The Apple Car
The initial hyperventilated speculation on this came just 11 days ago:
The Wall Street Journal | Apple Gears Up to Challenge Tesla in Electric Cars (13 February 2015)
It has been one of the hotter topics of conversation in the tech press ever since:
The case for
we’ve talked to our sources and compiled a list of some key employees Apple has hired and assigned to the project. A couple things we learn from the hires: Evident by this long list of automotive experts, it’s clear Apple’s ambitions go well beyond just its iOS-based CarPlay in-dash system. Well beyond software too, as many of the names below are hardware engineers coming from Tesla, Ford and other notable automotive related areas. In fact, the majority of employees on this list that are reporting to team leader Steve Zadesky come from an automotive hardware background 9to5Mac | Revealed: The experts Apple hired to build an electric car (19 February 2015)
In order to truly move the needle, Apple has a handful of choices: 1) Become a telecom player 2) Become an energy company 3) Become a bank 4) Become a car maker 5) Create a new industry Medium.com | It Would Be Weird If Apple *Wasn’t* Working On A Car (20 February 2015)
Morgan Stanley said in a note this morning that the automobile market is a huge opportunity for the iPhone maker. The firm believes Apple can become a major player in the sector. Morgan Stanley analysts noted that if Apple gains 25% of the auto market, the value of its auto business would be the same as the entire smartphone industry. TheStreet | Apple (AAPL) Stock May Rally After Upbeat Morgan Stanley Note on Automobile Opportunity (24 February 2015)
The case against
There is a simpler and regrettably less grand explanation for the rumors. Johann Jungwirth, the Mercedes Benz R&D exec that Apple hired last September, worked on infotainment systems, which makes him a natural for Apple’s work on CarPlay. The mystery vans are most likely part of the company’s Maps product. The Monday Note (Jean-Lous Gassée) | The Fantastic Apple Car (15 February 2015)
During my years at Apple, I took an Industrial Design team to pay a visit to Giorgetto Giugiaro, a towering figure in the automobile industry who would later be recognized as one of the Car Designers of the Century. ... When we walked into Giugiaro’s Italdesign offices, a surprise awaited us. When I thought of Industrial Design — Esthétique Industrielle in French — aesthetics first came to mind, industry second. But what Giugiaro showed us was the opposite: The industrial side of his practice was, for him, truly foremost. In his own words, his job wasn’t to design an award-winning shape for a car, his job was to design the process, the factory that would eventually excrete a continuous flow of vehicles. The Monday Note (Jean-Lous Gassée) | Apple Car: Three More Thoughts (22 February 2015)
in many countries–the US included–government interference makes it practically impossible for a producer to go out of business, no matter how poorly it’s managed or how untenable the market conditions. But this might be the tell-tale sign that danger lurks. Theory suggests that incumbents going out of business is an essential indicator of industry health. Without their exit, entrants are never allowed to bring disruptive ideas to bear Asymco (Horace Dediu) | The Entrant’s Guide to The Automobile Industry (23 February 2015)
The obligatory industry incumbent pooh-pooh'ers
Bloomberg | Apple Hairball? Ex-GM CEO Says Building Cars May Not Be Worth It (18 February 2015)
The Mac Observer | Daimler Chairman Continues Auto Industry’s Dismissal of Apple Car (24 February 2015)
Then again, maybe it's just all about the batteries
The New York Times | Apple Poaching Auto Engineers to Build Battery Division: Lawsuit (18 February 2015)
Samsung announced Monday that it will acquire the "battery pack business" of Magna International, a major automotive supplier. The company said the purchase, "is expected to enhance SamsungSDI’s capabilities in batteries for electric vehicles by combining the company’s established leadership in battery cells and modules with Magna's expertise in battery packs." The Mac Observer | Samsung Buys ‘Battery Pack Business’ for Electric Cars (23 February 2015)
Apple is “luring away” Samsung’s experts in next-generation technology — mainly experienced technicians and engineers engaged in signal- and visual-processing management and battery technology, according to the Korea Times. Apple Daily Report | Apple reportedly ‘luring away’ Samsung experts (23 February 2015)
Others have proferred thoughts that if Apple is considering building cars it should be focusing on hydrogen fuel-cell power rather than battery-powered vehicles.
My Thoughts
I laid out the questions that I thought Apple would need good answers to before including a new product into its new ecosystem last year in this board's initial post:
1. How much profit Apple could make selling the device 2. How often that device would be replaced (repeat business) 3. Could Apple’s version be a differentiated product? Apple doesn’t do commodity products. 4. How badly the current market leading products suck compared to what a well-designed device could be The former General Motors exec I cited above assumes that Apple will enter the business he knows, which is low-margin. I do not agree. If Apple enters the carmaker biz, it will be with a differentiated product, as has always been the case for Apple. The Mercedes Benz exec made similar statements, which seem odd coming from a luxury carmaker, but then again Horace Dediu states his commandment number 1 in the article I cited above as:
It’s easier to design and build a Ferrari than a Ford. And yes, if Apple enters the car market, it will be closer to Ferrari's model even than to Mercedes Benz', though I believe Apple would want to make a couple orders of magnitude more cars than Ferrari, probably at a more reasonable price. Apple might prefer its customers lease rather than buy its (hypothetical) cars, thus encouraging more frequent refreshes.
A Final Note
I go back to two posts I wrote almost 10 years ago on another site, about a driverless public transit technology that was just starting to get traction after a decades-long gestation. Several startups have built successful installations of this emerging form of public transit since then, none in North America, but serious interest is starting to emerge here, too. Google and Tesla's Elon Musk are working on variants already. It is *much* more practical than driverless cars, since it can only run on exclusive right-of-way.
This would not be a high-volume business, but would bring significant tangible benefits wherever it was built: economic as well as environmental sustainability, fast, safe, and convenient enough to entice people from their cars, disruptive to both the automotive business as well as the megaprojects that are urban planners' only current option, and exposing a wider spectrum of riders (like Windows and Android users) to Apple's technology in an entirely new way, perhaps encouraging switchers. It would work extremely well in linking Apple's campuses to Caltrain and BART in Cupertino and environs, too, with the possibility of providing mobility improvements to the public as well as Apple's own employees.
Apple would enter a business like this as its immediate leader, its prestige accomplishing at one stroke what forty years of low-budget nibbling around the margins by less substantial outfits has only begun to suggest. As I wrote about Apple's entry into the cell phone market in the same time frame (pre-iPhone), and which would be true in this case, too:
second place goes to the [competitor] that sucks least ggg
Personal Rapid Transit (PRT) industry news here. |
