Apple’s profits for Q1 are truly jaw-dropping. The company is now worth well more than twice as much as Google. When I look around my home and office at the dozens of MacBooks, iPads, iPhones, and iPods, I certainly see why. But where is their future revenue growth? Believe it or not, I think it may be in search. Before you roll your eyes at that one and flip back over to espn.com, give me a minute on this one. I’m not exactly new to the space. I’ve been in communications technology since 1991 and wrote my first lines of basic on a Tandy “Trash-80” in 1979. But, like most, I long ago left code production for information consumption. I’ve been through two comm tech IPOs, one comm tech merger as a principal, and more than a dozen comm tech acquisitions as a banker. That’s not just to show you how old I am. he point is that I’m not new to the value of voice at the consumer level. But what surprises me now is how many people are new to the “calls as currency” market opportunity. And for companies like RingRevenue, that’s an awesome opportunity.
I’ve long believed there are essentially six factors that hold back mass consumer adoption of information technology. Five of them (processing power, memory, battery life, bandwidth, and portability) have largely been solved. And I believe that Siri is the first credible advancement in solving the sixth. You see, it’s becoming increasingly easy to interact with or consume information through the myriad intuitive interfaces, apps and devices available to us. But we’re still getting information into a network using mainly a 150-year-old QWERTY keyboard design. Despite relatively unlimited bandwidth at the consumer level, we still put consumer-generated data into our systems at a snail’s pace.
Much has been said and written about Siri since “she” was introduced by Apple last quarter. I’m no Apple fanboy, but we have transitioned our entire office of 20+ people to Macs. And we’ve done a clean sweep of our home in the past year, replacing four Windows PCs with three MacBook Pros, an iPad, an iPhone 4S, two iTouches, and five iPods. Siri on the iPhone 4S was the most anticipated feature in the bunch. It’s pretty cool when it works — which is definitely not all the time. Most writers and consumers focus on the slick interface, the ability to speak text messages, and the fact that you can talk to your calendar. In short, they’re focused where Apple would like them to be from a feature standpoint. But they’re missing the real point here. Siri (and the voice-based advertiser solutions it enables) has the very real potential to challenge Google’s search dominance — especially for local search.
It would be easy to dismiss Siri as a just a feature. But many disruptive landscape-changing innovations are initially dismissed as gimmicks. Clay Christensen pointed that out to us. But Siri is much more than an interface to information. It’s a platform. I think we’ll soon see third-party developers writing apps for Siri. It’s a much more natural, intuitive and — therefore — useful interfacing to important information than trying to teach people to type with their thumbs.
Don’t get me wrong. Google’s days aren’t numbered (although they are indexed). For many years to come, the information that consumers are ultimately accessing will still come through the search engines. But Siri and services like it are designed to let consumers engage with advertisers more efficiently. In that respect, Siri is a bit of a trojan horse. But that’s not necessarily a bad thing. Let’s look at how the relationship between the consumer and the advertiser is going to change as a result of integrating intuitive voice into the process of finding a product or service provider. We’re all carrying phones. With services like Siri, the balance of power in the search monetization space has begun to shift almost imperceptibly away from Google to Yelp and other directory service providers that power Siri’s results. On a computer, we’ve been trained to sift through several search results to find the one that best reflects our interests. But on the phone, consumers don’t want to sift through a range of choices. We expect the right choice to be given to us. Think about your experience on that increasingly rare occasion when you dial 411.
Jeff Haden wrote a great piece last month on Siri and the end of SEO as we know it. As Jeff points out, Siri may one day actually bypass search altogether. For example, if a consumer in Santa Barbara asks Siri to find the best sushi restaurant, the results she delivers are derived from matching a Yelp database against their location. So for an advertiser, spending bucks with Google to be the top result for “sushi Santa Barbara” won’t help you. Voice “search” applications like Siri may actually hold the key to cracking the local advertising market because most small businesses don’t have an online presence. With Siri, there’s no website required. Just the phone that we’re all carrying around in our pockets. And those local businesses that are web-savvy will spend that time instead optimizing Yelp, Facebook Places, and other geo-specific data sets. In this case, since Yelp’s recommendation engine is the brains behind Siri, Yelp optimization could become more important for small businesses than SEO. Seems like a stretch today, but it won’t seem so far-fetched a year from now.
And, as Bill Meisel points out (whom you should be reading if you care about mobile usability and speech), it appears that Google recognizes this challenge. Google chairman Eric Schmidt has already identified Siri as a threat to Google’s core search business, especially on mobile, referring to Siri as a “search and task-completion service.”
Apple now has nearly 20% share of the U.S. smart phone market who can now get connected to advertisers’ products and services simply by talking into their phones. And that just may be enough to give Google a run for its valuable mobile search traffic. But in any case, Siri and the myriad competitors certain to follow help to usher in the golden opportunity for “calls as currency” business models like RingRevenue. It’s going to be an exciting few years for voice.
Apple is now worth twice as much as Google. In fact, in the last quarter, Apple’s profits were $13 billion — more than Google’s entire revenue for the quarter. Google … that persistent ringing you hear? That’s tens of billions of customers calls to businesses each year. Apple looks like they get it already. Go ahead and answer the phone.
Jason Spievak is the co-founder and CEO of RingRevenue, the leading call performance marketing solution. Nearly all leading U.S. performance advertising networks license RingRevenue’s platform, including Commission Junction, LinkShare, ShareASale, the Google Affiliate Network, PepperJam, Epic Media and dozens of others. Prior to founding RingRevenue, Jason was a Director and CFO at CallWave, where he led its successful IPO in 2004. Prior to CallWave, Jason was Vice President of technology M&A in Broadview’s Silicon Valley office, where he was the execution lead on more than $1.25 billion in successful technology mergers. Jason has also held product management roles with Nextel Communications and with Netopia, where he helped the company complete its successful IPO in 1996. Jason earned his MBA from the Kellogg School at Northwestern University and his BA from UC Santa Barbara. Come hear him speak on Leveraging the “Offline” Channels on March 8 at AM Days SF 2012.