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Perplexity AI is making moves in the smartphone market, and it could change the competitive landscape for tech giants. First, the company’s search functions have caused analysts to doubt Google’s (GOOGL) moat. Now, Apple (AAPL) seems to be next in the line of fire.
Perplexity announced a partnership with Motorola (MSI) to integrate its AI search engine directly into Motorola smartphones through “Moto AI” offerings. This comes as Perplexity is also in discussions with Samsung for similar integration. Meanwhile, Apple has been facing mounting criticism over delayed AI initiatives and reported internal struggles with its Siri virtual assistant.
Considering Apple is already losing ground in the AI race and its stock performance is suffering, Perplexity’s expansion into mobile devices is a new competitive pressure that is worth looking into.
Perplexity’s Smartphone Strategy Creates New AI Battleground
Perplexity’s partnership with Motorola is the first direct integration of its technology into smartphones. This has created what the company calls one of the “most comprehensive” integrations with a phone brand to date.
This integration will allow users to access Perplexity features even on the external screen of Motorola’s Razr foldable phones when folded. It will allow not just information retrieval, but also practical tasks like making restaurant reservations. Perplexity CEO Aravind Srinivas said that "Search shouldn’t be about endless links and ads — it should give the user directly what they want…”
The timing seems pretty smart because Apple is delaying a major Siri launch. Motorola users will receive a complimentary three-month trial of Perplexity Pro with the Deep Research feature, allowing Perplexity to gather valuable user behavior data beyond its typical user base.
Apple’s AI Struggles Have Been Severe
Apple’s AI projects have reached what Bloomberg’s Mark Gurman described as a “crisis” point, with key executives including CEO Tim Cook, software chief Craig Federighi, and AI lead John Giannandrea reportedly sharing blame for failing to deliver promised features.
Siri division senior director Robby Walke called the delays “ugly and embarrassing,” so the AI challenges seem pretty severe.
Apple did partner with OpenAI in June 2024, but this is reactive rather than innovative. Apple was dormant in the AI race for a long time by then. In contrast, Perplexity CEO Aravind Srinivas said that “Perplexity will make Apple Intelligence work.”
Apple Needs an AI Reset, But That’s Not All
Apple’s dominant position in premium smartphones is relatively intact despite Perplexity AI and other competitors rapidly advancing in mobile AI. Apple Intelligence was meant to make Apple products “profoundly different” and put users “on a different technology curve,” according to Cook, but the company has thus far failed to deliver on these promises.
I’d be cautious regarding Apple stock in the near term. This is less so due to Perplexity and its Siri AI delay, but more so due to the broader market fears and, of course, tariffs. Apple users are unlikely to switch to Motorola just because Perplexity has a better product than Siri for the time being. The company has bigger issues to worry about.
AAPL is still a solid long-term play, but trimming some positions like Warren Buffett did and moving that cash into more aggressive picks looks like a better and better idea.
