The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary:

• Apple’s Siri is still the dumbest smart voice assistant. This is bad because Siri could be a compelling selling point for the iPhone and iPad.
• Pricey iPhones can be justified by a robust on-device and cloud-based Artificial Intelligence smart voice assistants.
• A smarter Siri voice assistant could help improve HomePod’s tiny 6% market share in smart speakers in the U.S.
• A smarter Siri is needed if Apple wants to be a leader in smart home systems.
• I Know First’s artificial intelligence-powered stock picking algorithm has a bullish one-year forecast for AAPL.

There’s an urgent need for Apple (AAPL) to quickly improve its smart voice assistant, Siri. A year after we knew why Siri is so dumb, Apple’s employees are still unable to improve Siri. Apple wants to hire a Siri Engineering Product/Project Manager. The laggard status of Siri against Amazon’s (AMZN) Alexa and Alphabet’s (GOOG) Google Assistant is partly why Apple’s HomePod smart speaker only has 6% market share in the U.S. There were 66 million smart speakers sold/installed in to the U.S. last year but HomePod is failing there.

(Source: CIRP)

Why A Smarter Siri Is Highly Desirable?

The HomePod could be a non-iPhone revenue booster for Apple. The declining iPhone sales compels Apple to find new sources of growth. Smart devices like the HomePod could be new growth catalysts for Apple. However, the persistent ineptitude of Siri convinced me that Apple will not be a leader in smart home devices within the next five years.

Improving Siri should be a priority for Apple. Stone Temple’s recent U.S. survey found out that young adults and older people are really embracing voice assistants. Please study the chart below. More than 50% of people aged 25-34 are now using voice commands at home and at the office.

Almost 50% of people aged 45+ years old are using voice commands when alone at home.

(Source: www.stonetemple.com)

Apple knows that middle-aged and older people have much greater purchasing power than younger adults. A smarter Siri could help Apple sell more iTunes apps, books, games, and movie/music subscriptions. Amazon Video is beating Netflix (NFLX) on users aged 35+. This is not surprising, Alexa is very smart and has hundreds of skills/apps that help people quickly find accurate movie/TV show recommendations.

The Speech and Voice Recognition industry will have a market size of $31.82 billion by 2025. It is growing at a CAGR of 17.2%.  This niche market obviously involved smart voice assistants like Siri. Going forward, Siri could be Apple’s gateway to attracting more customers for its Services business segment. Instead of touch typing, voice commands/search is a more convenient way to find new products and apps.

Even iPhone-cloner Android phone vendor Xiaomi realized the usefulness of a voice assistant. Xiaomi’s XiaoAI voice assistant has more than 100 million activations. Unlike Siri, I have yet to read a single complaint online over XiaoAI. The point is that Xiaomi invested enough resources to make sure its voice assistant looks and performs like Google Assistant.

Voice assistants are emerging as useful in many ways that helps improve the daily lives of people.

(Source: valuewalk.com)

Siri Could Boost iPhone/iPad Sales

The bigger picture is that a smarter Siri could make the iPhone and iPad more useable at home, at the office, and on-the-move situations. The reason why Alphabet and Amazon invested in their voice assistants is they are the best way to engage users to shop more online and subscribe to streaming entertainment services.

There’s more than a billion iOS devices that could use a smarter and more useable Siri. Due to the tens of millions of music, apps, movies, TV show episodes available online, iOS device owners need a Siri that can quickly come up with accurate answers when queried for movies based on a person online viewing habit/preferences.

An iPhone could also be a good travelling companion if Siri could find the fastest route to a destination, camping sites, hotels/motel, gas stations, and restaurant locations.

Conclusion

Apple has billions of dollars in opportunities from making a smarter Siri. One example of this is selling more $329 HomePod. Instead of selling only 4 million units of the HomePod, a smarter Siri could help boost sales to 8 million units/year. The revenue from 8 million units of $329 HomePod is $2.62 billion/year. Add to this the potential number of new Apple Music subscribers and iTunes books/apps/movies purchases. A better voice assistant could contribute up to $5 to $10 billion in additional revenue.

Further, Apple can afford to build a new voice assistant from the ground up. The current Siri is based on previous code that is more than a decade old. Xiaomi’s XiaoAI was not bought from another company like Apple did with Siri. It was built from the ground up. Apple should also do this, let the old Siri operate for now while simultaneously working on a brand new voice assistant.

I still rate Apple as a buy for long-term investors. I Know First has a bullish one-year forecast for AAPL. I Know First has a high predictability score for APPL’s 12-month market trend performance.

How to interpret this diagram.

Past I Know First Success with Apple

I Know First has been bullish on AAPL’s shares in past forecasts. On December 28, 2018, the I Know First algorithm issued a bullish 3 months forecast for AAPL with a signal of 70.28 and a predictability of 0.69, the algorithm successfully forecasted the movement of the AAPL share.  After 3 months, AAPL’s shares rose by 10.89% in line with the I Know First algorithm’s forecast. See chart below.

This bullish forecast for AAPL was sent to the current I Know First subscribers on December 28, 2018.

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Please note-for trading decisions use the most recent forecast.