Siri Is Apple's Post-Jobs Ticket To $1,000

With the passing of Steve Jobs, investors in Apple (AAPL) need an early warning signal to know if Apple stock will go to $1,000 or $100 in the future. This article is the second in a series titled “The Future of Apple,” designed to help investors gain appropriate insights and be prepared to act on an early warning signal.

Siri is the most advertised feature of the new iPhone 4S from Apple. Siri is a voice controlled virtual personal assistant that relies on artificial intelligence. Apple has done an excellent job at integrating Siri with other apps on the phone.

In our test, Siri works about 50% as well as advertised but it is still a quantum leap. It is early in this transformational voice interface with computing devices. As a reminder, the Wright brother’s first flight was only 120 feet. Siri is marked beta. When was the last time Apple released a beta? discount jerseys As I will explain later in this article, widely releasing Siri beta is a brilliant strategy.

Siri integrates two tasks: first it does a great job at recognizing speech and second it figures out what you mean. Neither one is an easy task. I know it from first-hand experience as an engineer and entrepreneur. Two of my companies attempted to accomplish what Siri has accomplished on a very limited scale in narrow applications designed for supply chain. I must admit that in both cases, we ended up abandoning the functionality due to technical problems in spite of significant interest from customers.

When I asked Siri to find the best Indian restaurant nearby it came up with the right answer. It did not answer with the nearest restaurant, but found the highest rated restaurant nearby.

Siri is a spin off from SRI International Artificial Intelligencenfl jerseys cheap Center which itself came from the DARPA CALO project. CALO stands for Cognitive Assistant that Learns and Organizes. CALO was a project that attempted to combine various artificial technologies. The project was funded by Defense Advanced Research Project Agency, commonly known as DARPA.

Siri was founded as a private company in 2007 and was jerseys wholesale later acquired by Apple.

Siri is a stealth step in the march of Apple stock toward $1000 because to date analysts and competitors seems to underestimate its implications. Here are the key points from an investment perspective:

Siri is bringing in new customers who were previously Android users or who were not using smart phones. I initially drew this preliminary conclusion from my conversations with a number of AT&T store managers. Now there is a variety of data from a number of sources supporting this conclusion.
Siri increases stickiness of Apple phones. High stickiness means thatsteelers jerseys cheap once someone starts using Siri they are unlikely to switch. When asked to call my wife, Siri responded with question wanting to know which one of my contacts was my wife. After about 10 minutes, when I again asked Siri to call my wife, it knew who my wife was. Imagine Siri learning about you and what you do for two years and then giving up Siri for an Android phone that does not know you!
In due course Siri will migrate search revenues from Google (GOOG) to Apple.
Siri raises the bar for Google Android and Microsoft (MSFT) Mango to compete. Microsoft Mango is the next generation mobile operating system from Microsoft.
In addition to the technical difficulty involved in voice recognition, context interpretation, and tightly integrating the two with other apps, there is a question of computing power needed to accomplish the task. Apple appears to do a lot of computing that is needed by Siri in its massive data center in North Carolina.

The technical and business model of Apple to integrate hardware and software in a seamless offering lends itself to doing part of the computing in the cloud. Google and Microsoft with their licensing model will have significant difficulty competing.

Apple’s strategy of a very wide beta release of Siri is brilliant because cheap jerseysnow Apple is accumulating a vast amount of data that will not be available to a competitor trying to catch up. Further, imaging opening Siri to a 100,000 developers in Apple’s ecosystem years before such an opportunity becomes available to Android developers.
Apple iPhone was unique when it was launched. Now Android, with the introduction of Ice Cream Sandwich or Android 4.0 has almost caught up to iPhone 4. Once again the gap widens in Apple’s favor. Siri is definitely the right step in the march of Apple stock toward $1000.

Next in the Series “The Future Of Apple”: The next article in this series will focus on investment implications of patents.
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Full disclosure: I am long Apple from an average of $131. I took profits on 50% of the position at an average price of $360. Subscribers to ZYX Buy Change Alert may have a similar position and may have taken similar actions.