By Hannah Pedone

Apple has a grip on consumer technology through its iPhone business, but Meta is betting that the AI era warrants different types of hardware

Mark Zuckerberg's recent announcements around Muse suggest there's no guarantee that Apple's iPhone remains the dominant device in the AI era.

New Apple CEO John Ternus may want to watch his back, because Meta Platforms is making a play to upend the smartphone giant's ecosystem, analysts say.

Meta's (META) Muse AI assistant - along with related hardware offerings - highlights that Mark Zuckerberg's company is "developing products that directly attack" Apple's (AAPL) core business, according to Needham analyst Laura Martin.

This underscores what has now become the biggest investment risk for Apple shareholders, in Martin's view. She was referring to the idea that Meta, or another competitor, could build agentic AI systems and integrate them into their own hardware products, unseating the iPhone as a hub for consumer-technology interactions.

In a Thursday note to clients, she argued that Meta's recently announced rollout of devices such as keychains and glasses could pose a credible risk to Apple. While Apple makes various types of devices, Martin sees it as broadly a "single-product" company, with its iPhone front and center. But there's no guarantee that iPhones will remain the industry's dominant hardware product in the AI era.

When Zuckerberg launched Muse on Sept. 8, it intensified a race with Apple, according to Bank of America's Wamsi Mohan. He described a heightened competition to capture users' expression of "intent" - or tasks that people want to perform. Right now, iPhone users tend to pull out their iPhones for much of what they want to do technologically, but now there's pressure on Apple to maintain that grip.

Mohan pointed out in a client note on Tuesday that Meta's Muse reached 2.5 million downloads in its first two weeks, a sign that the agent's popularity isn't something to ignore.

Muse can directly access systems like Shopify's (SHOP) Shop Pay, and it has also partnered with Expedia (EXPE) and PayPal (PYPL). Through these and other partnerships, Apple may cede some of its power to decide which apps users see or access most in the App Store, and whether users pay for products through Apple Pay or other means, Mohan said.

Some of Apple's past choices may bite it. For instance, there are limits to how much user information and data Apple systems store because the company has maintained a privacy-oriented image. Various AI systems retain more information about their users in order to help agents execute tasks with more context. This could be a disadvantage for Apple and something that limits the potential of its Siri voice assistant, Mohan argued.

Another area where Apple has fallen behind Meta is in agentic commerce. Mohan explained that Meta has built payment systems through Stripe's Link agent wallet, which allows users to hide card information from merchants and AI systems. Mohan wrote that Apple hasn't "exposed Apple Pay to Siri in the same way."

Integrating agents into Apple Pay is a crucial step for Apple to compete with Meta and keep users locked into the Apple ecosystem via the payment process.

Apple isn't necessarily sitting still and reportedly has plans to develop general-purpose smartglasses similar to what Meta offers. But the highest-priority strategy should be to work on a Siri agent that pairs with Apple Pay, Mohan argued.

Meta and Apple did not immediately respond to requests for comment.

See also: The old new thing: Cisco and retro tech are back and forming the AI buildout's backbone

-Hannah Pedone

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10-01-26 1224ET