Apple Car: Please, Mr. Cook, Think Different
Apple Car: Please, Mr. Cook, Think Different
It's tempting to imagine Apple getting into the car business. How tempting? A Wall Street Journal article speculating that the company might do so because it has hired many car industry veterans became the (latest) focal point for a lively discussion on the pros and cons. USA Today threw some cold water on the report by heavily quoting analyst Tim Bajarin, who thinks that buying — Tesla, that is — would be smarter than building, and that, anyway, this is more a play for the dashboard, a CarPlay on steroids, than an opportunity for Tim Cook to channel his inner Elon Musk.
Could Apple get into the act? That one is easy. No company is better positioned in market capitalization and available cash to do, frankly, whatever it wants. Apple is still minting money with the iPhone. Smartphones have only just outsold feature phones globally and Apple has only just begun to tap the massive China market. History may be repeating itself in Japan, which gave up the gun to extend the era of the samurai, but that nation's fascination with feature versus smart phones is an outlier. Smartphones are eating the world.
But when a company is as dependant as Apple is on a single product — and even when it isn't — it's smart to think about what else it can get into. Google is today's big tech poster child for the need to diversify; it is still making a fortune on ad revenue but its business model is based mastery of the web. In mobile — where we are all going — Facebook seems to be doing a better job of conquering the market.
Apple has been associated with car talk for years. Fascination with an Apple Car was almost a death bed confession from Steve Jobs himself, who, in one of his final interviews, told the New York Times he would have wanted to take on Detroit if he "had more energy." Sightings of unmarked, self-driving minivans, at least some of which registered to Apple, have proliferated lately, fuelling speculation that Apple is interested in pulling a Musk. Even better: kicking the tires sticks it to arch-rival Google, which has a mature self-driving program as well as aspirations to be theoperating system of your car.
So is this about Apple Car or Apple cars? The company's DNA may provide the key clues.
Apple seeks to corner markets while staying true to itself. When Steve Jobs returned to Apple in the late 1990s, he put an end to Mac OS cloning, inextricably pairing hardware and software and gaining control over the finished product as no other company can.
Apple followed this playbook with its entire line of iDevices, from the iPod to the iPad, all top sellers in their categories. In music Apple still thinks grandly: Shirley Halperin and Ed Christman report in Billboard that the company wants to "own the record industry."
Can Apple claim a space in the car industry? Maybe. All of Tesla's patents are open source, so it could go a long way alone. But if Tesla were for sale — and even if it weren't, for that matter — Apple could get a running start by purchasing the company for cash, even if you included a goodwill premium which doubled the company's market cap. Relocate the Apple Car division to Ireland and the company might even be able to repatriate a ton of cash with a novel form of tax inversion. All sound high-level business reasons to go down that road.
There's more: Cars are basically eye candy, sold by how they are look and feel. That's a major Apple strength. New models come out every year with incremental changes you can see and major upgrades under the hood. Just like iPhones.
It all sounds so … tempting.
But Apple may be better, this time, backing every horse instead of its own. The battle for the car, like the battle for the living room, is about what's loosely called the "Internet of Things (IoT)." It's about muscling in with hub-like device which connects and controls other things. Like a smartphone.
Apple has already introduced CarPlay, which gets its nose into the tent. Wouldn't licensing lightening connectors and a version of iOS in every car — cashing a check — be smarter than overcoming the barriers to entry for an industry where billions are needed to get to the start line? Wouldn't licensing an "Apple Edition" with one or more manufacturers be an effective way of owning the part of the car you want, and not the parts you don't? (Similar to how Apple dipped its toe into mobile phones before launching the iPhone.) Wouldn't limiting the innovation required to a component you completely control be more elegant and manageable than the whole, unwieldy beast? Wouldn't being the brains be enough to take credit for every car which contains yours?
Turning the iPhone into an enabler of tech moves its paradigm into the nascent IoT space. It's a way of extending the strength of a powerful revenue engine without reinventing the wheel. Diversifying the iPhone could be Apple's Next Big Thing, not a big thing on wheels.
Tim Cook is no fool. He believes in big bets, but not blind ones. Neither EV or self-driving cars are mainstream and it isn't clear that either ever will be. But Apple can power and enhance that tech without getting mired in a business with fierce, experienced, successful competition. Apple is winning the mobile wars because the competition was feckless or non-existent or unimaginative. That is decidedly not a description of the car industry.
An Apple Car — something which the company makes and markets as it would a MacBook Air — seems highly unlikely. There's no obvious roadmap to any of the forms of world domination which motivates Apple. More to the point: it's not Think Different. It's almost the lazy me-tooism that drives critics who give Apple no credit whatsoever for innovation absolutely nuts.
Do you think Apple should be in the car business? If so, how?
