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Siri, Is This Frank Fazio Apple Lawsuit For Real?

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Frank M. Fazio thinks that Siri is so bad that he has not only sued Apple (AAPL), he wants the suit to be a class action.

The complaint, filed in the U.S. District Court of Northern California, states that the iPhone 4 S Siri feature does not perform as advertised.

The complaint states, “Notwithstanding Apple’s extensive multi-million dollar advertising campaign showcasing the Siri feature and the fact that the iPhone 4 S is more expensive than the iPhone 4, the iPhone 4 S’s Siri feature does not perform as advertised, rendering the iPhone 4 S merely a more expensive iPhone 4.”

The basis of the claim lies in the assertion that iPhone 4 S is the same as iPhone 4.  The basis of damages is that iPhone 4 S costs $100 more than iPhone 4.

The key question for investors is determination of the merits of the lawsuit.  After all it is the popularity of Siri that helped Apple report blowout earnings for the last quarter.  The blowout earnings launched the present strong leg in Apple stock price.

My own analysis concludes that the law suit will turn out to be immaterial to Apple stock performance for the following reasons.

Siri Is In Beta

Apple has clearly stated that Siri is in Beta.  The word ‘Beta’ has now become a part of our popular lexicon.  We did an informal survey of non-tech savvy people and found over 90% had a pretty good idea that Beta means the product is not finished and is in a testing phase.

Of course, the plaintiffs will try to convince the court that merely adding a disclaimer does not reprieve Apple from being truthful.

Improvements In iPhone 4 S

Even without Siri, iPhone 4 S contains a number of improvements.  In other words, iPhone 4 S is not iPhone 4 by any means.

iPhone 4 S contains improved A5 processor, a much better camera with 8 mega pixels and much better optics, faster download speeds, and battery improvements.

Class Action Status

The plaintiff will have to show that other users were also deceived.  Certification of class is a high burden and Apple attorneys may find a number of grounds to nip the class certification in the bud.

Perhaps the lawsuit is more of a commentary on our legal system.

There have been numerous reports that Google (GOOG) has been working hard on a Siri competitor.  Google may be able to use this lawsuit as a publicity stunt to offer its own Siri alternative.

About Me: I am an engineer and nuclear physicist by background. I have founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the chief investment officer at The Arora Report, which publishes four newsletters to help investors profit from change. Please feel free to write me at Nigam@TheAroraReport.com.

You can follow me here and get email notification when I publish a new article.

Full disclosure: Subscribers to The Arora Report are long Apple from $131 and have taken partial profits at $360, and $525.