Apple sets sights on Prompt AI to supercharge smart home tech

Apple is reportedly in late-stage talks with the computer vision startup Prompt AI to acquire talent and technology that would help it upgrade its smart home devices and further enhance its position in the artificial intelligence market. 

First reported on by CNBC, the deal highlights Apple’s low-key but purposeful strategy of shaping its AI offerings through small acquisitions focused on buying talent rather than purchasing billion-dollar companies across the board.

Leadership at Prompt AI informed employees during an all-hands meeting that they were nearing the finalization of talks with Apple. Some staff would move to Apple as part of the deal, the company said, and those who did not would receive a less generous salary package and be encouraged to apply for open positions at the iPhone maker.

Before Apple entered final-stage talks, other proptech players, including xAI and Neuralink (which is coming from Elon Musk), had reportedly shown interest in acquiring Prompt AI, according to people familiar with the meeting. Yet Apple’s bid seemed to be the most strategically focused, with an emphasis on both the company’s technology and its research talent.

Prompt AI was established in 2023 by veteran AI researcher Tete Xiao, who holds a PhD in computer science from UC Berkeley, and Trevor Darrell, a co-founder of the Berkeley Artificial Intelligence Research (BAIR) Lab. That same year, the startup raised a $5 million seed round led by AIX and Abstract Ventures.

Xiao and Darrell are both respected figures in the AI community, known for their work in computer vision and deep learning — two areas where Apple has been quietly building its capabilities behind the scenes. Apple and the Prompt AI founders have not responded to requests for comment on the deal; however, sources familiar with it note that the acquisition is likely to close within the next few weeks.

Apple eyes Prompt’s tech for home automation

Seemour, the flagship app of Prompt AI, is certainly central to Apple’s attention. The app integrates with home security cameras and utilizes a sophisticated computer vision system to recognize specific individuals, pets, vehicles, and objects. It can send alerts, text messages, or answer users’ questions about what has been happening in front of the camera — a development that suggests a conversational interface for home monitoring.

However, while a technical success, the prompt AI failed to find a sustainable business model. At a town hall meeting, Xiao reportedly informed staff that the app and all user data would be deleted to safeguard privacy. This aligns with Apple’s robust stance on privacy, making them a well-matched partner on a cultural and ethical level.

Industry watchers believe that Apple will utilize Prompt’s technology for its HomeKit platform — the one behind devices such as light bulbs, thermostats, and security systems that run on Siri. That could potentially transform HomeKit from a largely reactive automation system into an intelligent home assistant that is responsive and intuitive — one capable of observing real-world activity and responding instantly to it.

Apple has historically been acquisitive of small AI and vision startups, usually to integrate their work into forthcoming products. In 2020, it bought Xnor. AI, a startup that does edge AI processing, which later helped improve Apple’s on-device image recognition features. 

Apple’s subtle AI strategy gains focus

Indeed, unlike rivals such as Google, Microsoft, and Meta, Apple has steered clear of splashy AI-focused purchases. And while it has made large acquisitions before, its biggest-ever deal is still the purchase of Beats Electronics for $3 billion in 2014. Rather, Apple has shown a preference for “acquihires” — strategic and tactical acquisitions made to soak up specialized talent and proprietary technology.

Some analysts argue that this cautious approach has hindered Apple’s outward progress in generative AI. And its new “Apple Intelligence” suite — intended to deliver personalized, on-device AI functions to iPhones and Macs — has seen delays in rolling out and mixed early reviews. Apple’s stock is down just 2% this year, after being left behind by most major tech indices and competitors that have adopted their belief in AI.

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