Horace Dediu, writing for Asymco, starts by defining the term Significant Contribution, as laid out by Tim Cook:
We believe that we need to own and control the primary technologies behind the products we make, and participate only in markets where we can make a significant contribution.
Dediu works through some numbers, but lands here:
An electric automotive system requires new infrastructure, new user behavior, and, in the case of Tesla, new distribution network and new post-sales support network. Offsetting this partially is a government subsidy.
In contrast, the smartphone communications and computing system leveraged existing infrastructure, consistent behavior, at least initially, and the same distribution and support network. In addition, smartphones benefited from significant hardware and software and services ecosystems which encouraged third parties to add value to the system.
An interesting read. I’d argue that Apple is painstakingly cautious about entering new markets. If they decide to build a car, my bet is that they’ve already worked through the risk and cash flow numbers, done the market research to assure that the math works, that the risk is small enough for them to go forward.
They also have like $200bn cash in the bank. That provides nearly endless possibilities.
It’s all about the team driving it (NPI) and Apple has proven they know how to build strong effective teams around their products and talent acquisition doesn’t seem to be an inhibitor.
if they want to do it, are passionate about doing it, and believe it would be better for the human race, then you can bet they will do it.
Comparing iPhone to Tesla is unfair because iPhone (iPod phone) is an iPod, which goes back to the first release in 2001. So iPhone is 15 years old right now. The first production Tesla is the S, which was released in 2012. Apple Watch (2014) is a much fairer and more instructive comparison. Both Apple Watch and Model S are dramatically pushing the limits of battery power, much more so than even an iPhone. Both would like to do much more, but had to compromise driving range in the Tesla and networking range in Apple Watch to simply release a product. Both are essentially public betas for enthusiasts that will disappoint the uninitiated buyer who expects a car to have cross-country range or a watch to last for months or years without charging. The Apple Watch might even disappoint a techie who expects it to work standalone based on previous smart watches. In both Model S and Apple Watch, the manufacturers are looking forward to battery innovations to enable them to make the version they really want to make: a Tesla with the same range as a gas car, and an Apple Watch that totally replaces your iPhone. Both are years away, but not fantasies in any way.
With iPhone that is not the case at all. Apple could ship an iPhone 3 -sized iPhone today with 24-hour battery capacity if they wanted to, and you can essentially get that anyway by putting a 6 into the thickest battery case. There is no off-in-the-distance moment when iPhone matures into its true self because it is a much more mature product.
Apple’s success is all to often reduced to one factor: technology. The Apple genius is how they craft the customer experience.
With the iPhone, Apple “solved” the customer-hostile cellular handset reality with their customer-experience, whole-widget approach.
Apple will make a similar contribution to personal transportation by “fixing” the customer-experience of vehicle ownership.
If they’ve solved the “alternative fuel” range problem, they should use it on the iPhone first. 🙂
Tesla actually started production in 2006 for their Roadster model
The hole in Dediu’s argument that Apple won’t do this is that he takes as given that Apple has to launch with an all-electric car. They don’t. They could do a hybrid to start. Something like a Chevy Volt in outlook (electric first, backed by a gas engine as a fall back) but with Apple flair. That “… [leverages] existing infrastructure … at least initially, and the same distribution and support network.”
He compare the effort to the iPhone but the first iPhone was nothing like what we have, we’ve evolved from a device that did the bare minimum to be credibly to a device that has as much power as recent laptops and a million apps. The idea that the first Apple Car has to be the equivalent of the 6S (electric, self-driving, etc) is simply wrong-headed.
The one thing he notes that does resonate is the relatively small market share of hybrids and electrics. To me, that’s caused by a dynamic similar to HDTVs, another market people wanted Apple to get into – the replacement cycle is LONG. People don’t replace cars more than every several years, I’d bet somewhere in the 5-10 year range. TVs are like this too. Phones were always replaced at a much faster clip and the barrier to getting a new phone is much lower (a couple hundred dollars). So, if Apple does want to quickly build significant market share in the double digits, yeah, cars are going to be very hard to do that in.
Hell, if Apple did a Volt-like vehicle (30-70 mile electric range backed by efficient gas engine), with Apple design and user experience for $30-$50k I’d buy one. And I don’t need a new car.
nice mental gymnastics, but you’re wrong. the “i” in iPhone stands for internet, not iPod. the iPhone incorporates iPod music player functionality as a feature, but it is not the product. thus, the iPhone is not the iPod, and and the iPhone is not 15 years old.
that’d be like saying since it is also an “internet communicator” (one of the three things Jobs said the iPhone was, iPod being one of the others), and internet communication is decades old, that the iPhone is also decades old.
get real.
theyre not going to make a gasoline powered car. those have too many parts, too many points of failure, too much crap to deal with. theyre not going to partner with a failing auto company.
Way to not address any of the actual points. yay, you.
PS: Where TF did anyone mentioned partnering with a car company?
The iPhone hump pack offers more range, and it’s available now 🙂