In last week’s Insider column, I wrote a piece where I said I was highly skeptical Apple is creating a car. Even though the the next day the Wall Street Journal wrote Apple had a car project called Titan and apparently had sources saying Apple was making a car, I am still not convinced this is the case and believe they are more interested in owning the dashboard then branding a car. Yesterday, my Tech.pinions colleague Bob O’Donnell wrote a good piece underlying his skepticism that Apple is doing a car and questioning the hysteria surrounding these rumors.
But after I tweeted comments I made in USA Today about what I thought Apple’s intentions were regarding extending Car Play in a more advanced manner that could be integrated into all cars, I got a note from a friend who has also followed Apple for decades. In the note he suggested something that has a slight ring to it given Apple’s propensity to create ground breaking products on top of existing ones.
While he also is skeptical about Apple doing a car, he suggested that, if there is one area that could drive Apple in this direction, it could be related to energy — the idea they could deliver a breakthrough in an electric car that spans not only the dashboard but the creation of a vehicle with long range potential that is ultra clean and environmentally friendly. He felt long range would be the operative word here.
I met Steve Jobs a few years after he got back from India where he went to seek enlightenment. Although, in those days, he was more like a hippie than a tech titan, I knew from people close to him he had become in tune with nature and the earth and this was at the root of his view of making Apple as green as possible. In fact, this is at the heart of Apple’s design for the new campus and for the way they power their server farms and the soon to be built solar farm in Northern Monterey County.
While I think the idea of Apple creating a car is still a stretch given Apple’s core competencies, if Apple had a breakthrough in electric auto design that could also allow them to control the total user interface and they created a reference design of this concept as I suggested last week, it could be important for them and the auto industry. One of the things I have encountered in dealing with the auto industry over the last 20 years is the long development times it takes to integrate anything new into their cars. I remember when the iPhone came out, one of my friends who was close to one of the luxury car brands linked this auto company up with Apple to get them to support the iPhone. That was in 2007. The actual support of an iPhone in that particular vehicle, even though it was a simple connector, took three years to implement.
If Apple created an electric car prototype or reference design they could license or partner to one of the major car companies, it could speed up the creation of an Apple-tech dominated vehicle. It would have to be revolutionary of course, especially as it relates to breakthroughs in green energy for automobiles. But it could get traction as many of the automakers want to “out Tesla Tesla” as fast as possible since Tesla is starting to eat into the luxury car makers bottom line. My friend went as far as to suggest a concept car could eventually be sold through a luxury dealership using their brand with Apple’s design stamp.
But even with this “energy” angle suggested by my friend, I am still skeptical of Apple doing anything more than a prototype and having real trouble seeing their next big thing as an Apple Car. While it is true a connected, immersive car experience could be big for Apple with the support of many automakers behind it, I am really having trouble seeing Apple becoming an auto company even if they create a breakthrough product in this category.
Let’s pretend Apple wanted to get into car manufacturing, what would they do:
–Outsource the actual building of cars
–Avoid being beholden to others for crucial parts of the product, so own the core technologies and use of-the-shelve for everything else
–Avoid the low end of the market
–Focus on the user experience and design
Building reference designs to promote components (e.g. battery technology) does not seem to fit their overall philosophy. There would be very little opportunity to provide the superior user experience that supports premium pricing.
Building dashboards and computer-aided driver support systems would be possible and close to their core competencies. There would be massive room for improvement in the driving experience. However, they would need to strike a deal with some existing car manufacturers who are the gatekeepers to that market (and not very eager to give up ground to aftermarket accessories). So it would only ever work if they figured out the commercial side first (i.e. sign-up car manufacturers who are currently not selling much in the premium segment).
Building entire cars using a is certainly possible, after all Tesla managed to do that on a fairly small budget, see http://ftalphaville.ft.com/2015/02/17/2119262/no-one-needs-to-buy-tesla/ Like Tesla they would have to go for an all-electric car, but organising both the supply chain and distribution channel is a time consuming chore. Using a contract manufacturer might provide relief on the supply chain side. However, building a distribution channel and providing repairs&maintenance would be much easier if they teamed up with an existing car manufacturer.
I’m sceptical, but never say never. The car market is even bigger than mobile phones and computer technology is poorly implemented in cars. So there is an opportunity to provide a premium experience that is currently not available and to sustain premium pricing. However, figuring out the business model will be the challenge (if only we had a copy of Eddie Cue’s diary, so we could see who he’s been talking to ;-).
Nice post. The day of the electric car will come, and Tesla has a great head start.
If Apple were to sell a complete car, they will have to learn to play well with others. Recharging stations are already too few. Should Apple put out an incompatible one, and require you to charge at their stations, that would be a problem.
I bring that up as a “for instance”, I’m not saying they will do that, but in consumer electronics they sure do.
Come to think of it… Thank you! I now understand what “disruption” is. Develop a neat product, make it an island unto itself, thus locking everyone else out. It works for the manufacturer if the product is a resounding success.
“Should Apple put out an incompatible one, and require you to charge at their stations, that would be a problem. I bring that up as a “for instance”, I’m not saying they will do that, but in consumer electronics they sure do.”
Yeah, it was quite a pain to add all that Apple-only wiring to my house just so I could charge my iOS devices and power my Macs, since they don’t run on normal electricity, only Apple-branded and controlled electricity. Oy.
Are you going to tell me that they don’t make you buy Apps exclusively at their store, or that they don’t permit tech that would make other’s media compatible with their devices?
I’m raising a question, with precedent, that’s all. I guess we’ll see. I’ll keep an open mind, you seem to be more certain. It’s all good.
Lightning connector treating me pretty well. Haven’t you noticed? Everywhere you go everybody has one. I’ve never needed to, but I know I can mooch in an emergency. Daughter forgot her iPhone charger on a school trip. Wasn’t a problem at all. 🙂
As for your older accessories? Lather, rinse, repeat, or dangle! 😉
“he day of the electric car will come, and Tesla has a great head start.”
You’re correct but every industry Apple has entered, another company has always had a head start, with the exception being PC’s, where Apple had a head start with the Apple II and Mac. So having a head start is no guarantee of success.
Agreed. No guarantee of success.
None are on my radar at the moment. Will be when the same confidence of ubiquity of charging stations reaches present levels. That is, I can leave home and not worry about fueling to the extent I currently don’t worry.
Don’t rule out fuel cells. They just might turn out to be a better solution than batteries.
Wholeheartedly agree! The electric car is still an interim, band aid, solution.
Want to impress me? Form hydrogen from water, and get water back. I wouldn’t mind if a nuclear power plant were needed to do that.
Living up here where it’s -4 right now, I would much rather be driving a fuel cell car than one run by batteries. I look at people here driving around in Teslas and I think they’re probably not driving north to go ice fishing on those cars. If your fuel cell runs out of juice, someone can bring you the fuel to refill. Battery powered cars offer no alternative to a tow.
Ubiquity is paramount! In fact, it should be regulated.
Hydrogen tech can also be used as an electrical fuel cell, or hydrogen can be used for combustion. Either way, you start with water and an energy source (nuclear for no CO2 footprint?) and when you consume it you get water back as a byproduct.
Look at the cell phone industry. Had the FCC mandated GSM in the ’90’s, each and every tower would be giving you signal. All AT&T, Verizon, and Sprint towers would have completely blanketed the US. Instead what do we have? This incompatible mess.
Tell that to the people who are opposed to any form of regulation whatsoever.
They’re wrong. Society owns the roads, as well as the natural resources (air, sea, etc.). Society manages this through governments (ideally democratic ones) and governments manage through regulation.
The 0.1% will tell you who really owns all those things.
And that, my friend, is a failing…
Oh lord….
you forgot… “oops sarcasm”
You’re associating the 0.1% to the wrong end of spectrum.
Again wrong… anything you say… any judgement from you about business – is wrong.
I think recharging stations are subject to federal standards. But I might be wrong. This is actually a personal safety issue, so I don’t think Apple is that stupid. Also, Apple plugs fit in standard 120 volt outlets so maybe there’s hope for them yet, what? 🙂
As long as that station could charge both a Tesla and an iCar. We’ll see…
Look at it this way
In China, there are a lot of car and transportation company with a huge manufacturing capacity that lack branding, design and technology know how to create a wonderful car.
what if Apple provide them with a reference design, dashboard system technology and branding,
Apple talked with Magna-Steyr, a contract auto manufacturer that is building G-Class and MINI cars for MB and BMW. Just sayin’.
If Apple just made reference designs, that’s a big departure from their whole-widget approach. They are going to sell conspicuously Apple-branded automobile systems in a car whose quality they don’t have blanket control over? That goes completely against Apple’s philosophy of never staking their reputation on some other company’s performance. Not a chance, I say. It’s the whole car or not at all.
Why most analyzes often make the same mistake, thinking that a company must always remain in their core area of expertise while forgetting that their core competency in most cases will expend due to technological progress, including the experience they gain while developing some products,
we’re moving in a direction where everything will be computerize
i do believe that just as with Google, Apple is also working on a lot of moonshot secret project that are not made public.
when you become a company as big as Apple, it doesn’t make sense to tackle small project that would take a lot of your resources while adding little to nothing to the bottom line, nor risking losing your best employees due to a lack of ambition..
having said all that, I think Apple need not to jump in the automotive sector to become a car company, rather in the transportation business in general with a breakthrough technology that could make a difference in our society,
“Why do most analysis often make the same mistake, thinking that a company must always remain in their core area of expertise…”
Agreed. Apple’s core area of expertise stopped being computers when Steve Jobs took Computer out of Apple’s name. Under Cook & Ive, Apple is a design company, first and foremost, that happens to make Macs, iPhones, iPads, and now Watches. After reading The New Yorker piece on Johnny Ive, that couldn’t be more evident. Their core area of expertise lies in the following;
1. Vertical integration of hardware / software / services
2. World class supply chain management, that one can argue, is second to none.
3. Brand cachet and a brand loyalty
Any product category that Tim Cook & Co. feels that Apple can make a significant contribution utilizing the above core expertise, is fair game. That may or may not include a car. As a side note, Tim Cook, during the most recent earnings call, said one lesson Steve Jobs taught him was never to limit your thinking.
I think you can add quite a bit more in their areas of expertise.
They are probably one of the top SoC designers in volume shipped, behind Qualcomm and Mediatek.
They probably have huge expertise in precision manufacturing, especially in carving aluminum. They talk about it a lot in their videos.
They probably have a proprietary custom design in some level of their solar farms, which we can expect is cutting edge.
This is a company that files patents for the designs and furniture for their Apple Stores. I have no doubt the breadth of their expertise is insanely broad.
Absolutely. You could almost describe knowledge of materials as a core competency for Apple. Almost everything they do relies on uses of materials that are either uncommon or completely un-heard of elsewhere. It is a known area of passion for Jony Ive and permeates everything the company does.
If Apple designs a car, I would not expect its chassis to resemble today’s steel unit-bodies in any way. Composites, modular stressed chassis components molded of high-tech polymers, innovative joining methods; non-traditional architectures, materials and manufacturing techniques will be a given.
These things will make it cheaper to manufacture, and that is where Apple’s margins will originate.
Just to balance, although I too fantisize over what materials a Jony Ive car would use, I also have my doubts.
In my experience, Ive’s PowerBook designs were quite faulty (esp. the mouse button), and the Titanium G4 was simply too fragile with its protruding hinges. I’m not absolutely confident that a first generation Ive design car wouldn’t fall apart.
🙂
Wow. No.
Apple actually learns from previous mistakes.
These types of problems wouldn’t concern me with today’s Apple. Ive is that much more experienced now, and has vast resources to make sure any new designs are tested exhaustively. The press’ hyper-aggressiveness in covering any perceived Apple fault will also keep them on their toes, probably almost to the point of paranoia.
I agree that one of Apple’s hugely understated competencies is to learn and to build upon the blocks that they already have.
You can see how the laptops progressed from curvy plastic to experiments with various metals, to ultimately a metal unibody design. It’s also amazing how they built upon an single OS that was created 30 years ago.
That’s actually why I’m cautious. There is so much that is new to Apple when it comes to designing a car in innovative ways using new materials.
Instead, I’m more interested if there are supply chain issues that are holding back the use of certain materials, that have already been proven to work from a design standpoint. Batteries might be one of these given Tesla’s plans for a new factory. I think there are also some lightweight materials that can be used to construct cars, but are currently expensive. These might become affordable if the supply chain is set up right.
Agreed. Wholeheartedly.
“Why do most analysis often make the same mistake, thinking that a company must always remain in their core area of expertise”
Because usually the result is a company losing focus and diluting their resources. The result then is at least a steady, if not catastrophic, collapse of the company. Not always, but enough that the exceptions are exactly that, the exceptions. Not many companies can pull off being a Proctor and Gamble. And some would say these days even Proctor and Gamble aren’t doing that great at being a Proctor and Gamble.
If Apple is pursuing some automotive solution, I believe it won’t be a car for a car’s sake. The solution will likely be something that integrates with something else they do. And it will not dilute Apple.
Joe
Besides, many of the problems of an electrical car are right square in the middle of some of Apple’s core competencies: power management, manufacturing design, supply chain management, custom silicon design.
I’ve mentioned this before, but a thread I see in a lot of analysis re: Apple making a car, is how complex and difficult it would be to make a car. I don’t think that’s true. I’ve worked on vehicles and other heavy equipment much of my life, it’s really not that complex. Take the combustion engine out of the equation and it gets even simpler. Vehicles today aren’t particularly well built or well designed. I’m not saying Apple will build a car, but it’s obvious to me that if they applied their design and engineering expertise they could easily exceed the quality of much (maybe all) of what the auto industry produces today.
The technology is more or less manageable. The problem is in striking the right balance in vertical integration. Apple does not want to do everything themselves, but every time they decide to outsource something they need to manage the business relationship, agree the technical specs, figure out the logistics, and agree on a price. Automotive supply (and distribution) agreements tend to get very complex; particularly, if you start making payments for joint R&D and tooling.
Similarly, the challenge in setting up the iTunes store was not so much in the technology (although that undoubtedly required a lot of work and careful design), but in getting the record labels to agree on pricing and DRM.
Often it’s the non-technical aspects that are the more difficult problem.
Why is the suitability of Apple’s “core competency” to car manufacturing such a big issue? Did Elon Musk’s “core competency” include car manufacturing?
Let’s see, industrial design, software, supply chain management, consumer marketing, financial heft, oh sure looks like Apple doesn’t have what it takes to build a car.
“Wonder if Steve somehow saw all of this coming.”
Wozniak?! 😉
I’m definitely more of a Woz guy!
Woz seem like he’s a really nice guy, but he would have run the business into the ground.
Ah yes, but what would Jobs have become had he never met Woz? A promoter? A calligrapher? A congressional tour guide in Guyana?
He had a lot of great points. He was mostly a truly great product manager.
Apple’s software for a car makes sense, but manufacturing an entire car is as absurd as Apple going into the concrete business.
Apple doesn’t manufacture the iPhone entirely either, Foxcom do,
the same manufacturing process could also be applied to a car by simply replacing Foxcom with a car manufacturing factory in China.
Agree, plus back in Sept 2014, Foxconn invested 5 billion yuan in building electric car factories in China, and further back in June, its CEO said they were targeting a $15000 car. Manufacturing is not the obstacle, but there are other aspects that require Apple to enter new, or at least different, territory. Of course, Apple can adapt over time as any car product is still a long way from now.
IMO Apple is not going to go this route at all.
There are plenty of car manufacturers with idle plants that will love to build on contract cars for Apple.
They will take ownership of quality, part procurement & sourcing for a few years while Apple’s legendary supply chain team will learn & observe.
A few years later, that’s when Apple will take control of supply chain & use their partners like Foxconn, etc..
You misinterpret my response. My point is there are plenty of car manufacturers that could work closely with Apple to build the car hardware, in the same way that Apple works with Foxconn today to build computers. And lest we think it’s really hard to build cars, even Foxconn who few would think of when it comes to building cars, is entering the market to build cars.
Agreed. I’ve been doing a fairly piss poor job of articulating my point about how hard it is to build a car, in various comments. It is complex, yes, but it can be done, and done exceedingly well. I tend to think in terms of whether I can do a thing, and if I can, no matter how hard it may be, how complex, how long it may take, once I know I can do it, then I see it as being fairly easy. I’m not sure that makes any sense. But to bring this full circle, the point is that Apple can certainly build a great car, if they choose to. The question then is whether they will choose to.
I’m happy that somebody else shares my idea that the area where Apple could contribute the most to automobiles is in green energy.
http://techpinions.com/is-apple-making-a-car-in-your-dreams/38604#comment-1855741304
Tim Cook, when talking about markets Apple may enter, often mentions “markets where we can contribute”. For me, that is the key. I think he is very genuine in this regard.
If Apple could significantly accelerate the adoption of electric cars, it would be a huge win for the people of China who have to deal with terrible pollution issues (which also drifts to Japan, by the way). Japan had severe pollution issues too 40 years ago, and I’m sure that pollution will be a recurring issue as emerging nations develop their economies. It would be a huge contribution to mankind.
For this reason, I am very hopeful that Apple has indeed decided to do something about it. What Apple has been doing with environment friendly materials and the solar panels on their new buildings does point to a very environmentally conscious Apple, but that doesn’t necessarily mean they have a breakthrough battery technology. I’m still looking for clues.
I would appreciate it if you and other analysts also keep an open mind, and continue to uncover facts and ideas that might point to an Apple Car.
I’m hoping that Apple proves you wrong. 😉
As an aside, I think we have to consider that the primary market for an Apple Car may not be the US, but instead China. China currently buys more cars than the US, and of course there is more growth.
Which also makes Tesla’s dismal sales in China even more amusing.
Agreed 100% completely.
Forgot about Tim’s environmental activism. He seems to be on a mission.
Also car building is not very complicated. The current iPhone 6 is much more (as it’s so tiny & thin).
Not that I think Apple couldn’t manage it, but there are far more government regulations involved in both car making and selling than in cell hones. Ask Tesla how selling in NJ is going.
Joe
Agreed. But thankfully Tesla will pave the way.
Apple will build a car because Jony Ive and Marc Newson want to.
Tim Cook will give the green light because:
– It is a huge ecosystem that is begging to be disrupted by electric cars.
– Most of the existing players are unable to truly rethink anything
– Most of the existing players are incredibly slow to adapt
– For the mobile generation 99% of the purchasing decision for a car will be how smart it is, how well it integrates with other computing systems, usability, simplicity and beauty.
– It will be a business/design challenge which will keep Apple stretching
– It will help make the planet a significantly better place (this might be most important to Tim Cook).
But mostly Apple will do it because it is the foremost Jony/Marc dream design job.
The only question holding Apple back will be whether they can make the battery, charger accessibility, recharge time economics work.
It is in their DNA. Cars were one option Steve Jobs toyed with. He saw Apple’s uniqueness as being their design ability and making a productive dent in the universe, not any particular product, which is why they have been able to create a series of groundbreaking products. Everyone else stays too focused on upgrading products, not upgrading their long term design capability into the stratosphere.
Everyone talks about Apple’s annual product releases, but I think internally they are much more focused on improving their design skills every year.
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