This is the real reason legacy car makers don't want fully autonomous vehicles.
Cars that do 400 miles a day will reach 200'000 miles within ~1.3 years. Usually most cars are fairly low value by then. They would reach 400 miles by being on a highway for ~6.5 hours/day, which is fairly reasonable to assume.
Tldr: It should be a wash.
Cyclical is also great -- that's exactly what the laptop and especially the phone market are.
Margins is super complicated. iPhones don't cost more than Samsung flagships -- Apple's margins seem to come mostly from controlling manufacturing costs. Could Apple assert similar control over manufacturing costs for cars? Maybe! But maybe not. Cars are more complicated than phones.
If a margin inflation gets passed along to consumers, well, there are more people willing to pay an extra $200 (compared to a lower-cost competitor) every few years to have an iPhone than there are people willing to pay an extra $20,000 every few more years to buy an iCar -- just because it's a lot more money. And to be clear, $20,000 is an equivalent margin to the $200, scaled up for costs.
The barriers to entry are insanely high, of course, and that places Apple amongst a handful of companies with the resources to clear those barriers.
Autonomous vehicle pioneers have recently amended their expectations for when autonomous car will be fully realized, claiming it will now be more than 20 years. This is a far cry from conventional expectations in the self driving car world 3 years ago, when it was assumed that one or several big industry players would be mass producing robotaxis by the mid-2020s.
Uber may arguably have a first mover and scale network advantage. I personally doubt that will hold.
Apple has a problem with leadership. When managers aren't buying into a vision, mostly because it's murky at best, that is a big problem.
SV hubris believing you can go into any industry and disrupt the incompetent incumbents is laughable. FB found this out with phones and it sounds like Apple and Google are now figuring it out with cars.
The Netflix idea works here too: Apple and Google have to become more like GM and BMW before GM and BMW become more like Apple and Google. GM will have an awesome electric with a better range than a Tesla Model 3 this year! If they ever figure out aesthetics and software they will win.
Finally this article highlights what Musk has done at Tesla. They are the closest SV company to actually figure out manufacturing. It still remains to be seen but if they do it Tesla will be the market leader in cars.
That's the inverse of what would actually be a big problem: managers BUYING into a "murky at best" vision.
>SV hubris believing you can go into any industry and disrupt the incompetent incumbents is laughable.
Isn't that what people said about music players and then about phones? Heck, they are already the #2 watchmaker in the world in profits too...
>FB found this out with phones and it sounds like Apple and Google are now figuring it out with cars.
Neither Google nor Apple have ever released in car. If anything, their setbacks are related to the advanced self-driving stuff they aspire to make, not some issue competing with existing car tech or distribution or anything.
Besides, tons of companies have entered the car market and gave established car companies a run for their money already. The Japanese obliterated the established Detroit order for example, and new Chinese cars are as good as anybody's for general use. Tesla also come out of nowhere and cornered a niche of the market. Heck, traditional car companies are so complacent and derivative that if anything it's the inverse of hubris to believe one can do better.
Nowadays, when most of the manufacturing the expertise is in assembly lines in China and the like, creating a new car to compete with existing models is laughably easy -- especially if you have $500 billion lying around.
Chinese cars are barely being imported in the U.S. (Three models so far). It has taken many years to get this far, and will take longer for them to have a similar reputation as, say, Korea.
Tesla has done well in the luxury car market, but they've been late and had quality issues. The Tesla 3 is not out yet and there is still a big risk they'll fail.
So, "laughably easy" is a major exaggeration. It's possible to launch a new car company but nobody finds it easy.
No.
I see no reason to think that Apple could do with cars what they did with the iPhone, but that particular example doesn't make any sense.
Phones were ready for a natural complete upgrade from brick phones to smartphones. The mobile environment was there, all the network components were coming online to make it a really useful device, processors were getting to a good stage for mobile usage where it made sense to make the jump and the jump was right into what Apple already knew pretty well. The phone part of smart phones is pretty minor, quite honestly. Smartphones weren't so much an evolution of dumb phones, they were a complete redesign and replacement thereof. The technology that puts an OS in your hand just did the job of being a phone better than a brick phone did[1], and it came with a bunch of extra features that people didn't know they wanted.
Cars are a little different. Fundamentally, a self-driving car is still a car with an OS attached. It's not so much just figuring out the OS part of it, it's also getting the engineering on a vehicle right, and I'm guessing with autonomous cars there's a lot you have to take into consideration when it comes to the mechanical aspects. It's not quite like the phone situation where you just replace brick phone with smart phone - a smart car is fundamentally the same as a dumb car except that you don't drive the smart car (and in some models, you do). There's a lot more to take into consideration, a much larger spectrum of rules and regulations, and honestly the car part of smart cars is pretty involved. It's not that Apple doesn't have the money to throw at car R&D, it's just it doesn't seem to make a lot of sense to do it.
Again, I don't doubt they could do it, but the barrier of entry just seems higher here, and it's not as natural of a segue for Apple either. They're not just building a tiny computer with an iCar, they'd be building a car with an Apple computer.
[1]I realize that many prefer the brick phones to smart phones and that smart phones are pretty bad at the phone part of being a phone, but ultimately between the myriad of communication apps available, you have more communication options available in your hand than you do with a brick phone, and more ways to do the communication thing.
So yeah, Apple's smart to see if they can even make an autonomous system before trying to make their own car. Make sure all the problems are solvable before trying to solve them.
Heck there were even EXTERNAL projects with no direction, like the Apple TV (still flailing around), the Apple Cloud offerings (only got robust in the last 2 years or so, and the most touted part back then, the "office"-like iCloud apps are universally ignored), the Apple boom box, and other things besides.
Supposedly the iPod launched with a idiosyncratic equalizer, apparently tuned to Jobs tastes.
[1] http://appleinsider.com/articles/16/01/25/apples-project-tit...
Apple's strength in automatic driving should be the development of better, and better-looking, sensors. Apple does electronics and small hardware well. Those Velodyne LIDAR things are rotating kludges, look awful, and cost way too much. There are better approaches known. (I'm a fan of the Advanced Scientific Concepts LIDAR, which works great but costs too much because it's made by PhD physicists in Santa Barbara.) Existing automotive radars are dumber than they could be. Those are straightforward engineering problems that Apple could solve.
Building cars is a low-margin business. If Apple became a successful car company, their stock would decline.
So is building phones.
Maybe they can get back to making some new laptops, and some desktops (Mac Pro, Mac Mini), that don't suck!
We shall see what October brings.
Also, if you look at all the big tech companies (American ones at least) over the past 30 years, there's a recurring pattern of a company becoming preposterously successful, then spending a decade or more reaping the benefits of that success while repeatedly throwing money at the wall for different new projects to try and find something else that sticks. Meanwhile core businesses can lose focus and wither on the vine while huge piles of money and engineering talent get wasted on things that either go nowhere, or break even and fade away years later.
Until the last few years, post-1995 Microsoft was a perfect example of this. If there was a product category that was significant enough to be the basis of some other company's entire business (dialup Internet access or search engines or personal finance software, for example), they would spend many years and billions of dollars creating a Microsoft version of that product, based on the idea that they could siphon growth from a known and already-proven segment of the industry. I don't think this was due to a lack of vision or incompetence, I think that that just appeared to be the most effective way to meet investors' demand for growth and new revenue sources.
Google is in a similar bind. Think of how long it's been since they have effectively attained a search monopoly. They created a perpetual money machine (ads) that to this day provide the vast majority of their revenues. For 15+ years they have been expending titanic resources on trying to find a way to transition from a company that gets >= 90% of its revenue from ads, to a much larger company with many more revenue streams. They've had some great successes, but they have yet to break out of the trap of fundamentally being a company driven by ad revenue.
First of all, I'm not sure there's any evidence to support your claim that public companies are under pressure to diversify over iterate.
Second, public companies have chosen to go public. It doesn't just happen. So, blame them.
>lso, if you look at all the big tech companies (American ones at least) over the past 30 years, there's a recurring pattern of a company becoming preposterously successful, then spending a decade or more reaping the benefits of that success while repeatedly throwing money at the wall for different new projects to try and find something else that sticks.
In other words, luck is a substantial portion of success.
All the major manufacturers have announced programs for self-driving cars except Fiat/Chrysler. They mention Ford which has stated they will be in production by 2019.
Now I would suppose if Ford, GM, Mercedes, Toyoto or any of the Chinese car makers were to have their software fail Apple might be an awfully nice fallback.
FYI Ford learned massively from its problems with Microsoft's Sync technology. All the engineers knew it would be a complete disaster but that news wasn't passed up to the execs. Now engineers have been brought into the process.
http://www.detroitnews.com/story/business/autos/ford/2016/10...
This is in stark contrast to the compartmentalization of new projects that Apple under Steve Jobs was able to accomplish with the development of the Macintosh and the iPhone. Is this evidence that Apple is unable to do that now?
Thus, we get Mansfield in to say "no, we're focusing on this first; we don't have a car without it." This would be like Jobs (or Forstall) coming in to say "we're focusing on a multi-touch OS X first; we don't have a phone without it."
So, to answer your question: maybe. :)
Since he was also in the Korean Marines, I trust his judgement.
Partnership means smaller profit margin in a very tight market. The Big 3 for example barely make any money when selling cars (as opposed to pickups) these days, so to get a reasonable margin the price would need to be jacked up...
Making your own - the barrier to entry in that industry is VERY high which the article kind of alludes to talking about how it's hard to find suppliers willing to sell small batches of parts etc. There's a reason there aren't that many auto manufacturers around, and the ones that are out there aren't exactly the kinds of revenue generating machines as apples and googles of the world.
