This is what a service company should do - and Apple fails again, when it comes to its announced transformation into a service comoany. A service company is not bound to a hardware or an OS.
Apple is not a services company. Their services are there to add value to Apple Hardware, so it makes sense that they are either limited to their own devices, or work better natively.
Long story short. The cloud is not about hardware, AI is not about hardware.
Apple recently updated their M1 chip to support stable diffusion, and their own chips have been sporting their own neural engine for many years now. And I think this is how Apple will continue to approach AI moving forward. They. could do something like build stable diffusion into their own OS, continue to tweak their processors to run it well (or even better than the competition), with APIs made easily accessible to developers, allowing them to tap on said feature without needing to scale up their own infrastructure.
The end result is to steal users away from centralised image generation services like Dall-E, because having good-enough, on-device local AI generation capabilities would suffice in making users not have to visit those services in the first place.
But Apple misses this point - again. So while Apple still makes insane profits - it has nothing to offer for the future.
A reminder that Microsoft and Meta just dropped their plans for VR. Which I feel goes to the heart of what sets Apple apart from the competition like Microsoft - their ability to execute. Other companies try to dazzle the audience with some grandiose vision of the future, only for it to either be half-baked or cancelled long before said plan comes to fruition. Meanwhile, Apple will launch a product, then go on to iterate and support it year after after, which in turn gives consumers the confidence to hang around for the long term.
So it's not a given that Microsoft will be able to do anything meaningful with OpenAI, but less integrate it in a manner that's meaningful for the end user. Or pose any long-term threat to Apple.
Whether it's the present or the future, people are going to want their devices to just work. Maybe Apple is just another "boring phone company". However, I use a variety of Apple devices every single day (iPhone, iPad, MBA, Apple Watch, AirPods, Apple TV, Airtags, plus I am also subscribed to Apple One) and there really isn't anything that makes me want to jump ship.