I don’t get why people are unimpressed with the Apple’s (AAPL) iPhone 4S. Is it because the phone looks exactly the same as iPhone 4? Or is it because it doesn’t have a bigger screen? How much more can we change the hardware? Not much. Therefore, the competitive advantages on smartphones in the future will not be in the hardware, but in the software. A lot of people are missing out the real game changer, Siri, and Google (GOOG) should be very scared about it.
The Game Changer
Siri is a personal assistant app can take voice command from the users and translate the commands into tangible actions. Voice commands on all other phones, including the previous iPhones, are all very basic. They are only limited to calling someone or playing some music. Siri totally changes everything.
There are two things that make Siri stand out. First, it can take complicated commands from users that range anything from sending a text message to looking for a restaurant. The app has the potential to significantly save a user’s time on these mundane tasks. Second, Siri has a personality. It talks back and has an attitude. This emotional feature is genius. It builds a personal connection with the user, increases user loyalty to the iPhone 4S and enhances the Apple (AAPL) brand. The reaction to Siri reminds me people’s reaction to the iPad. Many people were disappointed with the first iPad launch presentation, but look at how well it is doing now. Apple doesn’t give us what we want; it shows us the future.
The Impact On Google (GOOG)
At first glance, Siri and Google do not have much overlap. Siri is a personal assistant tool while Google makes its money from online advertising, but Siri impacts Google by significantly reducing the amount of time we spend on Google’s applications. Siri will do things such as looking for restaurants, setting up reminders and sending out emails. Who knows what other services it will provide in the future if Apple opens it up to developers? All of these things required us using Google’s service before and Siri will make us less dependent on Google. However, Siri’s impact on Google is limited in the short run because of its limited availability but as it becomes more popular and its abilities develop, Siri could seriously reduce how much we use Google’s services and revenue in the long run.
Siri is a serious game changer that will further distinguish the iPhone from the competition. As the hype builds around Siri, we can expect more customers switch to the iPhone to take advantage of this feature. The Siri advantage hasn't been priced into the stock. There is definitely potential upside for Apple stock.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.