Competitive Juices: Is Apple's Siri About To Eat Google's Lunch?

Lot's of people are having fun asking Apple's Siri funny questions and then posting the results.

The results of which are becoming an aspect of Apple's marketing genius. Lot's of others are complaining about batteries and connectivity, which, given Apple's history, will probably soon be solved.

The larger question is whether in the shadow of Steve Jobs' death and the focus on the latest iPhone as a device, Apple stealthily launched a strategic strike against Google's core financial strength, its dominant web search advertising.

If Siri can disintermediate Google from the search process, or even noticeably reduce its market share, it will have scored a significant blow in the ongoing battle for supremacy between the tech Big Four; Amazon, Apple, Facebook and Google. Of that group, Apple remains, so far, the most consciously and effective competitor. They have all taken shots at each other but Apple, with, among others, the impact of the iPad on the Amazon Kindle and now its Siri launch has demonstrated that its understanding and execution of strategic initiatives is unparalleled. JL

Nigam Arora comments in MarketWatch:

Apple’s Siri is beginning to eat Google's lunch. Google has spread its wings, but Google's bread and butter is still selling advertising on search pages. Siri from Apple is the start of disintermediation from Google search. Siri is a voice controlled virtual personal assistant from Apple that relies on artificial intelligence. When I asked Siri to find the best Indian restaurant nearby, it came up with the right answer. It did not answer with the nearest restaurant but found the highest rated restaurant nearby.

Before Siri, I would have gone to Google and searched for an Indian restaurant. Google would have made money if I clicked on any one of a number of advertisements for restaurants on the search page. Siri completely bypassed Google and went to a data base called Yelp.

In a small study at The Arora Report , the evidence is mounting that users of Siri are consistently bypassing Google. If the results from the small study are extrapolated, in due course as Siri becomes widely available, it will change people's habits. The new habit will be using voice to find exactly what one wants without having to comb through a large number of results, some of which may not be relevant. Further, the display space on mobile devices is limited. Who needs the distraction of side advertisements like those from Google on the small screen?

Natural language interface has long been the holy grail of computing. Natural language is simply a fancy phrase for ordinary language. Most of us communicate with each other in natural language.

Asking a question in ordinary language and quickly finding the answer in Siri makes a Google search look like a horse and buggy compared to a car. At present, Apple seems to be using three data bases: Yelp, Wikipedia, and Wolfram Alpha. In due course, Apple will start using other specialized data bases giving better results for search queries in a much more natural way than what Google provides today.

The day is not far, when third party apps will filter the results from Google to provide the user with the right answer without showing ads from which Google makes money.

The way most searches are done at present is merely a temporary phase that will disappear. The business model of Google is at risk. There will always be a need for an index search like Google performs, but the most common search activities will drift away from Google. The problem for Google is that it makes most money from the most common searches.

Apple has done an incredible job of integrating Siri with other apps such as contact list and calendar. This increases the stickiness of Siri. High stickiness means that the users of Siri are unlikely to switch. When I asked Siri to call my wife, it asked which one of my contacts was my wife. The day after Siri knew who my wife was. To accomplish the task, I did not need to enter commands or go through a menu it was all very simple and natural.

It is only a matter of time before Siri shifts search revenues from Google to Apple. Google recently reported much better than expected earnings. As a result, the stock moved up. There is no telling as to what will happen to Google and Apple stock prices in the short term. But for the long-term, the handwriting is on the wall. Holders of Google stock are well advised to lighten up on bounces and use the proceeds to invest in companies that will benefit from the coming tsunami of natural language interface to computing devices.