Imagine if it were Apple on the forefront of humanoid robotics! It would be hard to come up with anything bigger than that, but there is no sign they are working on that. Maybe they’ll surprise us, but I’m not holding my breath.
On the other hand, I would wager that Steve J would have them working full tilt on one.
Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.
Hi Rob - I wonder whether that would be too much of a stretch for Apple’s core competency in superbly designed and produced but mostly static devices.
Robotics demands a whole new level of very high precision dynamics skills at Fanuc/ABB tolerance standards, plus very high reliability software to minimise the chances of even minor harm to users.
That takes special engineering genes.
Yeah… we wouldn’t want them to stretch… 
Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.
I don’t think that they are going to surprise us in the near future. They can’t even surprise us with iPhones anymore. All models just repeat themselves. I miss those times when iPhones 3, 4, and 5 were introduced. I think their imagination stopped after the iPhone 6. But I might be wrong about that.
With hindsight, the brainfart was not buying Tesla, or linking up with them in some way. Musk tried to get a meeting with Tim Cook during development of the Model 3, but Cook wouldn’t take the meeting.(1)
The reality, in my view, is that Apple is a hardware company that also makes great software. But it is hardware first: the Apple ][, the Mac, the iPod, iPhone, iPad, Watch, et.al. But taking on the entire “car”, FSD, EV, etc all at once was a bridge too far, especially for a company with no experience in any of it. (Tesla, remember, started very small in 2003, with a vanity project to make an electric sport car - based on the mild success of GM producing an EV which they fairly quickly discontinued. There’s probably a reason why the first truly successful EV didn’t come from a traditional car company even though GM and Toyota had all the parts and presumably knowledge enough to do it.)
I have said elsewhere that I think Cook has done an exceptional job managing Apple. Emphasis on “managing.” What he hasn’t done, in my view, is “visionary-ing” it. You can see the same thing in Ballmer, who made scads of money at Microsoft but missed most of the envelope pushing developments of his tenure: search went to Google, phone to Apple, etc.
I think Tim has come up short in EV, but maybe that’s understandable, it’s far outside the Apple wheelhouse. But Siri has fallen far, and barely serves the Apple user competently anymore. Apple is absent in AI, as evidenced by their sudden rush to try to link up with Google’s Gemini.
So. Easy to armchair quarterback after the fact, I know. But he wouldn’t even take a meeting with Musk? While trying to get into the EV game? Seriously?
(1) Widely reported last week, mostly based on a story in Bloomberg, not linkable here except for a brief summary:
https://www.bloomberg.com/news/newsletters/2024-03-07/an-insider-s-tour-through-apple-car-s-road-to-failure-big-take
Well, this raised him even higher in my estimation. Good for him and good for Apple.
JimA
I might be mistaken, and I defer to those who know more about Apple - but my impression is that while Apple may be a hardware company, it has never really been a manufacturing company. Or at least, not for a very long time. It designs and specs out the hardware, of course - but the actual manufacturing is done by third parties, mostly in China.
Cars don’t get built that way. The manufacturing is such a huge part of the product that it can’t be outsourced. Carmakers build their own cars, in a way that Apple does not build their own products.
So it’s hard to imagine Apple building cars - in Apple-owned factories assembled by Apple employees - was ever really a possibility. If the “Apple car” was ever more than a brainfart, the potential path to success would have been more the Waymo model - that Apple would try (like Google) to develop the electronics and software and design part of the autonomous vehicle, but enter into a partnership with a “real” automaker for the actual manufacturing and construction of all the cars.
What excited you so much when the iPhone 5 was announced to replace the iPhone 4? Compared to, say, when the iPhone 14 was announced to replace the iPhone 13.
I don’t think so. The numbers (in hindsight) simply don’t bear it out. Apple sells $350+B at a ~40% gross margin. Adding another $100B, or worse $200B+ (soon), at a ~20% gross margin would very likely reduce what people tend to value the company. Not only that, but the level of capital investment required for an auto company is MUCH higher than that of an electronics company, and the capital investment for autos is constant, it never ends, and always tends to rise. It’s the same reason Apple doesn’t manufacture their own chips, the capital investment is HUGE and continuous.
Mergers make sense when the acquiring company can see a clear path toward improving the margins, via efficiency or innovation or synergy or whatever other magic they think they have, of the acquired company. In this particular case, had Apple acquired Tesla, they would have witnessed rising margins for a brief period followed by declining margins with time as we see in hindsight. I’m also pretty sure that the corporate cultures at Apple and a Tesla were so different that there would inevitably have been all sorts of clashes which almost always serves to reduce margins.
Based on much of the stuff I’ve read about Apple, it appears that they also spec out almost every step of the manufacturing process. So they design the product, and design the manufacturing of the product, then someone else actually performs the manufacturing of them.
Excellent points… on top of which autos - unlike consumer electronics - are a highly regulated industry, not exactly an area of competence for Apple.
As for Tesla, now that it is facing the harsh reality of competitive pricing in a field of increasingly competitive rivals, (particularly sans generous government subsidies) it is down to, at best, a ‘Narrrow Moat’ vs Apple’s Fort Knox-like ‘Wide Moat’
Then this popped up today… Mobile charging stations!!
No doubt. I note that WalMart had a nice business selling “stuff” to people with respectable margins. Then they decided to expand into grocery which has terrible margins and they have prospered in a whole new field.
I’m not saying you should look for a way to lower your overall margin, but if there’s aj opportunity maybe that shouldn’t be the first thing you think about. The size of the “car” market, worldwide, is far larger than “phones” in both absolute revenue and absolute profit dollars.
Also true. OTOH, I come from Westinghouse, where we had a pretty free-wheeling broadcasting division and a laced-up-tight nuclear division, with shipbuilding, finance, and assorted other divisions with entirely dissimilar corporate cultures. The trick was simple: keep them apart, except at the headquarters building. For some reason companies seem loathe to do that (see Berkshire for another exception) but it can be done.
I’m not arguing that this was a slam dunk - even in hindsight, I’m saying it was an opportunity missed, even if it had turned to nothing.
Would Steve have taken the meeting? I think he would. He was all about “Think Different”, although he was also smart about “simplify”, as the story of his takeover of the Mac line illustrates. He was a pretty flexible flyer - he started with computers and wound up running Pixar. Open minds, and all that.
Yep. Albaby pointed that out upthread. I don’t see why they couldn’t follow that model. Contract manufacturing has been used by lots of major auto manufacturers: BMW, GM, Daimler, Mercedes, Jaguar and others:
There’s definitely contract car manufacturers, but they seem limited to have limited volume. The one cited in your article as the largest such manufacturer in the world has an annual production capacity of 200K vehicles:
So that’s definitely an option if you want to bring a model to market at modest volumes. But for anything larger than that, would it work? Or would you need to start opening your own plants, at that point.
If you’re moving 200,000 units annually 1) it might be worth opening your own facilities, or 2) making it worthwhile for your contract manufacturer to expand, as they did with the iPhone.
To be honest, I really liked the design. It was constantly changing, bringing buyers something new. Then the camera was way better in new models. It’s not like in the iPhone 15, which I have now and which highlights all the imperfections you have. I literally can’t spot them in the mirror, but I see them in the pics. Now, to make a selfie with friends, you need to go through a bunch of tutorials on how to make a picture look better.
Ah, this is a good example. But quite different from the Apple “iCar” case. WalMart did a “draw” decision. They add groceries, and that means people come to their stores weekly, and then they are already IN the store and buy other stuff (at higher margins). In the Apple car case, plenty of people go to the Apple “store” (physical, online, etc) to by iPhones, and because the iPhone is so nice for them, they will also consider an iCar. In the WalMart case, the low margin stuff draws people in to buy higher margin stuff. In the Apple case, the higher margin stuff draws people in to buy the lower margin stuff.
Yes, very large market. But, Apple would definitely not be in the “car market”, they would only be in the mid-high-end part of the car market. There’s no way they could ever sell a great iCar at $50k and make a reasonable profit. It would likely be $70k+, and that price level severely reduces the TAM (Total Addressable Market). I discussed this in an earlier post about the Vision Pro, a $1k phone can be justified by lots and lots and lots of people, a $4k AVP can only be justified by some people, and a $75k iCar can be justified by only VERY few people. That’s part of what leads to lower margins - if you can sell millions of something, you can produce it for less than if you can only sell 100k of something.
The same applied to Netflix. Many urged Apple to buy Netflix, but I argued against it based on high price and based on corporate culture. I also strongly suspect that had Apple bought Netflix, it wouldn’t have ended up as the great success (the premier streaming service by far) it is today. I think being part of a giant company would have stifled it to a great extent. But I may have been wrong about that one, not yet sure.
Contract manufacturing works great when you have a close to 50% margin and can give the contract manufacturer 8-10% of it. It doesn’t work very well when you have a 20% margin and have to give 8-10% of it to the contract manufacturer.
This is going to be, in the long term, interesting, as new uses are found for the virtual perspectives it can allow. Engineering, Training, and likely things we can’t imagine, so far… Imagine automotive repair training, no need for the physical vehicle, but there it would be, in full 3D in front of the student as they learn and see, the internals of what they are studying, same with engineering students, and likely other specialties, trades could be greatly aided… Patience, we all need a bit more, I think…
Well, then the brain fart was not shutting Titan down right then and there - about 6 years ago.
Same was true at the time for the cellular phone market, though. When Nokia phones were selling for $100 or so, Apple came out with the $600 iphone. Kind of worked out for them eh?
The theory Apple was probably operating with the past decade is that a self-driving car has such higher utility over cars of today that people would be willing to pay much more for it. For instance, some two car families might get away with only one car. Then there’s shuffling kids to/from after school activities, putting Uber/Lyft out of business, etc.
According to Bloomberg, Apple was realizing that EVs by themselves weren’t the kind of business they wanted, then Uber’s IPO paperwork showed that wasn’t such a great business, and now Apple is falling behind on AI, so is pulling its AI experts off of Titan to work on more projects with more immediate returns.
Nope. At that time, there was still sufficient evidence that a high margin car could be built and sold. Look at how Tesla margins grew throughout that period. Only in the last year or so was it evident that Tesla margins were shrinking and getting close to typical automaker margins (i.e. the kind of margins Apple doesn’t particularly desire).
Yes, we’ve discussed this earlier. It’s a lot easier to justify the purchase of an iCellphone for $1000 instead of a $600 model than it is to justify buying an iCar for $75k instead of a $50k model.
This is NOT exactly how the history went. First of all, Nokia wasn’t really the main competition at the time, it was Blackberry. Second of all, Nokia didn’t sell for $100, the cheaper model was $199, and the base iPhone was $499. And if you recall, the first year of iPhone wasn’t great at all. They barely sold many of them, and mostly to rich people that wanted to make a fashion statement. The iPhone did not become mass market in the first year. After the carriers (first only AT&T, later others joined) began subsidizing the iPhone with more expensive voice+data plans, they began to take off and become mass market.
Nope. At the time Elon reached out, Tesla was still in “production hell.” Model 3 hadn’t been delivering (at least not in volume), and margins were not good at all. Only high-end, low-volume OEMs like Ferrari had high margins for automobiles. That margins and capital would be like cars, not electronics, is apparently hindsight on your part, not Apple’s. They surely knew better then.
They might have thought, as Elon still thinks today, that the hardware would have typical automotive margins, but the software to self-drive would have high margins. And then there was the opportunity for tight integration with other Apple devices.
I wasn’t making a competitive analysis. The iPhone killed Nokia, as I said. Can you argue that? If not, then why pick on something I didn’t say nor claim?
Who said anything about the first year of iPhone sales? Again, why are you picking on something I didn’t say nor claim?
You’re technically right that the base iPhone was $499, but it was discontinued within a couple of months because few wanted only 4GB. So, the iPhone effectively was $599, as that’s the model most people bought, and quickly the only model they could buy.
But, congrats on being technically right on a minor point and ignoring the main thrust of my post.