- [Interviewer] 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 MSOG.
- 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've opened up with that.
And then recently, they've 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've 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% percent so it lagged.
There's good news, though, for Apple
is that there are categories that right now,
Apple doesn't even participate in
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.
- 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?
- They can be a third player, a distant third player though,
in terms of market share.
- Is it too late?
- No, I think they're on track.
I think they've got the right product
and I think that and they add these 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 smart phone when you've got three billion, more or less,
there's a big opportunity for smart phones 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 phone
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 percent
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.
- 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.
- 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.
- Gene, thanks so much for joining us.
- I had a ton of fun.
Hope to see you soon!
- Thanks.