“Apple earns high profits because it goes into high-volume industries dominated by low-margin players who sell relatively affordable products. Apple then makes a premium product, one where you can’t get similar specs for less — there is no other computer or smartphone with the software or build quality of an iPhone 6 or Macbook Air — and prices its offering a few hundred dollars more than the competition,” Jacob Davidson writes for Money. “Then it earns billions off this relatively small price increase by selling high quantities of units.”
“In other words, Apple makes premium versions of things everybody needs at prices most people can still afford,” Davidson writes. “A similar strategy for an Apple car then, would be to sell a premium-quality car with higher margins (Apple’s gross margin in 2014 was close to 40%) at a still-affordable price.”
“The problem for Apple is that it’s a lot easier to increase margins in a low-cost industry than a high-cost one. Even if an iPhone 6 costs 100% more than a cheap LG smartphone, it’s only $200. Same thing with the Macbook Air, which is twice the price of a low-end Windows laptop but still affordable at $1,000,” Davidson writes. “But trying to get similar margins in the automobile market means a price increase of thousands of dollars, not hundreds. Double the price of a $22,970 Toyota Camry, or ask for even a 50% premium, and you’re in BMW territory. (That company’s cheapest sedan costs $32,000.)”
Read more in the full article here.
MacDailyNews Take: The biggest obstacle for some when it comes to divining the potential success of an “Apple Car” is an appalling, woeful, utter lack of imagination.
An “Apple Car,” like all Apple products, would deliver something(s) that nobody else could ever hope to offer (until they begin infringing Apple’s patented IP and/or trade dress, of course and, even then all they can seem to muster are half-assed knockoffs; see: Mac, iPod, iPhone, iPad, etcetera). Obviously, Apple wouldn’t bother if it were just another freakin’ car.
People like Jacob need to stop thinking of an “Apple Car” as yet another “car” that’d be in competition with the other “cars” out there and – gulp! – Think Different™.
Think of the “Apple Car” as the:
• Mac vs. the “personal computers” on the market in 1984
• iPod vs. the “MP3 players” on the market in 2001
• iPhone vs. the “cellphones” on the market in 2007
• iPad vs. the “tablets” on the market in 2010
• Apple Watch vs. the “smartwatches” on the market in 2015That’s how Apple operates. There won’t be an “Apple Car” if it doesn’t deliver things that are revolutionary, unique, and better.
Related articles:
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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