thinking along the same lines.
And it’s not the only interesting AI wearable…
Another Easy Way to Use AI
On September 27, Meta announced the latest versions of its Ray-Ban smart glasses that integrate AI.
Meta’s partnership with Ray-Ban is its second generation of smart glasses. The newest model still allows you to take photos, record videos, and listen to audio. But it also has a built-in AI that can act on voice commands.
During a media presentation at Meta’s sprawling Silicon Valley campus, Mark Zuckerberg showed off some use cases for the AI glasses.
He asked the audience to imagine themselves grilling at a BBQ with friends and asking their AI-powered Ray-Bans a question about cooking times…
“Hey, Meta, how long should I grill a chicken breast for?”
Meta’s built-in AI can quickly answer these questions without you needing to pull out your phone.
Using the built-in speakers, the glasses respond directly to you. Based on early testers, the speakers deliver good sound quality… while being inaudible to those around you.
And Zuckerberg said this is just the start. He promised buyers that, next year, there will be a free software upgrade that will give the AI glasses sight.
You’ll be able to look at something and ask the AI about it.
Zuckerberg gave examples of the AI identifying monuments, translating signs in other languages, and helping to troubleshoot a leaking faucet.
Demos of how Meta’s smart glasses can “see” what you see
Source: Meta
As someone who wears glasses, this would be an easy way for me to use AI. I could put on my Ray-Bans and go about my day. I wouldn’t need another device to stuff in my pocket or wear around.
Don’t Let This Opportunity Pass You By
The iPhone burst onto the scene in 2007. And there were a lot of early adopters.
They recognized the iPhone as a breakthrough… and paid big bucks to own one.
But many of those early adopters made one critical mistake.
They didn’t invest in Apple at the time.
If you’d bought shares of Apple in June 2007 when the iPhone hit the market, you’d be up 4,490%, including dividends.
That’s enough to turn $5,000 into $229,500.
And as I’ve been showing you in these pages, smaller companies that were key iPhone suppliers also benefited.
Take Cirrus Logic (CRUS). It’s a Texas-based audio chip maker. It was a key supplier for the first iPhone.
The audio chips it made were integral to the iPhone’s sound system. So, they played a critical role in everything from voice calls to playing music and videos.
That made the company perfectly placed to benefit from the iPhone’s popularity.
The iPhone was such a popular product that investors piled into its key suppliers, too.
And because some of these suppliers were still tiny companies when all that investor money flooded in, the gains dwarfed even Apple’s early on.
For instance, when Jobs first announced the iPhone, Cirrus Logic had a market value of $640 million. By contrast, Apple was worth $73 billion.
Cirrus Logic returned 1,320% in the decade following the release of the iPhone. That’s roughly three times the return you’d have made buying Apple shares during that time.
That’s why you can’t be a bystander to the AI revolution.
These AI-powered devices are coming. And one of them will change the world.
But none of that matters if you don’t invest.
There are vanishingly few opportunities like this in your life. And often when they come along, we’re too young… or too busy with life… to pay attention.
If you’re reading this e-letter, it’s because you are in the position to invest in – and profit from – the AI boom ahead.
Don’t let this opportunity pass you by.
Regards,
Colin Tedards
Editor, The Bleeding Edge