An LLM on your phone can know everything else that is on your phone. Even Signal chat plaintexts are visible on the phone itself.
People definitely will care that such private data stays safely on the phone. But it’s kind of a moot point since there is no way to share that kind of data with ChatGPT anyway.
I think Apple is not trying to compete with the big central “answer machine” LLMs like Google or ChatGPT. Apple is aiming at something more personal. Their AI goal may not be to know everything, but rather to know you better than any other piece of tech in the world.
And monetization is easy: just keep selling devices that are more capable than the last one.
Gemini can know everything in my Google account, which is basically synonymous with everything that's on my phone, except for text messages. And I use an iPhone. And then Gemini will work just as well on the web when I use my laptop.
So I don't see what unique advantage this gives Apple. These days people's data lives mostly in the cloud. What's on their phone is just a local cache.