Google and Amazon are constantly updating their digital assistants and speakers while Apple is struggling to keep up. The Google Assistant and Alexa left Siri in their dust long ago. HomePod was significantly delayed, and it is still lacking many of the features found in the Amazon Echo and Google Home. Does Apple still have a chance of becoming a top artificial intelligence player or is it too late? We talked with Gene Munster, Loup Ventures Head of Research to discuss. Following is a transcript of the video.
Steve Kovach: What is there that Apple needs to be doing today to Siri, to its AI systems, to really catch up to what we’ve seen recently from Google and Amazon.
Gene Munster: They made some small changes that are impacting their AI and one of them is really subtle but important is that they, about a year ago, allowed their AI developers, their AI scientists, to publish some of their work. It’s part of the community of being an AI scientist is being able to publish your work and Apple and its secretive society certainly hasn’t let them do that, but they have opened up with that. And then recently, they have hired the head of Google’s AI. That’s a big deal. It’s a big deal because Google has said, over the last two years in each of their earnings calls, they have always led with we’re an AI first company. So to poach the head of AI from Google I think sends a message to the market that Apple wants to be serious about it. And they need to be serious about it because so far, they really haven’t, there’s a lot of AI that’s built into how your phone makes recommendations on text messages or organizes photos, things like that, how Siri works, but it still lags kind of where the other players are like Google.
We measure smart speakers and the intelligence of smart speakers and Google gets about, this is 800 queries we do twice a year, and Google gets 84% of them right in our last one we did. And then we did HomePod when it came out and it was more like 57% per cent so it lagged. There’s good news, though, for Apple is that there are categories that right now, Apple doesn’t even participate in some of the Siri functionality. For example, navigation. This is with HomePod in particular. Navigation or with commerce. If they would just turn those on, essentially, and we think we’re gonna hear more about that at WWDC about opening up Siri to new verticals. If they turn those on, you can see some quick gains against like Google when you compare these two.
Steve Kovach: Right, especially if that’s part of the success about Alexa may be, right out the gate, it wasn’t as capable but the fact that Alexa was open to so many third parties, boom. Overnight, it becomes much more capable than Siri. Is it too late for Apple and the HomePod? This smart speaker category really took off from Amazon. Google’s eating into Amazon’s market share a little bit. It seems like a two-man race right now. Is there room for a third player and can Apple be that third player?
Gene Munster: They can be a third player, a distant third player though, in terms of market share.
Steve Kovach: Is it too late?
Gene Munster: No, I think they’re on track. I think they have got the right product and I think that and they add this other functionality to it and adjust the price a little bit, I think that they can kind of get to that, and we think that third place kind of looks like 15 to 20% market share longer term. So right now, there’s some hundred million smart speakers worldwide, and when you think about the smartphone when you’ve got three billion, more or less, there’s a big opportunity for smartphones to grow. Excuse me, for the connected device or smart speaker to grow. And homes have multiple ones within it. Usually you have one and a quarter phones so you might have several of these in your home. So I think that we’ve got a long way to go in terms of market share gains and so I think that Apple is still in a great place but I think that their market share in HomePod is probably gonna gravitate to a similar market share they have with iPhone which is kind of mid to high-teen per cent and part of it is because they want to make money on their hardware and they want a great hardware experience and that shuts them out of a huge part of the market, that price point.
Steve Kovach: Had they announced the HomePod at WWDC, I would have thought that would have been a good excuse to say hey we’re opening Siri up to this many more verticals or all verticals. Instead, we got a delayed HomePod and Siri is still functioning mostly the same.
Gene Munster: Yeah, we were doubly disappointed. Like you, we were expecting something when they announced HomePod. And then so HomePod was announced in the fall of last year. And then when they delayed it, we thought well then that’s gonna be in combination with the announcement that they’re opening up Siri. So I guess maybe it might be three strikes and I’m out here if they don’t deliver on opening up Siri.
Steve Kovach: Gene, thanks so much for joining us.
Gene Munster: I had a ton of fun. Hope to see you soon!
Steve Kovach: Thanks.
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