If at First Apple Can’t Succeed, Buy an Electric Car Company?
December 24th, 2013There’s no shortage of tech and financial pundits telling Apple what to do. They evidently assume that Tim Cook and his team don’t know anything, or, when Steve Jobs passed in 2011, everything that made the company great died with him.
Unfortunately, that’s a meme that’s been played out in the media since then. That, along with sometimes false reports about alleged reduced demand for the iPhone, has helped fuel Apple’s stock price drop over the past year. Of course, as I write this article, the price is up again over news of a deal with China Mobile, the world’s largest cell phone provider, which means lots more iOS gear will be sold in 2014.
Yet it’s a sure thing that Apple will be under huge pressure in 2014 to deliver the goods. Yes, the iPhone 5s had some fancy innovations, such as the world’s first ARM-based 64-bit chip, and a pretty workable fingerprint sensor known as Touch ID. Indeed, other mobile chip makers, such as Qualcomm, were reportedly freaked over the introduction of the 64-bit Apple A7.
But will 2014 bring more iterative improvements to existing products, or will Apple open up new markets? One possibility is a wearable device, most often known as the iWatch, along with a possible Apple connected TV set.
As to the first, even if it happens, will Apple magically sell 50 million out of the starting gate, or will the market, if it has that potential, grow slowly over a period of a year or two? Apple plans long ball, as is being done with Apple TV, so initial sales may not be so magnificent. But anyone waiting for instant gratification could be disappointed, or maybe the alleged iWatch will be a must-have gadget for the 2014 holiday season that will be sold out for months.
The prospects for an Apple smart TV are probably just as hard to predict. Based on Apple’s commitment to 4K or Ultra HD with the new Mac Pro and the latest MacBook Pro with Retina display, there seems little doubt that a TV set will also be 4K. If that’s the case, will Apple be able to somehow bring the price down to the point where it represents just a modest increase over existing high-end 1080p TVs? Even then, is the market too saturated to absorb another volume player?
Just as important, an Apple Store is not the best place to display big screen TV sets, so would Apple depend on third-party resellers, such as Best Buy? Or will they even bother? It’s yet another question that may or may not be answered next year, but the company’s perceived prospects could suffer if there isn’t a visible Apple TV solution of one sort or another. Even then, Apple’s living room invention may just be an enhanced set top box with 4K support and some other bells and whistles.
But smartwatches and TV sets may not impress some analysts. They don’t seem to be impressed by anything from Apple nowadays. So, instead, there’s a renewed request for Apple to acquire another company in a totally new market, specifically Tesla, the electric car maker.
Tesla?
Despite a recent flap over a possible vehicle fire in a recent crash or two, the Tesla S supposedly has the best highway safety rating in the industry. But above all, an alleged Apple acquisition of Tesla would bring with it the company’s founder, chief executive office, not to mention resident visionary, Elon Musk.
Now Musk, in case you forgot, was also a founder of PayPal, the popular if sometimes controversial online payment service. He also runs SpaceX, which is in the business of building rocket ships to fly payloads into orbit.
But why would Apple want Musk? Well, being that he’s a visionary, and Apple lost a visionary when Jobs left this plane of existence, the critics say that Apple cannot survive without another. What about the existing members of the Apple team, particularly head hardware and software designer Sir Jonathan Ive?
Sure, Apple is not above buying smaller companies to acquire technology, but where does an electric car with a starting price over $70,000, minus tax incentives, fit in the marketing plan? While such an expensive motor vehicle would seem to be a plaything for well-heeled, you can evidently finance the entry-level model S for a $609 “Effective Monthly Cost” after a $2,500 deposit.
Regardless, it’s hard to believe that a limited production car of this sort, which promises delivery in two to three months, would provide a synergy for Apple.
True, Tesla is planning on eventually offering lower cost models that may have a starting price of $30-35,000. That would take it into well-equipped Honda Accord, Toyota Camry, Ford Fusion and Kia Optima territory, for example. If the “cheap” Tesla can be mass produced, and offers a driving range exceeding 200 miles, perhaps there would be the potential for success. Perhaps.
But why should Apple care? Where’s the synergy between Apple and Tesla? Sure, perhaps Tesla could offer the iOS interface — as other auto makers have done — but why would Apple consider buying the whole company? How would that move advance the company’s goals? Besides, why would Tesla need Apple to succeed? The company seems to be doing well enough on its own, and that itself seems almost a miracle at a time when starting a new car company from scratch seems the impossible dream.
As usual, it’s just talk, another rant from a financial analyst who wanted to get some press. Well, he succeeded, but he won’t get a link here. He doesn’t deserve one for voicing this hair-brained scheme.
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Tesla would fit into Apple’s green corporate philosophy without any problem. Tesla would benefit from some of the money Apple has laying around. I wouldn’t put it past Apple to disrupt another industry even going so far as selling Teslas in Apple Stores (hopefully getting around those idiot states that require sales by car dealers). I wouldn’t want Apple to blindly take over the design phase of Tesla products but they could assist with the manufacturing phase. Every time I see a car running a Microsoft OS-based anything, I get worried about that car’s “brain” crashing and causing all sorts of problems. I’d feel more comfortable if it ran a version of OSX.
Is there a justifiable reason for Apple to venture outside consumer electronics on something this big? Probably not but buying Tesla while it’s still at a reasonable price (current market cap is $18B) is something they’d have to think about real quick before it’s too expensive. Tesla makes parts for other automakers who can’t seem to figure out how to do it correctly. These automakers are just trying to jump on the bandwagon to show they are in the game. Sound familiar? Apple has been trying to get into the TV business but that cartel won’t let them. The auto cartel might be easier since most of it is owned by non-American companies.