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Apple (AAPL) Buys AI Specialist Startup Lattice for $200M

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Per a TechCrunch report, a few weeks back, Apple Inc AAPL snapped up Lattice Data Inc, a startup specializing in artificial intelligence (AI). Citing a source, the report claims that Apple paid about $200 million for the acquisition. Plus, the company has “absorbed” all the 20 Lattice engineers into its operations.

Founded in 2015, Lattice “turns dark data into structured data with human-caliber quality at machine-caliber scale.” Dark data is defined as “unstructured data such as text and images.” It was an outcome of the Stanford research project, DeepDive, which “is a programming and execution framework for statistical inference, which allows us to solve data cleaning, extraction, and integration problems jointly.” 

Lattice for Siri?

Apparently, Apple is expected to use Lattice’s abilities to improvise its digital voice assistant, Siri. Lattice has reportedly been in talks with other tech giants like Samsung and Amazon AMZN to improve upon their voice assistants, Bixby and Alexa, respectively.

Earlier this year, Apple acquired Workflow, a popular automation app which allows users to group together varied number of actions to complete tasks. Reportedly, the app will be integrated with Siri Application program interface (API) as well as other APIs. The integration of Workflow’s automation capabilities into Apple’s private APIs is expected to make the process of developing Augmented Reality (AR) devices easier.

Apple CEO Tim Cook has emphasized on developing the technology time and again over the last few months. Cook had mentioned about the company’s AR efforts for the first time at the third-quarter fiscal 2016 earnings conference call. He has been quoted saying, "AR can be really great, and we have been and continue to invest a lot in this. We are high on AR for the long run. We think there are great things for customers and a great commercial opportunity." In fact, he has been quoted by media reports saying not VR but AR will be “the larger of the two, probably by far”. Apple is reportedly working on AR glasses and has collaborated with renowned lens maker, Carl Zeiss.

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Over the past few years, Apple has acquired quite many startup companies that are specializing in AI, and augmented reality and virtual reality (AR/VR) technologies. Some of the acquisitions include AR solutions provider, Metaoi, Faceshift (motion capture), FlyBy Media (AR software), Perceptio, Turi and TupleJump (all into Machine Learning).

Buzz Surrounding AI and AR/VR Technologies

AI, along with AR/VR technologies, is the next step in technological advancement. According to a recent IDC report, global revenues of the AR/VR market are expected to grow at a CAGR of 198% from 2015–2020 to $143.3 billion by 2020. Meanwhile, global revenues of the Cognitive & AI market are expected to grow at a CAGR of 54.4% to over $46 billion by 2020. As a result, all tech behemoths, including Microsoft MSFT, Alphabet Inc GOOGL and Amazon, are trying to grab a share of this lucrative market.

In addition, Apple is under tremendous pressure to introduce new offerings, as its most important growth driver — iPhone — faces decelerating demand. Apple has been exploring newer growth avenues to boost its top line.

Zacks Rank & Share Price Movement

At present, Apple carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Given the phenomenal performance of its iPhone 7 and 7 Plus, Apple’s shares have outperformed the broader market in the past six months. Over the last six months, shares of Apple have registered growth of 41.56% compared with the Zacks Computer Mini industry’s gain of 40.26%.

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