It all starts with Siri, Apple’s voice-activated ‘knowledge navigator’ available on the iPhone 4S. Reposted from Quora, by Brian Roemmele:
Will Siri become a transaction completion system? Yes, absolutely. This is one of the ways I am certain that Apple will monetize Siri.
“Siri, order 3 large mushroom Pizzas from Tony’s Coal-Fired Pizza and have it delivered to my house after 7pm. Pay using my American Express card and add a nice $5 tip.”
The New Siri Took One Step Back
Apple’s number one aim is to create a very rich and delightful user experience. Thus it is built in to the very DNA of Apple to be more than cautious with how new features are extended. What we see as Siri limitations today is artificial, it certainly can and did do more in some ways.
In the very few months that Siri was a stand alone app, from Siri Inc., one was able to ask Siri to find a local restaurant, and to book a reservation. You could have said: “Siri book a 7 p.m. reservation tonight at Pizzeria Mozza”. This was an early form of a Transaction Completion engine. The Task Completion And Domain Model system built into Siri would have contacted the Open Table API and queried for a possible reservation. If a reservation is available, Siri would have passed on to Open Table all of the necessary contact information. This was before Siri had a voice, but it was a magical process even in text. Ostensibly Open Table would have compensated Siri Inc. for the transaction. With Apple’s release of the iPhone 4S integrated Siri engine, they have since backed off from this Transaction Completion model, temporarily.
I believe that Apple scaled back Siri’s abilities so as to work on perfecting the entire user experience. To focus on just a basic set of Task and Domain Models to start with and to grow very slowly. By constraining what Siri can do in beta Apple will be able to laser focus on the entire process. Certainly Apple thus far has been surprised by the server load at the North Carolina data center and has experienced some down time because of unexpected impact to the servers. Clearly this is new territory for any company and it was immensely wise to artificially limit what Siri can do for a number of reasons.
Siri Commerce: Transaction Completion
Apple is considering a number of revenue models for Siri, in fact I am sure that new revenue concepts will be thought of as time moves forward. There are certainly quite a number of startup companies that are offering any number of new concepts to Apple.
Siri by its nature is a Task Completion Engine and not a Search Engine. Thus the economic models that grew up in web 1.0 and web 2.0 with cost per view/cost per click will not likely be a dominant revenue system for Siri. However there are about 3900 commerce APIs that span the spectrum of Transaction Completion possibilities for Siri users. I am predicting this number to expand to over 10,000 in the next 24 months conservatively. More on how Siri APIs could work can be found here: Siri (software): What do application developers need to know about Siri to interface with it?. By no means do I believe this is going to be the only way Apple will Monetize Siri. There will be a majority if APIs that Siri will access that will not result in a Transaction Completion and other revenue models will apply in these cases, if at all.
Less Advertising, More Completed Transactions
In many ways Transaction Completion APIs will supplant traditional advertising models. There will be a one for one direct result for companies with no guessing on how Siri has generated revenue. It would be of immense value for companies to assume that this is the direction for Siri and perhaps other Siri-like systems. There is little value in assuming that Siri will default to underlined hyperlinks on a web page when you are requesting the need to purchase common items in the future.
Future versions of Siri will allow for more customizations letting users establish defaults and real-time overrides to direct Siri to a Domain, Task Completion and Transaction Completion models. This means at the very least Apple will assign a default or a round robin default for perhaps 500 of most common Transaction Completion models.
Soon Siri will accept requests like, “What are all the flights from Virgin Airways at Long Beach Airport to New York tomorrow”. Siri, with your permission and profile customizations will wade through the process and deliver up a pending transaction waiting for your approval. There will of course be levels of security and the ability to reverse a transaction or even a period buyer’s remorse reversals for a cooling off period.
Companies that create Domain and Task models that are accessible via an API will be in a very good position to be ready for Siri if Apple chooses this path.
Siri Completing Retail Transactions
Siri’s Transaction Completion systems will also impact traditional retail transactions in a number of obvious and not so obvious ways. There will also be impacts to new and old Payment Card processing systems. Siri may present an unexpected barrier to quite a number of creative business plans. However I do see a number of ways Siri could be used to extend some Payment Card processing ideas.
Simple tasks like ordering your favorite burrito at Chipotle could be as simple as, “Siri order my regular order at Chipotle for me to pick up at 1:30, charge it to my MasterCard”. You would simply go to the order pickup area at Chipotle and pick up your order.
Even more detailed requests like “Siri place my regular order at Sightglass Coffee when I am a mile from the location, pay with my Debit card and leave a 20% tip”. In this case the order is sent at just the right time so your beverage is ready at just about when you arrive and nothing is needed other than a pick up or perhaps it will be brought to you.
Apple Does Not Need To Be The Payment System In This New Model
As mentioned before, there would be a driving motivation for merchants to create Transaction Completion APIs in these retail use cases. Clearly I am not necessarily suggesting that Apple will use EasyPay or linked iTunes credit cards to complete the financial transactions. There is evidence that they will not but partner with known and some unknown companies that will have new or existing Payment Card Processing systems that would integrate with Siri’s Transaction Completion APIs. I have very clear visions on how this may play out.
To be successful in the Transaction Completion model, Apple would define how all aspects of how a transactions would be completed and the merchant would use a Payment Card Processing Solution of their choice that has made the effort to create APIs that will allow for these systems to work.
Apple would not want to start to process the transactions that are beyond the walled garden of iTunes, the App Store and it’s own retail products because they have rather high resolution control over risk in this environment. Even more directly, it is a far cleaner relationship if Apple gets a guaranteed payment when they deliver a paying customer to a merchant and get payment from the merchant, rather then Apple collecting payment from the customer and then paying the Merchant a reduced amount.
Advertising Dollars Shifting
Merchants at the end of the day want to do transactions. Advertising is just a method to drive transactions and perhaps build brand/company awareness. In this new Siri Transaction Completion model it would not be considered advertising in any traditional sense. Thus if proven successful, advertising dollars may start a seismic shift to this new model.
At first glance Siri’s Transaction Completion model may appear to only Impact mobile and Online advertising. However it is my view as Siri moves across all Apple devices including Apple TV Siri will have access to a $200 Billion dollar advertising market. This is in effect a large order of magnitude above the entire Internet advertising spend.
Siri does not really need to touch a single dollar spent for online advertising and still have billions of dollars potentially spent in other mediums. By delivering up transactions directly to the merchant, there will be a clarity on its effectiveness and it will be very, very powerful.
Hyperbolic Speculation
This all may appear to be a bit Hyperbolic in scope, but the revolutionary way Siri could deliver customers to companies is historically unique and frankly can become a magical experience that “just works” for both the merchants and customers.
It may not seem to be in Apple’s best interests to open up the Transaction Completion APIs, but enough thought will show that Apple will be leveraging the same power the App store created. In that model it could have been said that Apple will make all the great apps and leave little to others. Of course, the 1000s of millionaires the app store has created is testament to how well that model has worked. I think it will work as well with these APIs.
I have already identified 100s of use cases in the new Transaction Completion model and it is clear that there will be “new” winners on all fronts and some unexpected “losers”. There are some ways to see how Siri will expand through the patents Apple has been granted and applied for, more information is here: Siri (software): Does Apple have patents that may show the future of Siri?.
I am not suggesting that this is all going to happen overnight, this is just one logical transition Siri will take, and it is a very long journey.
