“Having discussed the software culture challenge in a previous Monday Note, we now turn to a new series of questions regarding the fantasized Apple automobile. First: Money. Take Ford, the healthiest of US automakers. (I won’t wade into the government loan vs. bailout money controversy),” Jean-Louis Gassée writes for Monday Note. “Ford’s Revenue and Operating Income: $134B [and] 3.9%. Apple’s corresponding numbers: $234B [and] 40%!”
“Yes, the car industry is large (around $2T, that’s two thousand billions), but it grows slowly. In 2015 it saw 2% annual growth — and that was considered a good year,” Gassée writes. “The question isn’t how Apple could make money with cars but: Why should it bother?”
“A possible answer resides in a look at the iPod’s history. When the iPod was introduced in October 2001, many scoffed at Apple’s entry into the MP3 player market, yours truly included: What are they thinking? You can’t make money in a market that’s already commoditized and saturated!” Gassée writes. “We now know the answer: Design + iTunes + Distribution. The iTunes ecosystem, music by the slice, micro-payments… the Apple Store revolution had begun but we couldn’t see it.”
Much more in the full article – recommended – here.
MacDailyNews Take: As we wrote back in March:”When Apple enters markets, it’s because they can bring something(s) so unique to the table that significant disruption is inevitable.”
It goes without saying that Apple would create a premium vehicle, premium-priced for premium customers as usual, not a some low-end crate. — MacDailyNews, September 21, 2015
SEE ALSO:
Analyst: Apple Car will cost an average of $55,000 – October 16, 2015
Apple speeds up electric-car efforts, aims for 2019 ‘ship date’ – September 21, 2015
Survey: 77% of hybrid or electric vehicle owners would likely buy an Apple Car – May 13, 2015
What to expect from the Apple Car: Disruption – August 31, 2015
Apple Car: Tesla engineer joins Apple’s ‘Project Titan’ vehicle effort – August 21, 2015
Apple Car development proceeds apace – July 27, 2015
Apple hires veteran Fiat Chrysler auto industry executive – July 20, 2015
What’s up with Carl Icahn’s sudden obsession with the Apple Car? – May 18, 2015
Survey: 77% of hybrid or electric vehicle owners would likely buy an Apple Car – May 13, 2015
Apple Car: Forget ‘electric,’ think hydrogen fuel cells – February 20, 2015
Apple working with Intelligent Energy on fuel cell technology for mobile devices, sources say – July 14, 2014
North Carolina regulators approve Apple’s 4.8-megawatt fuel cell facility at Maiden data center – May 23, 2012
New aerial images of Apple’s planned NC fuel cell, solar farms published – April 7, 2012
Apple’s massive fuel cell energy project to be largest in the U.S. – April 4, 2012
Apple patent application reveals next-gen fuel cell powered Macs and iOS devices – December 22, 2011
Apple patent app details highly-advanced hydrogen fuel cells to power portable devices – October 20, 2011
And I suspect it will be a shared system. If Apple prices iron a really premium at Apple gross profit rates, it will only be affordable when shared.
I agree wholeheartedly with this. It will either be a shared or lease business model. Most likely based in major urban areas only. i’m confident it won’t be a traditional auto sales model.
i think one market that the driverless cars are set to totally disrupt is the taxi/uber market. Can you imagine a fleet of driverless cars on the streets of New York, Chicago and San Francisco competing with traditional taxis and even shared Uber services? I think it would destroy both businesses.
Have you ever driven in New York? Insane. Probably the last place in the US that will have driverless cars.
I don’t recall the MP3 player market being “commoditized and saturated” when the iPod appeared.
No I thought that.
Seriously? Funny, I can remember the Rio, the Jukebox, the Nomad, etc.
I think the conventional wisdom regarding the depth of the MP3 player market changed with the iPod. Before iPod, it wasn’t seen as a major, mass-market device. It was a curiosity for geeks. The iPod – and more precisely, iTunes – changed all that. I know that I’d didn’t switch to OS X until Jobs announced the iTunes music store (and that it would be OS X only). Within 24 hours, I had OS X on my primary Mac, and shortly after, my first iPod.
Th clunky Rio, Jukebox and Nomad lines did not a saturated market make. The MP3 player market was still in its infancy when the iPod was introduced in 2001. Those other MP3 players came out in the late 90’s, but the offerings were pretty paltry, and while the Nomad had the largest capacity, it was like carrying around a portable CD player. I would say the market didn’t become commoditized for several more years after the iPod introduction.
Experience shows that a lot of auto manufacturers don’t get consistent and intuitive user experience features and design esthetics to make recognition of features easier and more natural.
The first years of the MiniCooper about a decade back had a very organized and easily used set of controls and interior features.
Fast forward to today and they botch some things like chrome rings and switches above the mirror in the center of the windshield. Works in the daytime, but at night the headlight glare off the chrome muddles the rear view mirror image.
The Mini has change for the sake of what the marketing managers “think” the user wants.
Apple learned a long time ago that people want consistency.
There were other MP3 players on the market prior to and during the first iPod introductions. SanDisk, Creative Labs, to name a few. Also a number of no name devices. Within the 18 months of the iPod’s intro, I believe the figure of market share they grabbed was 83%. An incredible success story, and without a doubt, driven by iTunes.