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Will Siri Change the Rules of the Search Game?

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There are two hallmarks of disruptive innovation that are commonly misunderstood. The first is the myth of the “aha” moment that tends to assign disruption to a single instant of discovery and change, when, in reality, nearly all disruptive innovations are the result of long-term trends, research, and investment that finally culminate at an inflection point. The iPad wasn’t invented in a vacuum, but was the result of decades of research, failed attempts, and gradual technology advancements.

This doesn’t diminish the value of the innovation, but even the lightbulb was only possible after centuries of accretive science.

The second myth is that a disruptive event immediately changes the world. In fact, it’s only in retrospect that we acknowledge the power and impact of these innovations, which were often under-appreciated at the time.

Disruptive innovation is a gradual process with a long tail both before and after the inflection event. But what’s always clear is that the world is never the same after that point, and those who recognize the impact sooner have an advantage over the laggards who fail to realize the game has changed. And I suspect we’ve just seen the first major disruption in the search market since Google introduced AdWords.

The Battle for Search -- The search market is one of the most lucrative in the industry; especially for the dominating force of Google, which just posted quarterly revenues of nearly $10 billion. Unless you know the exact address of what you’re looking for, search is almost guaranteed to be your first stop after firing up your Web browser. Placing contextual ads on search results both drives massive profits for the search engine and serves as a supremely effective marketing tool for many companies.

The structure of the search market is fairly straightforward. Companies buy advertisements tied to keywords, demographics, and user histories. The search companies try to optimize the accuracy of raw search results to provide the best user experience, while simultaneously tracking activity and presenting “optimized” ads. The goal is to hook the users with a combination of helpful search results and targeted advertising that’s most likely to appeal, and get them to click.

Companies pay a combination of a base rate and some amount per click. Since the goal is to drive these clicks and eventual purchases, there is a massive incentive for search engines to predict the users’ behaviors and desires as closely as possible, which requires tracking their activities. Search engines like Google, Bing, and Yahoo thus tie into tracking and advertising networks to get the data they need, and to reach the greatest number of consumers.

Thus, today’s search game is defined by extensive user tracking and profiling, funded by targeted advertising. The value of search to a user is the quality of results. Since users don’t pay for search, the value to those funding it is the ability to convert those searches into clicks, and then into product sales. Thus the users, as with any free site funded by advertising, are the product, and the companies paying for the advertising are the client.

In other words, there isn’t a search market, there is an advertising market.

Siri Thinks Different -- Siri isn’t a search engine, although it shares some of the same goals. Siri is, in essence, a new user interface, whose objective is to perform tasks, not merely deliver results.

Thus Siri, even in its infancy, performs a wider set of context-driven activities that range from setting an alarm, to finding the nearest restaurant, to translating a user’s question into a request sent to a search engine.

Siri is glue. It aggregates a diverse set of services and resources into a single voice-driven interface that doesn’t require the user to know exactly which site, service, or app will best complete the task or deliver the most relevant results. Ideally, Siri will know which of its underlying components is best suited under the circumstances.

You tell Siri what you want, not how to do it.

Whereas a search engine crawls sites to collect data to present to searchers, Siri plugs in a wider range of services and only falls back on a generic search engine as the resource of last resort. This allows Siri — in an ideal world — to provide more-useful data more quickly. It knows Yelp is its best resource for information on restaurants, Wolfram Alpha for factual data, and iOS’s own apps for weather and maps.

Siri is limited to the services that Apple has baked in and to data from certain Apple apps, which is a pretty small collection right now. Most search engines have similar partnerships for things like flight tracking, weather, and movie times, and built-in tools for maps and other features; but these results merely display on top of a long list of search results. The major search engines also offer a plethora of other services, like mail and calendaring, but, again, these are all oriented at delivering targeted advertising.

Siri is focused. Search is more diverse and inclusive. Siri is task oriented, whereas search is information oriented. Siri is the user interface, where search is the data feed.

Different Goals, Same Target -- Siri and search companies both compete to control your contact point with the Internet. Search does this through deep integration with Web browsers; even to the point (with Google) of producing entire operating systems whose primary goal is to serve as your conduit to the Internet and drive you towards Google services. The value to Google in producing Chrome OS and Android is in increasing usage of Google for the purpose of gaining access to your activities and delivering more targeted advertising.

Siri is a new user interface designed to increase the usefulness of the iPhone, and it’s hard to imagine it won’t eventually come to other products. The Internet is only one of its potential components, which also include on-device data and apps like calendars and reminders. Siri tracks your activity to improve its accuracy, not to deliver advertising. The value to Apple is in selling more devices.

These are completely different financial models, even though both systems track and analyze your activities. One is funded by advertising, the other with device sales. (And both, perhaps, with licensing to drive users to particular partners.)

How Siri Disrupts Search -- Siri doesn’t replace search, but in many cases it circumvents it by directing users straight to integrated partner services. When you ask for the nearest Indian restaurant there’s still a search taking place, but it’s through Yelp, not a generic search engine that would include Yelp plus various other results.

By skipping the search engine and going straight to a designated source there is no place to insert advertising. If the results are embedded in Siri’s response, as Yelp recommendations are now, the only way for advertising to appear as part of the process is if the user manually goes to the partner site.

The model changes. For the subset of services it supports, Siri could deliver more value to the user by more quickly getting them to the information they need, or by completing a task for them. It creates more value for Apple by selling more devices. The value to the partner sites is an increase in traffic without having to pay the per-click fees of a search engine, and potentially in licensing fees, although the sites may lose out on their own advertising opportunities, depending on how they were integrated.

Search engines are hurt by reduced traffic, reduced user tracking, and reduced opportunities to deliver advertising. Widespread adoption of Siri could also hurt companies that deliver services competitive with those included in Siri. It would place Apple in a position of incredible power, which isn’t necessarily all positive. If you compete with Yelp, you have a chance of showing up in search results, but you will be completely invisible to Siri users.

Now, clearly, there aren’t yet enough Siri users to make even a thumbtack-sized dent in what’s left of Yahoo, never mind Google. But I’m not talking about this year or next year, but the world five or ten years from now.

If Siri succeeds, with Apple at the helm, it could potentially capture and redirect a material percentage of activities that currently run through search engines. Today we can get basic facts and restaurant recommendations, but I won’t be surprised if everything from ordering on Amazon to getting customized health information migrates to Siri. The smarter Siri gets, the more directly it provides information and services we need, and the wider range of tasks it performs for us.

General-purpose search engines won’t go away, but we certainly won’t interact with them directly nearly as much.

Had Google bought Siri we would likely see it available on a wider range of platforms and supported by advertising. It would have enhanced the current search market model.

But Google didn’t buy Siri, Apple did, and despite the range of software products Apple builds, its primary business model is selling hardware. Apple may have an ad network, but that’s to reduce the intrusiveness of ads and draw more app developers to its platform (and iAds isn’t exactly Apple’s most successful product).

We will still be tracked. We will still run searches. But one business model is funded by advertisements, and the other with device sales. For the first time since the birth of search we have a competing model.

 

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Comments about Will Siri Change the Rules of the Search Game?
(Comments are closed.)

John May  2011-10-21 20:45
The key point about Siri vs. a browser-based search engine is difference between speech and text. A search company could figure out how to implement every feature Siri offers and more, but there's not much room for advertising in a short verbal message. If Google had bought Siri, they would have had to figure out how to make money without the digital voice saying, "I have tomorrow's weather for you, but first, a word from our sponsor..."
Lawrence  2011-10-23 08:10
John makes an excellent point. Google can't really win in this vector of search. Even if they come up with the perfect Siri clone, it means more users using a very ad-unfriendly medium for their main source of income.
Frank Lowney  2011-10-21 23:27
Excellent analysis. The brilliance of adapting SRI's software to iOS 5 may stem from what we now know was Steve Jobs vow to destroy Android. In addition to the patent front of this 'thermonuclear war' there is this, the attack on Androids (fiscal) supply lines.
Michael E. Cohen  An apple icon for a TidBITS Staffer 2011-10-22 00:53
I can easily see Apple hooking Siri up with access to their various media stores at some point in the near future:

"Get me the new novel by Grisham."
"I want a season pass for 'Community.'"
"What are the best selling rock albums this week?"

A great way to boost their stores at the expense of the Fire-starters at Amazon.
The beauty of SIRI is no typing required.

Can't wait for the SIRI enabled Apple map to arrive.
Siri is certainly significant just now. (That was the main reason I just bought my own, first iPhone.)

However, I think that sooner or later we'll see access to Siri opened up to the developers - and then that significance will increase by an order of magnitude over now.
I don't doubt Siri will be disruptive, but it won't be good for everything. That nearest Indian restaurant could have a million poor reviews, and be next door to a Thai with a million great reviews. Some things will still need Google or a review site
Frisian  2011-10-27 12:47
Just as Siri will learn, you will learn. You will learn to ask for the nearest Indian restaurant or anything else close by that has lots of great reviews. And Siri will learn you're less fussed about exact cuisine and more about quality and reviews, and it may even show you that Thai restaurant unprompted.
Christine  2011-10-27 13:06
That's why Siri searches Yelp rather than Google for restaurants.
While Siri has the buzz, Google has Voice Search already for iPhone. Some things Siri does better, but in others I still prefer Google Voice Search.