1. The document discusses the competition between Apple and Google/Samsung in the emerging soft AI market, with Siri and virtual personal assistants. 2. Google has a significant advantage over Apple in search, mobile operating systems through Android, and user data from its various services. Samsung also works closely with Google through Android. 3. However, Apple has strong products and customer loyalty through the iPhone. Siri is new but has potential if Apple can improve its capabilities. The winner will depend on further technological developments from all companies.

1. Apple vs. Google
Who will win the soft AI war?
Ismael Soto Cantero

2. Executive Summary:
1. Apple in creating a stack in the search engines business with Siri
2. Google + Samsung seem to be the main competitors that Apple should defeat in this
battle; correspondingly, they dominate the customers data and the mobile phones
industry
3. Apple has the right technology and the right products to captivate the customers but
starting from scratch is difficult and will take longer than analyst though
4. Soft AI technologies open a new business horizon for mobile devices and the
interaction of the customers with them devices

3. Siri is something new and it is here to stay with us for a long
time, so be aware about what it really means
On October 4th, 2011 Apple announced
that Siri would be included with the iPhone
4S
Siri represents the first soft AI and virtual
personal assistant that is launched to any
device; it interacts with us through our
questions and it is not limited to recognize
our voice and transform it into actions
"We are at a turning point in history where people can talk to a computer and be
understood. It’s a watershed moment where people won’t go back" Gary Morgenthaler
(first VC investor in Siri)

4. Apple has made his iPhone its main line of business and Siri is
there to take advantage of all the information of its customers
• Apple revenues and profits are driven
by the iPhone & iPad products;
around 72% of Apple´s revenues
• Apple is taking less than 5% of
market share in the smart phones
market but nearly 75% of its profits
Charts from Business Insider

5. The Siri´s back business model is to learn about customer´s
preferences and get money from them, just as Google does
1. Siri will learn from the customers their preferences
2. Apple will put the customers´ information over an open map data base using other
search engines in the back as a Wolfram Alpha and Yelp
3. Apple could use Siri as a crowder to become a preferences-based data base
4. Apple can monetize the information via 2 complementary ways:
a) Selling devices with the best VPA among other characteristics
b) Using the information that Siri is taking from the customers;
- Traditional way: getting money from advertisement
- New way: price discrimination and getting a haircut
Charts from Harrison Research

6. iPhone customers have received well Siri; however its non-fully
developed capabilities could entail a menace to Apple´s plans
iPhone customers like Siri and they are satisfied
with its capabilities; however, due to the fact that it
is a unfinished product, they cannot use the add as
frequently as they should (for Apple´s interests)
Charts from Business Insider

7. Google is the main competitor in this new soft AI business due
to its data bases and to its presence in the mobile industry (1/3)
• Google is the leader in both, the core
search services as well as the overall
number of searches by surfers
• Besides that, its mobile operating
system, Android is the most popular by
number of phones sold around the
world with around 47% of market
share and Samsung as the big fish in
the market by number of sold phones
Charts from Business Insider

8. Google is the main competitor in this new soft AI business due
to its data bases and to its presence in the mobile industry (2/3)
• Google has historical data of us and a
powerful tools called Gmail, Google, Google
Maps and Google+ that mimics Siri´s
preferences learning process since years
• Google included in its Android system tools
that act as a VPA since before Siri appeared
• Google is also embedded into iPhone as
predefined search engine. Something that
seems to change in the following weeks
Charts from Business Insider

9. Google is the main competitor in this new soft AI business due
to its data bases and to its presence in the mobile industry (3/3)
• Samsung is an intensive R&D company with
more than 45.000 US patents (4.800 Apple)
that can face Siri technology soon or later
• Samsung leads the market and has launched
the new Samsung Galaxy III that includes a self
build VPA. It is true that is not as advanced as
Siri is
• Samsung works over Android and would use
this to create powerful collaboration between
Google and them whenever they get and
maintain enough market share
Charts from Business Insider

10. However, Google also has problems to retain its core business
and iPhone is at the end a massive business by itself; a $100B
business only surpassed by 53 other companies in the world…
Charts from Business Insider

11. …and a technological war have started through the firms via
acquisition processes in aim to adquire a massive amount of
patents, increasing lawsuits among them

12. The end of this war depends on whether Apple is able to make
Siri work better and if Google can make attractive the value of
its current and potential capabilities
Apple
Samsung + Google
• Cutting the edge
soft AI technology • Massive data and
customers • Starting from
• Cutting the edge scratch is always • Android and
knowledge Google do not
mobile phone difficult, specially
product and • Android is the when Apple has offer products as
business model leader mobile OS launched Siri attractive as Apple
in absolute terms unfinished does
• Apple starts from and Samsung is the
scratch with the first cell maker in • Apple product • Soft AI current
customers learning the world users are high portfolio is
process value ones but few atomized and not
• Potential synergies in relative terms to
• Wide portfolio of among Google cutting the edge
products and its the market size
products
complementarity
• New
developments in • Users are more
soft AI VPA from and more search-
• Entering into a
Samsung and • Being the leader is driven by
new business; big
other developers always questions and
data management
challenging, will answers and not
and its • Fully integration of Apple keep on the just by links. Also,
implications each of the track? they use
Google´s tools and alternative ways of
the Android searching
systems

13. ismael-soto.com