What’s at Stake in the Voice Assistant Race

It is interesting that Apple’s HomePod has ignited a broader philosophical debate, within the tech industry and industry pundits and observers, around what is really at stake with voice assistants in the future. Everyone has an opinion on this, and there is a degree of implications for the future to be thought about as well.

It is worth making a high-level point right off the bat. In many discussions I’ve had behind closed doors on this subject, it seems folks like to explore whether voice assistants are disruptive. I dislike this word because it is misused more often than it is correctly used or understood. But the question I hear specifically is whether these voice assistants are disruptive to Apple mainly. The answer is no, and I’ll briefly explain why.

At its core, disruption of an incumbent impacts its core business model by way of losing its customers. For Apple to be disrupted by something, that something has to lead to Apple losing customers who are not buying their hardware. There is no guarantee Apple is not going to be disrupted in some way like this someday, but I’m confident it is nowhere near the immediate or relatively distant future. What I don’t think is at stake with these voice assistants is Apple’s disruption, but I do think what’s at stake is Apple’s sharing of their highly valuable customer base with other companies.

Now it is clear; Apple doesn’t have too much problem sharing their customer base with the likes of Amazon, Netflix, even Google to some degree since they are not closed off from others in their ecosystem. This is glaringly evident as Apple CEO Tim Cook shares each quarter how Apple is growing the number of subscriptions their platform is driving. At Apple’s annual shareholder meeting yesterday Cook said Apple “holds” almost a quarter of a billion subscriptions for both its services and other apps. In his own words: “We’ve built a muscle in how to do that. I think that will be good for Apple in the future as well.” I think this is an incredibly important statement.

Apple has the largest, most profitable base of consumers on the planet. This is evident by the 1.3 billion devices in use and their increased growth in services which includes subscriptions. I have no doubt Apple wants to increase the number of subscribers on their first party services like Apple Music, iCloud, and eventually a TV offering which is likely. But for that to happen their services need to be competitive with third-party services. But for Apple, the question will be which first-party services they feel are core and areas where they can make a real difference and have a competitive advantage.

In that vein, the question of Siri arises vs. the competition because Siri is a service. Looking to the future, I believe Siri is an important platform for Apple as a part (not the entirety) of the human interface of the future. Voice will be one of the primary ways we interact with computers at some point down the road. Therefore, Siri is essentially an important UI strategy for Apple. It’s as important as iOS is to Apple today. Google knows this which is why they are full throttle on Google Assistant. Amazon knows this which is why they are tripling down on Alexa. So what is stake for Apple in this future is how much they want to share the voice assistant their customers use with others besides themselves. Does Apple want their customers to use Siri 100% of the time? 70%? 50%? This is the philosophical conversation long term.

When I made the analogy of Apple being willing to share their customers with others like Amazon, Netflix, etc., via apps on their platform I’m not sure it is the same kind of sharing in the voice assistant realm. Voice assistants, I believe, will offer huge levels of convenience we can’t even imagine today. And if I’m right they are the basis of a new operating system in the post-smartphone world, then their importance today in generating dependence and relationships with customers is of strategic importance.

This is the reason I bring up the importance of a product like HomePod for Apple. It isn’t the product itself but rather that HomePod represents another way for consumers to interact with Siri in the home. If Siri is important to Apple, then it is in Apple’s strategic interest to give their customers as many opportunities to interact with Siri in whatever way they want and feel comfortable. The one thing we learned loud and clear with voice speakers like Echo and Google Home is how comfortable consumers are speaking to these products in their home. More comfortable in fact speaking to them then their smartphone, PC, or smartwatch.

Apple is at risk of having to share too much of their consumers with competitors like Amazon and Google in the ambient computer platform race, and while they may think this isn’t a big deal right now, I tend to think it could have broader strategic implications if they are not careful.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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