Apple is already positioned to be a car company in many ways

Apple “has put a few hundred employees to work on a secretive project to develop an electric automobile, a person familiar with the matter has said,” Tim Higgins reports for Bloomberg News. “While Apple often tests ideas that don’t get released, the work underscores the company’s long-held desire to play a greater role in the automotive space, which is ripe for more of a merging with users’ digital lives.”

Higgins reports, ““’It makes a ton of sense,’ Gene Munster, an analyst with Piper Jaffray Cos., said Saturday in an interview. ‘If you would’ve said 10 years ago, ‘Apple is going to be in the car business,’ I think people would’ve said you’re crazy — because it would’ve been crazy — and today it’s a much different company that’s able to tackle these massive addressable markets.’ …He added that he doesn’t think Apple would bring out a car in the next five years.”

Apple’s strengths as a potential automaker include:
1. $178 billion war chest
2. The car is the ultimate mobile device
3. A unique mix of executives with tech and auto experience
4. Worldwide retail network
5. Ability to navigate those global operations

Read more in the full article here.

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28 Comments

  1. How exactly is Apple’s retail network remotely geared to selling cars? They’re going to be pushed for room accommodating the Apple Watch. How’s a car going to work?

    1. I guess that Apple would park the demo models in the mall with a sweepstakes offer to give one away for free if you put all of your important PII on a form so that your identity can more easily be stolen and innumerable highly annoying advertisers will cold call you at home and work. /s

      I agree with you, mxnt41, the fact that Apple already has widespread retail presence does not really mean much for selling electric vehicles.

      1. Newsflash!!!! GM and Ford don’t own their retail dealerships. Those dealerships are franchises that are owned (usually locally) by small business people. It’s not far fetched to expect Apple to do the same as Kia, Toyota, Volkswagen, etc. when they entered the market. They sold franchises to existing dealers with existing service departments. It’s not a stretch for Apple to do this at all.

        What has kept real competition and innovation out of the auto industry is the huge amounts of capital required for entry. Apple has that. There’s a ton of money to be made in the auto industry by anyone who decides to treat customers decently, and not do things like you sarcastically described above. (I’ve been a victim too).

        I think people are probably correct that Apple will work on electronics for cars instead of producing their own car. Still, I think Apple has the resources and the smarts to pull it off if they really wanted to.

        1. But it’s not inexpensive for someone to purchase a franchise and get it up and running according to company specs: building, design, inventory, parts, etc. If it’s an Apple franchise, it’d be quite costly, I’d bet.

  2. Has anyone thought that there is more to be made in energy then in auto manufacturing and sales. The run they will give Tesla is in Battery tech. Why make a car, when you can make the heart of all cars. Who would test electric car tech in a minivan? Someone clearly uninterested in aerodynamics, not Apple.

  3. No, no, no. A million times no. I’ve never questioned Tim Cook and thought the trolls that did are just tools, but this raises all the red flags for me. Too often when the visionary in a company leaves, his/her successors take the company too far from its core mission. Apple already struggles getting its OSs perfectly perfect and now they want to become a car company? Ludicrous. If true, this is the beginning of the end for Apple. It will be too hard for them to do all things with the level of detail needed to maintain their brand. Please, Apple, say it ain’t so.

    1. IBM used to make cheese cutters, scales and other “machines” for business
      Nintendo used to make playing cards
      Tiffany’s used to be a New York stationary store
      LG used to sell cosmetics and hygiene products
      The GAP used to be a record store that also sold jeans.
      Bombardier started with snowmobiles, now they build jets and transit systems
      3M started with mining minerals to make abrasives for grinding
      etc. etc. etc.

  4. Apple succeeds by focusing on the right things. If they are dabbling in a product so very far from their core strength, they are in danger or failing in their core market. Dabbling in too many products is a sign of poor leadership and hubris. I don’t think Apple would do that. So Apple’s activity in Automotive — if it is true — is a mystery. We can only wonder what is the angle. Designing user interface for a car? Navigating a car? Co-branding with Beemers or Benzes? A mystery. An intriguing riddle.

  5. 1. $178 billion war chest
    Apple accumulated this war chest because it does not waste money. I have no doubt that Apple has the ability to design and build a fantastic vehicle. It is also likely that this vehicle would be an expensive, niche product at best, like the existing Tesla products.

    Long ago, Apple shifted towards contract manufacturing and assembly. If Apple were to make a foray into the automotive space, it would begin with years of R&D to develop and patent new technologies. Apple might then consider partnering with an established company to license, build, certify, market, and provide warranty coverage and other customer support for the “AppleCar.” But it seems highly unlikely to me that Apple would strike out on its own to build a new car.

    2. The car is the ultimate mobile device
    Apple has succeeded by focusing on its core business, which is consumer electronics and software. Apple has already established a forward path into the automotive space with CarPlay, which will enable a wide range of Apple mobile devices to seamlessly interact with CarPlay equipped vehicles. Apple does not need to design and manufacture automobiles any more that it needs to design and manufacture a TV.

    3. A unique mix of executives with tech and auto experience
    Apple has acquired mixes of all kinds of talent for various reasons. For instance, Apple designs its own SoCs, but it does not manufacture them. Similarly, Apple has people with experience in the music industry, but it is not signing and developing its own bands and talent under its own label.

    4. Worldwide retail network
    I covered that one with the sarcastic post, above. Do they put a demo model in the store to sit in, and then take orders? Can you order your AppleCar online and have it delivered? What happens when your AppleCar needs service?

    5. Ability to navigate those global operations
    Yes, Apple has great international business abilities. But it will apply those abilities to product areas that better fit Apple’s core business and core strengths. Apple wants its products to support you at home, at work, while walking and biking, in the subway, bus, and airplane…and in your car. But Apple does not design and build houses, office buildings, bikes, airplanes, or cars.

  6. The future is already here. Commonplace technologies of tomorrow already exist at the fringes of possibility today. The trick is knowing what to look for. Apple _does_ know what to look for. Apple excels at looking into the future to advance tomorrow’s technology into today. And they do it with an enormous sense of responsibility. It is why Apple always seem to be creating insanely great innovative new products.

    Once the “auto mobile” becomes self-driving, the vehicle itself essentially becomes a personal travel pod; think: mobile office, entertainment center, family room that is totally ripe for re-invention. The task will embody cutting-edge software, battery, communications, hardware, and “human interface” design worthy of Apple’s attention. (How about a zero-emission plug-in electric vehicle with a self-charging photovoltaic skin and an interior that evokes the best of cutting edge Italian design?) Besides, it sounds like a heckuva lot of fun.

    Re-thinking the car would play well to many of Apple’s strengths, while presenting a challenge worthy of Steve Jobs and Apple in terms of the goal of making the world a better place. Apple probably saw all this unfolding back when Ford threw-in with Microsoft years ago.

  7. I actually don’t care if it looks like a spider from Mars- the ultimate goal these days (a continuation of Henry’s T) is to make it work anywhere and cost little. Less than $15K, and I’ll be looking at it. More than that, and I’ll have little to do other than compare it to the other over-blown and over-priced idiocies out there in the market.

  8. I think work to understand the car business better is the most likely explanation of all this gossip. I suspect they may well be working on car concepts directly specifically to judge where and how it will effect their core businesses in that area and where perhaps they could even lead car companies to take things to benefit both. An actual car? I just cannot see it happening it goes against everything we know about Apple. my only hesitation is perhaps that everything we know has a foreseeable ceiling eventually in the directions it is heading so at some point and the watch is a sign of this they will have to move further from their core business. But as I say i think this is about moving the auto business closer to its core than vice versa.

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