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Page 1: Apple vs google soft ai

Apple vs. GoogleWho will win the soft AI war?

Ismael Soto Cantero

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Executive Summary:

1. Apple in creating a stack in the search engines business with Siri

2. Google + Samsung seem to be the main competitors that Apple should defeat in this battle; correspondingly, they dominate the customers data and the mobile phones industry

3. Apple has the right technology and the right products to captivate the customers but starting from scratch is difficult and will take longer than analyst though

4. Soft AI technologies open a new business horizon for mobile devices and the interaction of the customers with them devices

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Siri is something new and it is here to stay with us for a longtime, so be aware about what it really means

On October 4th, 2011 Apple announced that Siri would be included with the iPhone 4S

"We are at a turning point in history where people can talk to a computer and be understood. It’s a watershed moment where people won’t go back" Gary Morgenthaler

(first VC investor in Siri)

Siri represents the first soft AI and virtual personal assistant that is launched to any device; it interacts with us through our questions and it is not limited to recognize our voice and transform it into actions

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Apple has made his iPhone its main line of business and Siri is there to take advantage of all the information of its customers

• Apple revenues and profits are driven by the iPhone & iPad products; around 72% of Apple´s revenues

• Apple is taking less than 5% of market share in the smart phones market but nearly 75% of its profits

Charts from Business Insider

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The Siri´s back business model is to learn about customer´spreferences and get money from them, just as Google does

1. Siri will learn from the customers their preferences2. Apple will put the customers´ information over an open map data base using other

search engines in the back as a Wolfram Alpha and Yelp3. Apple could use Siri as a crowder to become a preferences-based data base4. Apple can monetize the information via 2 complementary ways:

a) Selling devices with the best VPA among other characteristicsb) Using the information that Siri is taking from the customers;

- Traditional way: getting money from advertisement- New way: price discrimination and getting a haircut

Charts from Harrison Research

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iPhone customers have received well Siri; however its non-fullydeveloped capabilities could entail a menace to Apple´s plans

Charts from Business Insider

iPhone customers like Siri and they are satisfied with its capabilities; however, due to the fact that it is a unfinished product, they cannot use the add as frequently as they should (for Apple´s interests)

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Google is the main competitor in this new soft AI business dueto its data bases and to its presence in the mobile industry (1/3)

• Google is the leader in both, the core search services as well as the overall number of searches by surfers

• Besides that, its mobile operating system, Android is the most popular by number of phones sold around the world with around 47% of market share and Samsung as the big fish in the market by number of sold phones

Charts from Business Insider

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Google is the main competitor in this new soft AI business dueto its data bases and to its presence in the mobile industry (2/3)

• Google has historical data of us and a powerful tools called Gmail, Google, Google Maps and Google+ that mimics Siri´spreferences learning process since years

• Google included in its Android system tools that act as a VPA since before Siri appeared

• Google is also embedded into iPhone as predefined search engine. Something that seems to change in the following weeks

Charts from Business Insider

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Google is the main competitor in this new soft AI business dueto its data bases and to its presence in the mobile industry (3/3)

• Samsung is an intensive R&D company with more than 45.000 US patents (4.800 Apple) that can face Siri technology soon or later

• Samsung leads the market and has launched the new Samsung Galaxy III that includes a self build VPA. It is true that is not as advanced as Siri is

• Samsung works over Android and would use this to create powerful collaboration between Google and them whenever they get and maintain enough market share

Charts from Business Insider

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However, Google also has problems to retain its core businessand iPhone is at the end a massive business by itself; a $100B business only surpassed by 53 other companies in the world…

Charts from Business Insider

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…and a technological war have started through the firms viaacquisition processes in aim to adquire a massive amount of patents, increasing lawsuits among them

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The end of this war depends on whether Apple is able to makeSiri work better and if Google can make attractive the value of its current and potential capabilities

Apple

Samsung + Google

• Cutting the edge soft AI technology

• Cutting the edge mobile phone product and business model

• Apple starts from scratch with the customers learning process

• Wide portfolio of products and its complementarity

• Massive data and customers knowledge

• Android is the leader mobile OS in absolute terms and Samsung is the first cell maker in the world

• Potential synergies among Google products

• Entering into a new business; big data management and its implications

• New developments in soft AI VPA from Samsung and other developers

• Fully integration of each of the Google´s tools and the Android systems

• Starting from scratch is always difficult, specially when Apple has launched Siriunfinished

• Apple product users are high value ones but few in relative terms to the market size

• Android and Google do not offer products as attractive as Apple does

• Soft AI current portfolio is atomized and not cutting the edge

• Being the leader is always challenging, will Apple keep on the track?

• Users are more and more search-driven by questions and answers and not just by links. Also, they use alternative ways of searching

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ismael-soto.com


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