Apple SIRIously Upended By Google Now

Margie is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Google’s (NASDAQ: GOOG) talent has upended Apple (NASDAQ: AAPL). In 2011, Siri was introduced with much fanfare, dubbed the first A/I with personality, and was a momentary cult hit with the public and fanboys alike. Eric Jackson penned a column for Forbes on October 28, 2011, stating that Apple’s Siri would be “a Google killer.”

According to Jackson, there were five reasons Siri posed a Sirious (intentional misspell) threat to Google at the time.

  • It was the first voice recognition system that actually worked, and at the time was still in “beta.”
  • Siri has personality, and we would come to view Siri as our friend.
  • Siri is hard to copy, and blends art with artificial intelligence.
  • Siri helps own the customer experience for Apple. Jackson predicted that the future iTV would use Siri as the primary input.
  • Siri will improve over the next two years with all the data it's amassing.
  • “When Siri opens up its API to 3rd party developers, this thing’s growth and adoption will go ballistic.”

GOOG Total Return Price data by YCharts

Let’s see how these predictions look 19 months later. 

  • When Siri came out, there wasn’t anything else like it. It was cool. I played with it, and enjoyed it. It didn’t work perfectly, but still... As a Google investor, I was worried that all Jackson said might come to pass.
  • Siri did have personality, and gave clever answers that amused everyone. However, today, a funny but incompetent assistant is quickly fired.
  • Siri was indeed hard to copy. Google took a long time to respond, and probably put an incredible number of man hours into creating Google Now. Various Android prediction websites repeatedly reported delays in the launch date of Google’s own assistant. But, Google has responded, and to this point, bested Siri. The company's voice recognition is second to none, and has steadily improved. Many people, even devout Apple fans, claim that Siri still doesn’t work very well, but I trust Google to decipher my dictated texts, often without double-checking them.
  • There is no doubt that Siri will be the interface for the iTV, and a variety of future hardware products. Also, there is no doubt that Google’s assistant is already being used in the same way that Jackson predicted Siri would. I can create an appointment using my voice with Google (much like I can using Siri), but with a greater success rate.
  • Siri hasn’t improved as much as iPhone users and shareholders would like. Scott Forstall, credited with iOS and who helped develop Siri after Apple’s acquisition of the company, is gone, largely due to the Apple Maps debacle; Google Maps on your iPhone, anyone

There’s a great column here, by Jay Yarow of Business Insider, about why CEO, Tim Cook, let Forstall go, which should give you insight into how Cook wants to run the company.

Using others' data

Jackson stated, “when developers write Siri-enabled scripts that tie into their websites – like Yelp (NYSE: YELP), OpenTable, and others? Siri will become even smarter. For users, it will become even more valuable because better and better data results will come back to it.” Google countered this by buying Zagat, among other acquisitions, and continues its torrid pace of development.

Not coincidentally, Yelp has been a long-rumored takeover target, and quoting my Foolish collegue, Sal Mattera, the company has been identified as a possible take over target by Yahoo. "Yelp is a key player in local. It has a large user base that rates and recommends local businesses, and a sales team that works directly with many of them. Google acquired Yelp’s competitor Zagat in 2011, and has begun to integrate Zagat’s ratings into its services, particularly its map application." I tend to agree that it is a likely acquisition for all the data sharks out there.

Why Google has outpaced

Siri has proven to be a relative dud, and Google’s personal assistant continues to get better. Google Now also recently became available for the iPhoneWhat Jackson didn’t consider was the fact that Google has already amassed massive amounts of data, which Apple can't even come close to replicating. This data is why Google gives away Android for free to OEMs, as they gain more individualized data from their users.

Google goes out of its way to recruit top-notch talent, and has long been regarded as one of the best places to work, offering generous perks to retain talent. When Google senses a threat, it's able to put massive amounts of man and brain power to come up with a solution. Such has been the response to the supposed threat of Siri. This is one of the reasons why Google's stock price has soared, while Apple's has languished.

Despite this, I still like both of these companies as an investment. Apple is far cheaper, valuation-wise, than Google (in part for the above reasons) and pays a hefty 2.8%. For Google, future innovation is priced into the stock, while Apple is being treated like a dog. Should Apple surprise investors with a new, novel product, as they did under Jobs, the stock will soar as it defies expectations. 

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.


Margie Nemcick-Cruz owns shares of Apple and Google. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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