Apple’s Acquisition of Siri Moves It into Mobile Search

The competition between Apple, Google, Microsoft, Facebook and Amazon has become a strong force in the mobile market at present. The latest move came from Apple, which bought start-up Siri last week, taking Apple into search for the first time and strengthening the suite of technologies behind its rumoured expansion of online services later this year.

Siri makes an iPhone app that provides a “virtual personal assistant”. Users can use natural language voice instructions to search for what they want. For example, “Find me a romantic French restaurant nearby”. The application uses Nuance technology to convert the speech to text, extracts the semantically relevant parts, carries out a search and returns results. The business model behind it works on referrals. Siri has agreements with local restaurants and businesses; when a user acts on the information provided, Siri is paid a fee. The free program was only launched in February 2010. It’s achieved around 250,000 downloads since then and has been hailed as one of the best new iPhone apps. Details of the acquisition price have not been disclosed.

On its own Siri does not give Apple a strong position in mobile search. One key difficulty for start-ups is how to achieve the scale needed to make an application like Siri’s useful worldwide. Critics cite the limited range of partnerships as a key weakness — it’s not much use if the partnerships don’t include the businesses you might need. In contrast, a search giant like Google has massive coverage. But the problem with Google is that users cannot process 20 million search results on a phone’s screen.

There’s a real need for much more intelligent search on mobile, delivering a small set of really useful results. Siri’s a good step in the right direction, especially when it comes to the front end — the software on the phone — but Apple will need to build up the back end, that is, the agreements and search coverage.

The acquisition’s interesting for its voice-command angle. Google has won a lot of praise for its voice search application, which works remarkably well (try searching for the band called Dananananaykroyd). I think we’ll see voice-driven user interfaces entering the mainstream, and Apple’s now in a better position to implement that.

Siri is also interesting for its potential in building indirect business models for online services for Apple. Search is one of the most natural areas for online advertising, as people are asking for information. On a mobile phone, many feel that search is likely to be more directed to buying something than PC-based searches, because you’re less likely to do research-style searching on a small device. The acquisition of Siri links well with Apple’s recent announcement of its iAd service.

Apple’s recent acquisitions have pointed in the direction of the company building a substantial online services portfolio. Reducing its ties with Google may be part of the rationale. But there’s growing evidence that users are taking their PC-based Internet usage onto mobile devices, so a key part of Apple’s intent is probably to establish itself as one of the world’s major online service platforms, with options to move from direct services revenue (iTunes) to indirect models through advertising and revenue sharing. As Microsoft, Yahoo, Nokia and Vodafone have shown, this will not a quick, cheap or simple task.