One of the worst kept secrets in silicon valley in the 21st century is that Apple was working on a so-called Apple Car. Yes, Apple has worked on a car but Apple won’t build Apple Car. Why not? Everybody wants one.
Among major technology companies, Apple remains one of the most disciplined of gadget makers. Google, Microsoft, et al seem to want to stick their fingers into every technology pie imaginable, and spend billions doing just that. The results? No cars. Why not?
Change. Is. Hard.
First on my list of why Apple won’t build an Apple Car is the obvious. There’s no money in cars. Apple makes more profit on Watch than most car companies make these days. Tesla seems to have progressed rapidly and somewhat successfully with Model S, Model X, with Model 3 on the way, and that glamor has pushed the stock price beyond the value of General Motors. Tesla is what Apple should be if Apple chose to build an Apple Car. What can Apple do to bring value to the automobile industry that isn’t already there. If there’s no big money, and there’s not, and if the technology changes are running rampant everywhere, and it is, then why bother, Apple?
Second on my list of why Apple won’t build an Apple Car is because Tim Cook said so. Well, actually, he didn’t use those words. In fact, he didn’t say anything about cars at all. Bloomberg:
We’re focusing on autonomous systems… It’s a core technology that we view as very important… the mother of all AI projects… probably one of the most difficult AI projects to work on.
What does that mean? Cook is not saying, of course, but he also noted this about automotive technology:
There is a major disruption looming there. You’ve got kind of three vectors of change happening generally in the same time frame.
Translation: Things are moving too fast. Nobody knows what’s going to happen.
Add to that the obvious again. Apple does not have the clout in the marketplace to move the automobile market forward the way the company did with the Mac, iPhone, iPad, and Watch.
The automotive market is different. Yes, cars and trucks are full of modern technology and will become more so in the future, thanks to wireless connectivity. But the industry is very much tied to the ancient past, relatively speaking– by distribution, transportation systems and service, as well as the oil industry (gasoline). Electric powered autonomous cars might be the future, but dramatic changes could easily disrupt entire economies.
What could Apple bring to the autonomous vehicle industry that would differentiate an Apple Car from a Tesla or anything else by GM, European, or Japanese makers?
Cook on the Apple Car, again in Bloomberg:
We’ll see where it takes us. We’re not really saying from a product point of view what we will do
Translation: We don’t know where this is going but we’re watching it closely.
In many ways, the autonomous vehicle industry is much like personal computers back in the early 1980s. Many different systems, many different players, but unlike the PC industry which faced decades long consolidation, the automobile industry remains highly fragmented, where major players have only a few percent of the entire industry’s marketshare, and, relatively speaking, none of them make the kind of gross margins and profits that Apple finds attractive.
Autonomous systems do not necessarily equate with an autonomous electric vehicle; a car with an Apple logo.
Michell Krebs in Autotrader:
Apple has long been the wild card in the autonomous car game. Now we know Apple is all in, and, judging by its track record in other areas, it will be a force. Apple’s strategy to commercialize autonomous vehicles remains to be seen — will they partner and sell the technology or actually develop their own vehicles?
If everyone is doing the same thing and moving in the same direction, then what can Apple do to remain different but impact the market?
Partner? Go it alone and build a car? Sell an autonomous system to carmakers? None of that sounds like Apple. The risks are high and the rewards are low. A Watch that can read blood sugar sounds like a smaller risk with a greater reward.