Does Apple Really Need to Rush the Apple Car?
August 2nd, 2016The ongoing stories about the alleged Apple Car and Project Titan have conveyed messages of confusion. The alleged project to create a motor vehicle has allegedly been delayed by problems with personnel and technology. So people are leaving, deadlines are not being met, and maybe it’s all a mess.
Add to that the report that the original deadline to release an Apple Car has been pushed back from 2020 to 2021. If all of this is true, maybe it’s true that things aren’t going so well. After all, despite being five years out, it’s delayed a year, so wouldn’t it be possible for deadlines to slip yet again? Maybe it’ll happen in 2015.
But is any of this even true?
Certainly, Apple’s critics and competitors would love to make hay of reports that all is not going well. One commentary, after listing the problems, suggested that Apple is already in trouble. After all, iPhone sales are down, and the Apple Watch hasn’t quite matched expectations. While the former is true enough, it’s just two quarters, and the potential for the next iPhone is still up in the air, although Apple executives are clearly optimistic for its success.
The Apple Watch? Well, nobody outside Apple is aware of what its sales expectations were. The numbers are buried in the “Other Products” category, but that decision was made right from the beginning. It wasn’t a response to poor sales. I would not presume to guess what Apple is hoping to do, but it would seem that Apple is prepared to give it some years to percolate. Even if sales weren’t so terrific the first year, wait till the second year, or the third.
Again, we’re just whistling in the dark. Remember that, according to independent estimates, the Apple Watch remains at the top of the market. Well, unless you toss it in the “wearables” category that puts the Fitbit at the top of the heap. But how many Fitbit models are also smartwatches?
Of course, industry analysts subdivided tablets, and separated them from PCs, which put the iPad in a curious place even though some do use it to replace a Mac or a PC. Apple’s new “what’s a computer?” ad certainly exemplifies the flexibility of the iPad Pro.
In any case, with all the talk about the Apple Car, and Apple’s plans, let’s not forget this is an unannounced product, never officially confirmed by Apple. All the reports you read are based on indirect sources, such as news about Apple hires, and people who are no longer with Apple. That former hardware executive Bob Mansfield has reportedly been placed in charge of Project Titan clearly indicates a major commitment to the project’s success.
When it comes to reports of delays and disorganization, I suppose any major project involving an R&D expense in the billions of dollars would face confusion, mistakes, and changes of direction. It may even be that there is no final plan for how the project will end up. It may still result in building an electric car, no doubt with some level of self-driving capability. But it may instead focus on licensing such technology to other car makers, similar to what Google is working on.
Car or no, it stands to reason that software developers and executives would be hired. That explains why Dan Dodge, the former CEO and co-founder of the QNX division of BlackBerry, has joined Apple. Obviously, elements of QNX aren’t going to be part of the software package for Project Titan. Indeed, for competitive reasons alone, Dodge couldn’t use any of that code unless, of course, it was licensed by Apple. But that seems less likely. Project Titan would no doubt base its software product, whether powering an Apple Car, or as a standalone, on iOS or something based on iOS.
It has been widely reported that Apple has been busy hiring automative personnel from other companies. All right, call it poaching. At one time, there were stories claiming that Apple and Tesla were busy grabbing employees from each other. Elon Musk boasted that Tesla was getting the best of those efforts, but it’s understandable that Apple would want to hire the best and brightest from the industry.
Even though the speculation about concentrating on autonomous driving software has been getting more coverage lately, it may still be about building a car. That’s because of reports that two Ford engineers skilled at building car bodies, Todd Gray and Aindrea Campbell, are among the hires. Why bring onboard body structure engineers if a car wasn’t part of the plan?
Regardless of how it all turns out, though, speculation that the Apple Car exemplifies Apple’s desperation to create something to replace the allegedly dying iPhone, or the filing Apple Watch, is sheer nonsense. Whether it arrives in five years, six years, or longer, a lot can happen in that timeframe. At the end of the day, there may be no Apple Car or self-driving software package for the car industry. A final decision may not come until a year or two before an actual product is launched.
So if Apple is hot to trot to find the next iPhone, and maybe it is, Project Titan will not provide an immediate solution. So what else is Apple working on? Augmented reality? The rumors of Apple’s future plans are too narrowly focused, but it’s also true that it may be too early in the game to guess what else Apple might be developing.
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The Apple Car has a serious problem. Typically, Apple introduces to the market, not just a new product, but a new category of product, and then enjoys a period when it has a de facto monopoly on that category until the competition begins to pay catch-up, usually by introducing copycat products that serve to illustrate the truth of the old saw that imitation is the sincerest form of flattery.
If Apple does intend to made an Apple Car, it would find itself in the unusual and probably high uncomfortable position of reversing this normal order of things. By 2020 or 2021, it is probably safe to assume, companies such as Tesla will probably have staked a claim on this market and Apple would be the company playing catch-up. To be successful, it would not only have to produce a reasonably decent car that worked reasonably well, it would also have to give potential customers compelling reasons why their car is better than the ones already on the market. When the competition consists of companies like Tesla, this might be very hard to do.
Against the background of these considerations, a one year’s delay begins to look important. Conceding an extra year for the competition to dominate the market might spell doom for the Apple Car.
There were certainly computers before the Apple II and Mac, portable mp3 players before the iPod, smart phones before the iPhone, tablets before the iPad, streaming video boxes before Apple TV, and smart watches before the Apple Watch. Apple didn’t create any of those any of those product categories, but when they have such success with their unique twist on things, its easy to overlook what came before. When Apple dominates a product category it’s because they are astute in identifying the most desirable feature mix for the largest number of people, and by addressing annoyances that other companies overlook. They also wait until the technology is available to “do it right” rather than coming out with a premature compromise.
I don’t see why the same dynamic couldn’t play out in the automotive market. Early market share isn’t as important with cars as it is with a computing platform where network effects cause lock in. As long as the Apple car can drive the same roads, and be recharged wherever power is available, being late to the party isn’t a deal breaker. In fact, by waiting to jump in, Apple can identify overlooked issues where it can come up with unique solutions. No doubt they are already in the process of patenting or acquiring self-driving technology. Apple can learn from incidents like the recent Tesla fatality without their brand being tarnished.
The Mac made graphical operating systems credible, even though Apple wasn’t the first. Digital music players and tablets went nowhere before Apple got on board. Smartphones were mostly used by busy professionals before Apple made them warm and fuzzy for regular people. Ditto for the Apple Watch, although it’s still a work in progress.
In each case, you had a large unserved market that Apple managed to fill.
Motor vehicles, however, is a mature technology that was highly saturated long ago. Car makers struggle to boost sales, and when they peak, they begin to slip again until more people are ready to replace their aging vehicles. This is happening now in the U.S. where market growth has slowed and, in July, some car makers reported lower sales. As with TV sets, this is going to be a hard nut to crack for Apple. Remember that, in 2020 and 2021, most car makers will be competing directly with Tesla Motors to move electric cars.
Peace,
Gene