Apple, Siri and the customer insight play

Apple, Siri and the customer insight play

Siri isn't a voice control system. Nobody uses those, and Apple wants something everybody will use. First, they value user experience, second they value differentiation from other platforms, and third, certain business models are predicated on having very large user bases. That's where the revenue streams become complex and the profit becomes really interesting.

Let's say iPhone 4S has Siri and it looks cool and it makes people want to buy it. Apple, being well managed and having good hardware margins, makes money on the sale. Then people start using Siri and feeding it incredible amounts of demographic and behavioral data. Apple, being smart, can use all that demographic and behavioral data to develop a high level of customer insight, allowing them to make better and better selling products and services.

But there's more. If Apple chooses to adopt a Google-style business model, they can aggregate and anonymize that data and sell it to advertisers and marketers. That turns the customers into products, something they tried -- and have thus far failed -- to do with iAds in apps. Siri moves it to the OS level and while it won't display ads, it will collect data that can be fed back into iAds, or other advertising and marketing platforms.

Google already pays Apple to be the default search engine on iOS for that very reason -- to sell ads against search results. The App Store, however, reduced the amount of searches being conducted on mobile. (As Apple has proudly announced during their events -- unlike desktop, people aren't spending their time in search, they're spending it in apps.) That started to cut out Google but didn't cut in Apple.

Siri cuts in Apple. Queries issued through Siri go to Apple's servers. Apple gets the data on who's issuing them, when, where, and in relation to what else. Without building a search engine of their own, Apple steals away what makes search so valuable. And because they're doing much more than search, they can monetize against much more than just search results.

But there's yet more. Because Apple becomes the intermediary -- the walled gate -- between their customers and the internet, traditional internet services lose all visibility into their customers. They don't see iOS users running queries, they see Apple running queries on behalf of iOS users. Tons and tons of them. That loss of visibility means internet services lose the very customer insight Apple has gained -- they lose the ability to make better and better selling products, and to monetize individual users.

Apple has already done this with the App Store and iOS subscriptions. App Store developers often don't know who their end users are, and traditional print media was livid when Apple made the sharing of demographic data opt-in for end users. Sure, account logins can mitigate this somewhat but often make for a worse user experience and there's no guarantee end users will make accounts for every app that wants them. (Just like not everyone sends in the warranty card for that printer they just bought at Best Buy or Staples.)

With Siri, that extends Apple's intermediation to internet services as well. So, increasingly, if companies want to get customer insight back, it will become easier to just go to Apple and get it -- meaning buy it. To the best of my knowledge Apple doesn't offer that now for App Store developers and they may never offer it for internet services tied to Siri, but it's a business model they could choose to explore. It turns the partners and suppliers into customers, and again opens the door to yet another entirely new business.

But there's even more. With Apple as intermediary, they don't just get the customer insight for one service, they get them for every service that goes through their system. That includes both complementary and competing services. If visibility into your own users is valuable, how valuable is visibility into your competitors' users, and their demographics and behavior?

To make it more tangible, Coke has no idea who buys a can of their tasty beverage at the local QuickyMart. But QuickyMart does, with ever-increasing granularity. And if they choose to, and they know how to derive proper customer insight from it, they can use it to better stock their shelves and increase their profits. And they can sell it to advertisers who want to reach their customers. And they can sell it to Coke, who wants to better understand the end consumer to improve their own profitability. And they can sell it to Doritos who wants to be bought alongside Coke, and they can sell it to Pepsi who wants those customers to buy their tasty beverage instead.

Again, Apple may never choose to get into this type of business, or like iAds they may not do it well, or they may get into some or all of it in a very different way. Customer insight, however, opens the door to an increasingly important and valuable revenue source, and Siri opens the door to customer insight.

Have something to say about this story? Leave a comment! Need help with something else? Ask in our forums!

Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

More Posts

 

Could not connect