Why Microsoft and Google Fear Apple’s Siri

Tim Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market intelligence firm in Silicon Valley.

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In case you haven’t noticed it yet, Siri’s voice technology is actually a front-end to some major databases such as Yelp, Wolfram Alpha and Siri’s own very broad database. What it’s really doing is serving as the entry point for searching these databases. So I can ask Siri to find me the closest pizza joint and it quickly links me to Yelp, then to Google maps. On the surface this might look good for Google and Yelp since it ties them to these third-party sites that get the advertising revenue from this search. But what if Apple owned their own restaurant recommendation service and mapping system? They could divert all of these ad revenues to themselves. Here is an obvious question, then: How long do you think it’ll take before Apple buys Yelp or Open Table, and MapQuest or a similar mapping service?

How about searching for autos? Ask Siri where the closest BMW dealers are. It comes back and shows you the three or four BMW dealers within a 25-mile radius on a Google Map. But what if it could also tie you to Edmund’s database and instantly give you ratings of their cars and dealers running specials? Or perhaps you’re looking for an apartment in Chicago? Ask Siri about available apartments in Chicago and someday it could perhaps link you to Apartment Finder. And while Apple might not need to own this database, Apartment Finder could be Siri’s preferred first site to “search” for apartments and Apple would get a share in ad revenue from these searches.

(MORE: The 12 Coolest Things We Saw at the Consumer Electronics Show)

Indeed, it’s pretty clear to me that Apple has just scratched the surface of the role Siri will play for them in driving future revenue. At the moment, we are enamored with its ability to enhance the man-machine interface. But that’s just the start. Siri is actually on track to become the first point of entrance to “search” engines of all types tied to major databases throughout the world. It will become the gatekeeper to all types of searches, and in the end control which search engine it goes to for its answers.

For this to work for Apple, they need to start acquiring or at least developing tighter revenue-related partnerships with existing databases for all types of products and services, and then make Google or Bing the search engine of last resort for Siri to use if it can’t find something in Apple’s own (or its partner’s) databases. Oh yeah, and tie as many of these searches as possible to their own iAd platform.

Yes, Siri is an important product for enhancing our user interface with the iPhone. But Siri is in its infancy. When it grows up, it will be the front-end to all types of searches conducted on iPhones, iPads, Macs and even Apple TV. If I were Google or Microsoft, perhaps I, too, would be downplaying the impact of Siri, since they know full well that it’s not just a threat to their product platforms, but to their core businesses of search as well. They should quite concerned about this since Apple is taking aim at their cash cow search businesses and could impact their fortunes in the future.

For Apple’s investors, the call for them to start paying dividends on their cash hoard is too short-sighted. Instead, they should be encouraging Apple to start buying up as many databases and services as they can and begin the process of entrenching Siri’s role as gatekeeper when searching, raking in the search ad revenue for themselves.

By the way, at the 2012 Consumer Electronics Show, Samsung showed off both voice and gestures for navigating their smart TV. These are worthless unless they are tied directly to rich databases that these user interfaces control. When Steve Jobs told his biographer that he “nailed” smart TV, I believe one key piece of this will be how Siri will be tied to a rich database so that when you ask for any video program or content you want to see, it will reference powerful databases tied to Siri’s user interface and look for all available material related to your request. Samsung should be just as concerned about Siri as Microsoft and Google are, since Apple’s software wizardry could leave their voice and gestures impotent out of the gate.

So don’t think of Siri as just a voice interface. Rather, think of it as the gatekeeper to natural language searching of diverse databases and search engines that Apple will link to an ad model which could eventually make Apple the third major search company in the world someday.

(MORE: Four Industries Apple Can Disrupt in the Near Future)

Tim Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market intelligence firm in Silicon Valley.

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