Apple R&D Reveals a Pivot Is Coming(aboveavalon.com) |
Apple R&D Reveals a Pivot Is Coming(aboveavalon.com) |
There's a handful of small players testing the banking regulations now (like Mondo) to get authorised as basically "iPhone banks" - modern, mobile, without the legacy and technical debt.
With Apple Pay (and their $billion reserves) Apple could conceivably sweep in and buy up these newly regulated challenger-banks and buy their way into FS overnight.
I don't know if Apple are thinking along these lines, but I do know that it's a great idea either way.
1) The car business delivers lower margins than the iPhone. Even if you compare them to those of premium car companies (like Range Rover, Audi, Mercedes, BMW or Lexus).
2) The iPhone didn't had comparable brands to compete against, when it entered the phone market. It came with a hefty price tag. A sum that was never even considered mass-marketable before. The iPhone created the premium sector for phones. It raised the share of income people considered plausible for cellphones.
The author is also right in that apple is very good at applying their business model to new markets. But
3) to become premium in the car business either means
- lowering their margins
- producing cars that aim at a smaller/niche market (Porsche to Ferrari/McLaren),
- lowering the costs of the supply chain currently in use by other premium car makers.
The last one would be doable, certaintly by Apple. Certaintly with EVs. But I doubt it would be doable without any information leak other than this article.
4) More plausable for apple's margin territory would be an attempt at the user interface of cars. Like appleTv is for television sets or the healthKit-API.
The problem with cars is not the getting-from-a-to-b-part, not the status-part or the comfortable-interior-part. The problem with cars is the user interface-part, it's the outdated-touchscreens-part or the connecting-and-charging-and-holding-your-phone-part. It's the car's software that sucks. And for some that sucking software includes the driving-yourself-part. Reaching out to current premium car-makers also points into this UI/API-direction.
5) Also there are a lot of lower hanging fruits out there, easier to tackle than building a premium car. Like VR or building physical television sets, home automation, healthcare - or wait, software.
Sure, Apple could be (and probably is) working on an automobile of some sort, but that seems like it would be difficult to really make a 10x improvement on. Especially with all the rules and regulations about what can be considered a car; it must have mirrors, steering wheel, pedals, etc. The prospect is so limiting. Besides, I think Tesla is rocking the automotive world and Apple would probably be better teaming up with them than going alone.
Just my $.02 worth.
(Sorry, Jony.)
- Apple is investing more in ancillary services (iCloud, Siri, Maps, new Arm processors, etc)
- More investment into manufacturers to get the latest tech (retina, etc)
- Some of it is lacking focus and spending a lot of "R&D" money in irrelevant stuff (like most big companies do)
A keyword is missing - autonomous car - maybe the first couple of versions will be manual but they can be relevant in the long term only if they are working on bringing autonomous cars to the market as fast as tesla/google.
However, this quasi-exponential growth in spending reminds me of a pathetic moment at a EU commission meeting I attended, on research and innovation public funds in 2010.
The EU commissioner basically complained that Europe had no Unicorns like the GAFAs, but wanted to be reassuring: this is about to change. We will prevail, because we'll spend more on R&D (through tax money) than all of these do together.
With the implicit assumption that the more you spend, the bigger the returns.
I wonder if Apple will partner with Tesla to use their Gigafactory batteries and charging network. If not they would have a lot of ground to make up.
The answer, at least for Apple, has always been in user-facing software. The hardware is a "pretty box" (to use Jobs' phrase) and certainly there is impressive core engineering there. But the 10X difference comes from fundamentally re-envisioned software platforms and user interfaces.
So this doesn't make much sense for cars if we only think in terms of traditional automotive engineering or "merely" shifting to an electric platform. Tons of incredible feats of engineering, but not a 10X difference in user experience or opening of a new landscape like the Mac, iPhone, etc.
BUT if we look to the (semi-)autonomous future then it's a huge wide-open landscape of innovation. And it's all about the software smarts and user interface. It's critical to understand that the user interface is essential, i.e. that we will not simply jump to fully autonomous cars. They will be cars that interface with human drivers for quite some time. So that's where Apple will compete with Tesla.
And yes getting the underlying (electric) automotive hardware and production right is a huge challenge in and of itself, but ultimately technically feasible. The software layer on top of it is more of a proprietary differentiator in the long run.
I just thought I would leave this comment here so in a few years someone will find it.
HMD and transport are the obvious markets to tackle.
Or they could reintroduce their enterprise/business products, such as XServe.
The electric car idea really won't be ready anytime soon, due to limits of neural-net learning speed.
So, if you start looking at product spaces that have:
1. A meaningful market size (ideally all consumers) 2. A price that is significant 3. Enhances the brand image as chic/cool 4. Is global
You don't really discover too many spaces to play in. They're not going to move the needle with a new printer.
Frankly, if I was Tim Cook, I'd just buy Tesla and be done with it. Goodness knows they have the cash, and Elon has signalled previously that he'd be interested in handing over the reigns once the original strategy was delivered.
The initial theory of disruptive innovation from The Innovator's Dilemma is about this exact issue and how companies can deal with it.
A broad product portfolio will always be more stable over the long term.
My main questions regarding an Apple car are the following:
1. Apple seems reluctant to chase market share at the expense of profit. The automotive industry is very well established and from my understanding operates on razor thin margins. Apple seems to be a master of the supply chain but much of this has to do with the fact that they ship such large numbers of very similar hardware. Apple doesn’t ship the most smartphones in the world but they do ship the most of a single model and this allows them to put incredible pressure on their suppliers. Does anyone expect Apple to be able to move so many cars that they would be able to put more downward pressure on suppliers than the traditional automakers?
2. If the strategy isn’t to dominate the market and thus assert downward pressure on suppliers then I would assume the strategy would be to sell a premium car that carries higher margins. Apple obviously has a well deserved reputation as a premium product within the computing/electronics space but is it a given that this would translate to the automotive market as well? I don’t particularly care for a brand’s prestige but I know this does inform many consumers’ decision making. Apple might be viewed as a premium brand compared to Samsung/Moto/Lenovo/HP/etc, but would most consumers be willing to pay a premium for an Apple car compared to a BMW or Mercedes?
3. Is there any reason that Apple’s prowess in the electronics supply chain may not translate well to the automotive supply chain? These two industries seem very different to me.
4. Apple, like almost everyone else in the tech industry, uses outsourced manufacturing for the majority of their products. While there are similar contract manufacturers in automotive, they are not nearly as large nor their use as wide spread, to my knowledge at least. Foxconn was already one of the biggest electronics manufacturers even before they started building iPhones for Apple, I don’t think a Foxconn equivalent exists in the automotive world. I would imagine this may present problems for someone like Apple that doesn’t plan on actually building their own cars, or do they?
5. There is considerable risk when launching a car model, even for the established players, I would assume the potential risk for a newcomer would be even greater. Newly introduced cars seem to suffer from more serious and more widespread problems than newly launched smartphones/computers do, although those often suffer problems as well. Does the potential exist that problems encountered with a newly introduced Apple car may carry over to negative perceptions about the broader Apple brand? It seems enormously perilous to me to risk your brand reputation on one specific product line that traditionally tends to be both very low margin and suffer from frequent defects.
I’m curious what others may think of my concerns or if anyone knows of articles that have gone into more depth with regards to my concerns.
That's what a successful Apple pivot looks like.
VR, electric cars?! Maybe, but extremely unlikely. Those are obvious things that everybody in Silicon Valley is thinking about and has overhyped to death. Apple would probably take some smaller category that people hadn't thought could hit the big time. IMHO, it's obviously not going to be VR, that's been completely overhyped, sounds cool to nerds but completely impractical and practically useless, and will have basically no impact on the majority of lives out there.
If a pivot was obvious, then it wouldn't be a pivot. It would just be the next step in the original plan.
Why do you want him fired? who do you think can replace Cook? I don't see anybody.
Samsung is in #2 spot in global brand valuation. Google, Microsoft, and Verizon round out top 5.
http://www.digitaltrends.com/mobile/apple-is-the-most-valuab...
EDIT: Upon a bit more research I find different valuations but still Samsung is up there.
> Verizon
There's definitely something wrong with this.
The question is whether the watch repeats the iPod trick of dominating and expanding the market two iterations on. With the iPod this happened when it was no longer tied to the Mac, maybe with the watch that will happen when it's no longer tied to the iPhone?
For comparison, in 2014 Volkswagen spent $13.5B, Samsung spent $13.4B, and Microsoft spent $10.4B. [1]
Apple has, historically, not been a big spender when it comes to research, tending to favor short-term, tightly focused research over long-term, curiosity driven research. Over the last few years their research budget has ballooned, but only in 2017 (projected) are they going to reach levels that the above companies were spending at in 2014. Has Apple's research focus changed?
Perhaps we're not seeing some monumental project in the works, although an autonomous car would be pretty big. Perhaps what we're seeing is Apple deciding to loosen the purse strings and, instead of stashing away obscene piles of money, they've loosened their research focus and now have a lot of people doing whatever the hell they want, much like MS, just because something useful might someday emerge.
Let's face it, Apple has so much money they could probably launch their own space program if they really wanted to.
[1]http://fortune.com/2014/11/17/top-10-research-development/
What's interesting is how aggressively they're moving into the car space if that's what's happening. The phone people had no idea, they got blindsided thinking Apple wouldn't have the guts, would never commit the money.
It wasn't that they doubted Apple's commitment, they just didn't have the imagination. To be fair to them, Apple timed things perfectly. Even a year earlier SOCs weren't powerful enough to run something like the early iOS. They did in software what they did in hardware much later with the 64-bit transition. They pulled off a superbly executed technological coup just at the point when it became possible to do it at all, beating everyone else to the market by years.
If they're planning to do the same with cars, we have interesting times ahead.
Unpossible. Space stations need to be displayed against a black background (albeit one punctuated with twinkling dots of light). Ive doesn't do black background.
If it has, honestly, it's because they don't know where to put their money or they've put it all in one thing.
You more or less say the same thing.
"hey've loosened their research focus and now have a lot of people doing whatever the hell they want, much like MS, just because something useful might someday emerge." (This is we have no idea what to spend our money on).
"Perhaps we're not seeing some monumental project in the works, although an autonomous car would be pretty big." (This is we are betting big on this one thing we think has huge potential).
The other option apple has not been fond of is large investments in a small set of things, each of which may be a potential big future.
The first would be quite concerning. If you have companies with large research budgets, and they have no idea what they should spend money on in order to make the next big thing happen, that does not bode well.
Why doesn't it bode well? The transistor, the laser, Unix, information theory, and a giant number of other things which form the underpinnings of modern technology came out of Bell Labs, which is the epitome of a place with a large research budget and no specific "next thing to monetize" that the spending was directed towards.
From what I understand of Apple's culture, it's unlikely that it will ever transform towards this, but that's a separate point.
So maybe they are developing a car, maybe they are just amping up their IP for the impending shift of tides. However, MacRumors mentions an electric car possibility: Project Titan http://www.macrumors.com/roundup/apple-car/ so a physical product makes sense.
That's the whole point. The argument is that Apple is pivoting into a different industry.
% of revenue spent on R&D would not tell you much here. If a company with $10m revenue spends the same % revenue on R&D as VW, does that mean it's possible for it to bringing out a new line of cars? Setting up to manufacture a car costs a large amount of absolute $, so comparing absolute spend makes sense here.
With cars it makes perfect sense as long as you do one thing first: throw out everything you've read about fully autonomous cars being right around the corner. If instead we're facing a future of semi-autonomous capabilities which still require a human to oversee and guide -- much like the autopilot controls of airplanes -- then there is a massive opportunity to rethink the automobile interface from the ground up around this new hybrid approach.
You can be sure that Apple's car will not just be a Jony Ive designed Tesla. It will involve a rethinking of the user interface. Apple likes to make a 10X difference when entering product categories and that's been the key element. Effective autopilot assistance features can plausibly get us to 10X improvements in safety and convenience.
Apple's functional organization is one of its secret weapons in applying this philosophy consistently across so many consumer categories and creating a halo effect. I would be very surprised if they changed that for computers-with-wheels.
Smart home / smart appliances would be a much more logical step for Apple as it'd be much closer to their area of expertise in electronics. Unlike with iPod and iPhone, there's at least one company that is already doing all the right and hard things around cars - Tesla.
TVs, kitchen appliances, even lights are much better understood and researched. Technology is there, safety/regulatory barriers are lower than with cars, consumer demand is pretty obvious. Yet existing manufacturers releasing product after product with laughable design and usability. Just like used to be the case with Nokia and Windows smartphones.
I think the big question here is not are they working on a car, but can they deliver a car that represents a significant improvement over what's out there. And that i'm highly skeptical of, unless they deliver full autonomy. But there is just no way Apple is going to beat Google to market with that technology.
So, I agree they're working on a car, but I feel fairly confident that it will be an absolute disaster for them. Though most times that's been said about their products in the past decade or two has been a disaster for the person saying it.
Come to think of it, I think I just saw a slide with it right on the single slide during the Viv presentation. I went back and found it. Here is the video URL at the time the slide is shown: https://youtu.be/Rblb3sptgpQ?t=51
It's the same thing OpenAI, HARC, and other groups are working on: creating revolutionary intelligent assistants and possibly achieving strong AI. The chance to work on that project at Apple, that I might consider a move for.
Applied AI combined with conversational or AR interfaces to create specialized personal assistants will be the next in the line of game changers such as car, flight, radio, telephone, computer, rocket, internet, cell phone, the web, smart phone, tablets, and data mining.
I hope so, but given they released Siri in 2011, and only minimally improved on it since, it doesn't look like they're giving the field much attention. It doesn't look Apple takes it very seriously, and in the meantime Google & Microsoft have released their own superior versions.
It's quite possible that their iterative loop on Siri and Siri-like experiments simply doesn't include the general populace. Apple does not have much of a history of touting beta software and using their customers as guinea pigs, but internally they definitely do.
Either way, I'm skeptical that any company is going to make huge, monopolistic profits from selling autonomous cars. It's something that's going to easily commoditizable. Consumers aren't going to care which company their buy their autonomous tech from, as long as it's safe and it works.
A better fit (although much, much, much harder to achieve) for Apple would be a real robot/android. Apple has hundreds of billions in cash to play with and a steady stream of income on the horizon for the next few years. I think they should accept that they don't have to come out with the next big hit every year. They should look 10+ years in advance and try to beat everyone to the last consumer electronic product.
So is it that much of a stretch for them to actually come out with a mobile VR headset?
Think about it.
- They make the phones.
- They make the vr software.
- They already have the eco-system for you to get apps from and the developers to sell through.
- They can sell upgrades for face/hand tracking, etc.
What about a version of FaceTime, where 2 people can call each other and play a game together?
Within a very short time could exceed what Oculus is doing very quickly.
[0]: http://venturebeat.com/2016/05/11/oculus-and-samsung-have-1m...
(Arguably the same thing happened in K-12 education; when women were largely excluded from other professions, teaching positions were filled by the best women in the workforce; now, many of them would rather be doctors/engineers/lawyers/etc., so the quality of educators has decreased to the market level.)
My hope is that the car is a front and they're secretly building arcologies, but in reality they're probably just building some shitty car.
From the European point of view cars seem to be a dead end. More and more people live in an urban area and more and more young people use public transportation way more often, than cars. Additionally carsharing makes owning a car in a german city kinda obsolete.
So... why cars?
It's rather depressing to consider that excellent industrial design can only be supported on the exponential-looking part of the sigmoid curve.
I've now begun to think that the increase in what everyone is calling "R&D" is just Apple become too large to any longer be efficient. Perhaps they've crossed that point mentioned in the Mythical Man Month where gains in team size decrease productivity.
Can we really conclude that? Good geez.
1) Apple's secrecy 2) Apple's pivot
If they're pivoting, why be secret about it? One of the reasons provided was that being public about new products could hurt current product sales.
If it's an entirely new product line (ie. car), I have a hard time believing someone will think twice about buying an iPhone because Apple is coming out with an electric car.
Instead being secret seems it may hurt more than help. If I'm in the market for a new car, and there's a real release of an affordable Tesla that has already happened, while at the same time I have no idea what Apple is doing or if they're even going to do it or what kind of timeline the project is on, I'm probably going to buy the Tesla.
Otherwise if I'm somewhat certain that Apple may be coming out with a new car within a year or two, I may decide to hold off with my purchase of the Tesla for the time being in order to consider buying the Apple iCar when it comes out.
If Google started braying tomorrow about making cars then car companies would respond. They'd have a harder time rolling out their product.
Apple hasn't shipped a successful new product line since Steve Jobs' death, and sales of its last successful major product — the iPhone — now seem to be slowing. Their cloud efforts are famously flailing, and their software is increasingly stale: who here has a folder full of unused Apple apps, with better third-party replacements on their home screen or dock? Almost everyone with an Apple device.
I sit here writing this on a Macbook, unironically. Their hardware manufacturing capability is best in class, and they've managed to hone their existing products' hardware increasingly close to perfection. But innovative? You can't be innovative just by spending money on R&D. You have to ship new products. And for now, Apple seems like it can't.
Surely the production line for any kind of car at all would be almost impossible to organise covertly, all the factory space, tooling etc?
Looking back, it was still a big surprise once the details were known. So, a car? Build a roof, sign some NDAs, and do your best.
Cars are not phones and I don't see the massive factory/production line being prepared to build the cars nor the investment in battery production that would be required (assuming an EV not an ICE) so unless they buy BMW (LOL!) or another car manufacturer then it will be 3 years minimum from them showing a car to us being able to buy it.
Remember aside from the biggest car conglomerates there's a dozen smaller 2nd tier makes who can't afford building self driving car from the ground up. Even the biggest ones invest into it more out of necessity than internal motivation.
Are they working on some non-phone products that they hope will be big? I'm sure they are.
Could they conceivably find that one of those products achieves massive traction and overshadows the iPhone (especially as the market for smartphones cools)? Sure, though I'd bet against it actually playing out like that.
Is Apple making a big planned play to radically deemphasize smartphone sales in a desperate gamble to become a car company? Of course they aren't.
Even if the smartphone market's high-water mark was 2015, Apple has a hugely successful, almost grotesquely profitable product that will -- assuming they don't do something absurd like pivot away from it -- be the source of incredible value for at least a decade and probably much more. On the back of the iPhone, Apple has grown to a market cap that -- even after recent losses, and despite a weirdly low P/E -- is massively higher than the combined market caps of the top five auto companies.
They are trying to become a mass transit provider by owning and operating a large fleet of those self-driving cars, renting them out on a per-ride basis.
That is, if they're smart.
I think it is more "The future of cars is not _everyone_ owning one." The point is that most cars spend most of their time sat, parked waiting for a single user who is also usually the owner. This is inefficient. I'd rather the car I owned was out earning money while I'm sleeping/working and available just when I need it.
Uber has the right idea, and those that own cars will become part of their network.
Two other industries I see impacted; car parks - my car doesn't need to remain near me; home delivery - thanks, I'll send the car to pick it.
Apple might be working on something to take a bite out of Facebook or Google Search or Amazon's Echo. The next big thing is likely to be "you just talk to it and it does the right thing". Siri with common sense.
Apple is making a car not self-driving technology. They may develop self-driving technology, but the business will be making a finished product that they sell to customers, not licensing technology to others (which is what Google is doing).
>Facebook and Google Search are ad businesses, and looking at those businesses they're very small compared to Apple.
Edit: sorry I meant Macbook pro
I'll take built in ethernet and two display connectors on my lenovo instead. Want to add another network port? Well, there's USB3 gigabit, or simply USB-C. If you need native PCIe adaptors, then Dell XPS range comes with Thunderbolt 3 via USB-C.
Sorry, I have to agree with the parent that the port war is growing tiring. Unless there's a plethora of USB-C ports on the laptop we still need our connectors.
For example, I would personally love a Subaru that had its information and entertainment systems designed and built by Apple and licensed to Subaru. It would also be cool if Apple's designers helped with the overall exterior and interior design.
Has anybody considered that it might be other form of transportation? Maybe an electric motorcycle or some other cart? All their devices is very personal, could be a personal transportation device?
Apple's mission seems to be to create the best products they know how to build. But environmentalism is pretty highly valued at Apple, so it seems likely that they will move towards things that they think will benefit not only their costumers but also the environment.
But Tesla's mission seems to be about accelerating the adoption of electric cars. They need "everybody" to produce electric cars, so it is in Tesla's best interrest that they build a car. It will be interesting to see if Apple picks up on Tesla's R&D, with the opensource patents and maybe even a Tesla Gigafactory.
But very interesting to follow, hope they make a car and hope they make it great. But I am afraid they lost their cocky edge a few years ago, so it will probably just be a nice new car.
But i can see your second point being true, maybe full-autonomy will take a long time. So even if Apple will design a great interface, it would probably be copied by competitors fast enough, unless there's some big barrier to copying that interface like the phone had in apps. What could that barrier possibly be ?
The only exception i can think of:
The addition of radio for most cars was an important invention.
So let's go wild - what if Apple succeeds in making siri a true AI, with a great personality, someone you'd have great fun driving with, everyday to work ?
Btw I agree about the watch, but it's also early days. The iPod might not have seemed as radical an improvement on other MP3 players either, at first. In retrospect the details made the difference between the product category working for people and not, and blew the category wide open.
With human rights?
However do think there are some fundamental differences between Tesla and Apple. Tesla is far more into performance than it is likely Apple ever will be. I think the sporty aspect will not be present with an Apple car. The seating arrangment for kids in the trunk in the model S, is more in line with stuff Apple would have done.
I think Apple will spend a lot of time investigating the current method of controlling and interacting with a car and looking at a way of improving that.
I think Apple will try to make a very pretty car but I can't imagine them going for the almost sports car look of Tesla.
Not at the software interface level. Tesla has done incredible work at the hardware level transitioning to electrics but the UI is still pretty old school. I.e. your parents could step into a Tesla and not know that there was anything different about it. Apart from having to plug it in, which you tell them is a Good Thing. That and some snappy performance.
If you think just a little bit ahead about where the next user-facing innovation is, it's autopilot. And the big thing to "get" is that it's not going to be some switch you hit that makes the car magically fully autonomous and you just sit back and take a nap. Rather to go beyond very limited scenarios and actually function on the real world road network and weather conditions, it's going to be about the human-computer interface.
So what does that look like? Is it just a flat panel screen in the center console next to your big steering wheel? Is that how the car is going to deliver safety-critical information to you that you need to supervise and potentially respond to within seconds? And how are you going to respond to them, through taps on screen dialogs?
Probably not. And there is where Apple will compete with Tesla, in the human-computer interface, as it did with the Mac, iPhone, iPad, etc... Even though they all had great hardware too, it was software that made a 10X breakthrough.
If Apple is just building the car, and fully autonomous transport is out of the picture, then all they can hope to do is make it electric and install all kinds of shiny gizmos inside. Battery tech won't advance on their doing, so we can't expect their "revolutionary" change to involve any actual gain in commuting, but we can expect to be inundated with a lot of beeps and boops. Oh and maybe your Apple watch will unlock the doors.
With cars I want to underscore what I said about a "10X" improvement in safety and convenience. That is not just polishing a turd. What does it take to actually get to a car that largely drives itself, on myriad roads and conditions? It is wishful thinking to believe cars will do this all by themselves without drivers anytime soon.
Instead, think of a UI that is much more about "mind-melding" with a human driver. Letting them know exactly what it is planning to do, how it intends on navigating that stretch of Highway 1 without driving off the cliff. THAT will probably require fundamentally rethinking the cockpit. You will be mostly focused on "driving by instruments".
If they can achieve that, then we get cars that really do save thousands of lives and make the journey much more relaxing.
I guess the real disruption in the automotive sector would be a focus on mobility instead of owning a car. Have a smartphone app where you could call a shared car from wherever you are whenever you wanted. It appears 10m later, takes you to your destination and then goes back into the pool.
At least in the big cities, a whole lot of people would forgo car ownership if such a service was available.
So similar to the autopilot feature that Tesla already has in their cars? Plus it isn't going to up safety until there is 100% acceptance in this autopilot feature. Sure your car might be driving safer, but the other people who don't have these features will still be a danger to you.
https://www.inverse.com/article/14393-elon-musk-shares-video...
"I know The New York Times can’t say that it’s certain that Apple is working on a car, but I can. They are. Of course they’re working on a pay TV service. It would be astonishing if they didn’t have teams hard at work on VR and AR. The difference between Apple and other companies is that Apple will spend tens (or in the case of the car, hundreds) of millions of dollars on a new product and never ship it. They don’t just say no to ideas — they say no to long-in-development projects."
Note, "hundreds" of millions of dollars. Whatever you say about DF spin (and you'd be right!), the facts he leaks are generally accurate.
The analysis in the OP (exhibit 3) would seem to indicate ~$5B on R&D on hitherto-unknown products since 2014. Which is astonishingly large. Because it's based on company reports, this must be common knowledge for serious tech industry analysts.
Why?
Apple is possibly the world's most effective company at synthesizing industrial design and software in premium devices sold to consumers. Google is a web/cloud services and advertising company.
The reason presumably is that you can't see what Apple is doing in public, while Google has a car that still can't drive itself in the rain that is occasionally seen wandering around Mountain View. I question the methodology of that analysis.
They do nice interfaces, and iOS is great. I have no doubt they would produce an amazing luxury car with a beautiful software UI, but I do not see them morphing into a machine learning software powerhouse anytime soon, at least compared to Google. Google Now easily beats Siri and Google Maps beats Apple Maps.
While obviously Google is historically a web/advertising company, they're showing a lot of strength recently in machine intelligence, like with Google Photos auto-tagging or AlphaGo.
Google is actually an AI company.
A self driving car is not just going to magically appear from Apple. It'll take years, and offering a branded in-car experience with someone like Ford or VW would be a lot more Apple's style.
But then, I've been repeatedly wrong about Apple for years. Still, I feel like when they introduce something these days it's evolutionary, not revolutionary.
I grant though that this is a sort of 'unknown unknown'. By definition, the great new things are non-obvious. I may have said the same thing about pre-iphone phones. But I don't really see what they could offer me that would make me want to pay an apple-style premium for a car (other than full autonomy, of course).
I'm sort of surprised that Microsoft & Amazon are sort of just sitting back, watching. I guess neither of them care so long as the back end is running on their cloud.
It's a lower margin for the classic companies that use a dealer model to sell cars. Direct sales like Tesla have pretty decent margins. It's unlikely Apple would use a dealer model. That's pretty outdated and will eventually go away (though not without kicking and screaming from the existing dealers).
Don't forget many Android phones have awful margins but the iPhone? HUGE margins. Apple sells premium products. Ultimately it won't matter what the margins are for any of the existing companies when they move into a new industry.
> I'm sort of surprised that Microsoft & Amazon are sort of just sitting back, watching. I guess neither of them care so long as the back end is running on their cloud.
I would be surprised if both companies haven't done some research into this. Microsoft's R&D is pretty famous for working on tons of moonshot ideas, many of which never see the light of day. Amazon seems to move into whatever space they think they can get into. Right now they're kicking ass with their brand new AI initiatives so I think they have their hands full (if I were them I'd shove Alexa into every product I could).
Is it? It is well known that they are hiring bunch of engineers with automotive industry backgrounds and are working on something related to cars. However I've also heard from friends in the industry that they're not really hiring people with backgrounds related to building actual car chassis.
I think the jury is still out on whether there will actually be an Apple car (as opposed to an Apple (co-)branded car full of Apple tech).
To your second point, I'm not sure that autonomous tech will be easily commoditizable. Some companies will have much better tech than others and consumers will prefer them. Think about internet search engines: The easiest of all industries to compete in, yet (or "thus") full of huge, monopolistic profits.
Actually if you think of a car as a consumer electronic device, it doesn't seem weird at all!
Either autonomous vehicle is a real robot (and not a bad place to start, given that moving things around is a great task for a robot), or I'm not sure the word has a lot of meaning.
It isn't approaching an android until it's something like KITT, but that's something else.
Frankly, that idea sounds ridiculous, but the first "good" VR headset is something that Apple is absolutely capable of delivering and importantly, it fits the R&D spending figures in the article (a car would cost them a lot more).
They also happen to have a number of unique strengths such as their own OS, their own SoC that give them a huge advantage over anyone else in market.
It also makes sense that Apple would not want Facebook to gain any traction with the Oculus Store in competition to their own App Store, so frankly it would be a huge strategic mistake for Apple not to release a VR device within the next 2 years. I just think they won't release anything until all the user-hostile kinks have been worked out.
Apple is not, as many seem to be suggesting in this thread, about applying "disruptive UX" to random markets like cars. They are about giving new technologies mass-market appeal. They take something niche (like MP3 players, smartphones, or VR) and they make it into something that everyone wants.
Um, what? I assure you that "we all" don't agree with your favorite ice cream flavor, rock band or "software experience". In terms of "software experience", Apple aren't showing much hope of catching up to Android on mobile, much of their desktop application software is abysmal (iTunes, Quicktime, etc.), and their desktop OS experience, while decent, gets less "right" with every version.
"We all know" ? The starting point for your whole desmonstration is assuming general agrement of one of the biggest source of troll of all time ?
If a move to a new manufacturing process such as carbon fibre gets thrown into the mix, that's three simultaneous revolutions.
It is this. What you're missing is that in the whole wide US, the number of European-density cities where most people can choose to forgo routine use of a car can be counted on one's fingers. The common layout here is a few walkable commercial blocks "downtown", that generally serve as single-destination stops for drivers who live further out.
Self driving is what's required to make the car sharing frictionless and on-demand in less-dense areas. Currently this role is being done with human owner/operators; replacing the humans with software will reduce prices and consolidate ownership of capital equipment. (Interestingly enough, it will also decrease the stickiness of supply. Instead of needing to slowly recruit driver mindshare for a new intermediary, a straightforward investment in a fleet of cars suffices)
That being said, I think this article is a bit hokey. Apple "pivot"? mm hmm.
Basically, here's the deal:
Right now, the cost to own a car is CO and the value received from owning a car is VO.
The cost to rent cars from a taxi-like service is CR and the value received from renting cars in a taxi-like service is VR.
For most people, CO < CR. That is, it's usually much cheaper to own than to rent. With perhaps some exceptions if storing your car is super difficult in your locality.
The VO and VR relationship is much more complex. There are advantages of each model (you can take an Uber when you're drunk, you don't have to look for parking, but on the other hand you can't leave your crap in it and you have to wait for it to arrive and you can't take your kid in it).
Based on the CO < CR and VO <?> VR distribution across people, we have a certain balance where taxi-like services are pretty big, but ownership is the dominant model.
In the autonomous world, VO > VR almost all the time. That is, you get all the advantages of current ownership and pretty much all the advantages of current rental. But the cost of ownership presumably increases (you have to pay for a sensor package now) and the cost of renting presumably decreases (since you no longer have to pay for a driver). So the question is how much do those costs end up changing? Is the sensor package expensive or cheap? How many human costs can the Ubers of the autonomous world actually cut out, and how much utilization can they get out of each car? If the CO increase is small enough or the VO decrease is small enough, you expect to see more car ownership. If not, more car rental.
because private companies don't generally dabble in public infrastructure :)
I think at this point it's less about cars or electric cars, but more about self-driving cars(that happen to be electric). In the U.S. at least, we have a MASSIVE roadway infrastructure that's not going anywhere for a long time. Utilizing that probably looks like a much easier path to automated transportation than does building up the rather sparse network of railways.
The self-driving utopia is primarily a suburban-centric dream, in many European cities (and a small handful of American ones) it's likely to be less efficient than what already exists.
Around here for example, the subway runs every 2-3 minutes and moves faster than cars - perhaps even self-driving ones. Trips are generally short enough that being able to work/surf the internet is a pretty marginal benefit, and the hardware store is so close that it would be nonsensical to use any vehicle to go there. All of the above pre-supposed long travel times and having to take a vehicle for even mundane every tasks - this is untrue for many cities, where cars (self-driving or otherwise) will likely be strictly inferior to the utility offered by walking or mass transit.
I disagree.
The Apple Watch is only "unsuccessful" using a yardstick calibrated to the scale of existing Apple product lines -- in its first year it appears to have achieved sales revenue on the same order as Rolex ($4.7Bn, per Forbes).
(Apple's secretiveness makes it hard to tell how many Watches they've sold, but the low estimates are in the millions, and the high end estimate -- 12 million shipped through 2015, per Canalys -- would put them in the same league as the market leading luxury watch manufacturer, if not ahead.)
If any other company had released a product that replaced the century-old industry-wide #1 luxury brand within a single year it would be seen as truly disruptive and a major breakthrough. But the wristwatch industry is small by Apple standards, and the nascent smartwatch market is still embryonic compared to smartphones, so the scale of sales doesn't match onlookers' inflated expectations of an Apple product.
(As for Project Titan, I expect a bit more than just an electric car, given that scale of investment. Possibly an attempt at redefining how we do intraurban and suburban personal transport, the Apple way. But they'll have an uphill struggle to supplant the automobile with something better, because of all the built infrastructure and regulatory constraints, so at least at first it'll look like "just an electric car".)
What's interesting is that if you think of the Watch in terms of it being a computing platform, 12 million devices shipped might be considered a bad sign.
Sega had two back-to-back systems that shipped in that League (the Saturn shipped 9.26 million and Dreamcast shipped 9.13 million) and both systems are considered massive commercial failures, so bad that they nearly sunk the company forcing Sega to pull entirely out of the hardware market.
Of course they have a lot of room to slash margins to compete so I'm not too pessimistic but the iPhone was really a once in a generation kind of product and I think they've taken most of the easy profits off the table already.
But smartphones are also clearly not going to crash and burn. Even if people don't replace them like clockwork every year or two years, there is going to be a healthy market for iPhones for a long, long time. There are still people without smartphones, there are still large markets with low Apple penetration, and they have an enormous install base and developer support -- and, as you say, positively absurd profits to cut into eventually.
Does Apple dream of another product that will be as big as the iPhone, but is yet in its infancy, with its growth ahead of it instead of behind? Well, of course they do. How could they not? Will they launch new products? Of course they will. Might one of them be a car? It might. If the stars align for Apple again, might we in ten years say that they are not the iPhone company, but rather the X company? Yes, that is possible.
But:
1. There is no possibility that Apple is planning to pivot in any meaningful sense of the word. "Pivot" does not mean "launch a new product and hope it takes off." Pivoting is simply not something that the most valuable company in the world does in the face of some cooling of demand. Pivoting is what desperate start-ups do.
2. If the leaders of Apple are basically cool-headed people who do not entirely buy some kind of superheroic mythology of what Apple is capable of, they are probably aware that the iPhone was a literally singularly successful product in the history of, like, the world, and that the odds that lightning will strike twice and they will have another product that successful or even more successful are lower than the odds of lightning literally striking the same person twice. It is possible that Steve Jobs was not a basically cool-headed person. I think that Apple's current leadership is.
3. And specifically, the product that makes us forget the iPhone just straight up can't be a car. There is just no demand for a car that can support an Apple-in-2015 type valuation, especially at iPhone-like profit margins, double-especially in a world in which autonomous cars makes any meaningful jump in the utilization of each car. And PS: approximately 0% of Apple's current employee base would be useful in Apple-as-a-car-company.
Still, I hope you're right; I do agree that it's a big part of the future, and seeing it flounder is frustrating.
Depends on your perspective
http://www.spacewallpapers.net/wallpapers/albums/Other/norma...
If that was really the only reason people bought cars, we wouldn't have as many variants, manufacturers, models of cars.
Electric cars. Yes, there is Tesla, but not much else. And, as Tesla proved, there is significant demand for an electric car done right (ie, powerful, long range, not expensive). Throw in the brand name and a really nice cockpit design, and you have a hit.
I think a company going from zero to massively produced and heavily scrutinised car in one step is too big a jump without acquiring someone along the way or signing up a existing player.
I personally find for the price and the (personal taste) ugly design the Watch exceeds the expectations. It's not because something is not pulling the same frenzy like there was with the iPhone and iPod, that it's automatically a failure.
>> There is just no demand for a car that can support an Apple-in-2015 type valuation
Assuming transportation is on demand and automated, the revenues of that industry will far eclipse the phone industry revenues. Add that with the fact that automated cars are really hard, brand might mean life and death(in the mind of people) and moving people in shared vehicles on-demand has pretty strong network effects - there's a possibility for a bigger business than the iPhone.
But from that to Apple winning that business ? that a low probability bet, so maybe pivot is the wrong word. But Apple can allow itself to try that bet, money is of almost no concern to them
That's why i believe entertainment in some form, is critical.
So maybe that siri personality is also built in such a way to enable all-time awareness by the driver, effortlessly ?
Or another option: maybe they use some kind of brain monitoring machine like eeg, and together with music put you in some kind of meditative state fit for driving, yet very enjoyable ? but doing so in a subtle way ?
I doubt there will be anything like a "meditative state" -- that's dangerous. On the contrary a goal of the UI would be to keep the driver highly engaged with the vehicle computer at all times.
Driverless cars would be (further) disruptive but only if driverless cars are actually possible. That is mostly a tech press peak hype cycle fantasy right now. Even Google made a public statement throwing cold water on that, saying it could take 30 years.
Meanwhile the disruption we could actually face is with 10X improvements in safety and comfort via semi-autonomous driver assistance features. A car that mostly takes care of itself, but still requires a human pilot that remains engaged, aware and alert, particularly in situations that are more dicey. You know, like how airplane autopilot works.
For investors, i meant.
" The transistor, the laser, Unix, information theory, and a giant number of other things which form the underpinnings of modern technology came out of Bell Labs, which is the epitome of a place with a large research budget and no specific "next thing to monetize" that the spending was directed towards."
That was research for research's sake. It was, explicitly, not directed at ever making money, but instead, advancing the state of the art. I don't think any of the companies mentioned, or Apple, are doing it for that reason, and for them it does not bode well, because they are hoping to make money.
I could also point out that Bell Labs made any money at all through licensing those inventions. That is also not Apple's business model :)
Advancing the state of the art can lead to making more money, the research results can be monetised, whether they are or not all depends on the intent of those leading the particular institution.
The point still stands though, it's such a shame seeing the minimisation of ports on all systems these days. I can understand using standard ports (usb-c) for peripherals, but essentials such as Ethernet, display and several USB ports (whichever format) should remain built in.
So who knows?
Also, whether they are currently road testing vehicles or not, that doesn't change the fact that Apple is increasing R&D spending.
Given literally everyone else collected the data well before google, and maps was still better, this seems wrong.
Google developed better ways to get the data and automate it, not just got better data. For years, literally everyone else had better data.
Google Maps: 40 minutes
Yelp: 3 days 20 hours
Apple Maps: 13 days
https://twitter.com/syneryder/statuses/668473075365642240
I know Apple's policy is to screen edits carefully to ensure accuracy & avoid vandalism, but it's actually making their maps more inaccurate, because it takes longer for errors to be fixed. Google has also started incentivising frequent editors with rewards (like free 1TB Google Drive subscriptions), which helps encourage people to make the corrections in the first place.
Look, the margin on a $700 iPhone is somewhere in the vicinity of 30%. That means that the price that an iPhone user pays for the privilege of having an iPhone per se is about $200, maybe $300 on the outside.
For a car whose manufacturing costs are $30,000, a 30% margin would mean selling at $42,000. The size of addressable market that can afford to spend $12,000 on Apple brand is microscopic compared to the market size of people who can pay $300 on Apple brand. The "luxury" market for cars is inherently much, much, much, much, much smaller than the luxury market for smart phones.
So if Apple does try to attain iPhone-like margins in the car market, they will necessarily address a tiny market. If they don't, they'll still address a much smaller market than the smartphone market, and with smaller margins to boot.
I'm not seeing how. You post is talking about market size. The parent I replied to was only talking about margin. Two very different things which, as you were pointing out, will have two very different outcomes as far as profitability due to market size but that was never something brought up in the context of the original conversation.
> So if Apple does try to attain iPhone-like margins in the car market, they will necessarily address a tiny market. If they don't, they'll still address a much smaller market than the smartphone market, and with smaller margins to boot.
Smartphones are one of the biggest markets in the world so of course they will be addressing something smaller. Though car market is still pretty huge especially in the corporate selling of vehicles. What if Apple sold fleets to taxi / uber / lyft type companies? Maybe they create their own rival to uber / lyft and you can get picked up in an Apple car.
Seems there is so much speculation here that no one is going to be able to paint an accurate picture of what Apple's entrance into the car market would look like let alone figure out what the margins and revenue would be.
I also feel the keyboard and trackpad quality has deteriorated on the thinner devices. I much prefer the snap of the click on the 2012 MacBook Pro trackpad to the Force Touch simulated click.
I think OP's point is (to paraphrase) "why all this when the population is moving into high density cities where this complex infrastructure already exists and presents a superior choice to cars, self-driving or otherwise".
Or from a more global perspective "why all this when the US is the only major market that is likely to continue having a mass suburban population in the long term, and the rest of the world has already urbanized and will continue to do so, already has highly robust mass transit infrastructure, is actively building even more of said infrastructure, and that is rapidly attracting even more population?"
There is a particularly common dream among American urbanists that suburban America will somehow rapidly urbanize - I don't think that's particularly true, but it's certainly true the rest of the world has urbanized, and will continue urbanizing rapidly. So the question is if self-driving personal cars (as opposed to say, commercial cargo vehicles) will largely be an American phenomenon, and if so, doesn't that present fairly modest total addressable market for a company the scale of Apple.
Apple will probably try to get into car market but in an incremental way, probably by teaming up with some car constructor and doing some part of the car (AI, media...). it make much sense then waking up one morning and revealing a brand new car in a brand new market for them and try to sell it (with all the costs and the risks it comes with).
I never mentioned Bell Labs once.
As for Apple's record on innovation, I would argue that the Newton could be seen as an innovative product that was a pioneer in its field. Furthermore, most innovation is a refinement on what has come before, that is not a mark of failure for an R&D department.
Selling cars requires a huge dealer network rollout with huge up-front costs for training and spares. Doing it DIY would be insanely expensive, and persuading existing dealers to sign up for a franchise is going to be a tough sell considering Apple's historical treatment of resellers.
Apple under Jobs certainly had the imagination to make a good phone - but the phone industry was always fairly crappy, with very clever internals but mediocre UX.
I don't see much reason to think that Apple under Cook has the imagination to break open the car industry in the same way. The possible competitive differentials are much smaller, and Cook isn't the most creative CEO Apple has had.
If the USP is that Car is electric, looks pretty, and may eventually have some self-driving features - that won't be anywhere close to enough. It's going to need to have some wow to get taken seriously, and even if Jobs were alive and in charge there's limited wow space available.
Of course if it flies and/or teleports, that would be something else.
Apple has huge expertise in both these areas. Not electric motors sure, but electronics design and manufacturing in general and specifically battery technology on the power train side and software on the self-driving side.
But the key to their potential is software. I think the main reason for Apple's success is their super high quality OS core, code libraries and software development tool chain combined with one of the greatest software engineering culture and talent pools on the planet. They have exploited this advantage ruthlessly ever since the 90s. It underlies the success of all their best products - even the iPod if you bear in mind that iTunes was built on these core advantages. Yes iTunes is a mess now, but it made the success of the iPod possible.
The key to success in the coming car revolution will be software. Computers will control and orchestrate every aspect of the internal operation of the vehicle, and that's before you even get to external operations with self-driving. Only Microsoft has the depth of software development competence and the technology platform resources to compete with Apple in this area, but for whatever reason they just don't seem to be able to get their act together when it comes to engineering complete product stacks rather than individual technologies.
Except their distribution network, reputation/brand value, and marketing reach. And their IP in the non-powertrain components. And their manufacturing knowledge which makes the cars more reliable.
And they can fund the move to electric (or whatever) using existing profits. Whereas any newcomer has to raise money and spend time doing all of these things.
While this is probably the best time for someone to attempt to do those things.. the incumbents definitely aren't starting from scratch.. they still have advantages.
Neither actually.
Battery technology for cars is a very different area of work compared to making battery for phones.
And writing self driving car algorithms isn't exactly the same designing UI on the FreeBSD OS.
That sounds perfect for Apple, though—they've got tons of capital, excellent at supply chain logistics, and used to thriving in very competitive markets.
Tesla is trying this model, but I don't know whether anyone can makes claims as to its success yet. Right now they're pretty low volume and are losing lots of money. Maybe the no dealer model scales, maybe it doesn't.
My '69 Chevelle disagrees.
* would have lots of spare capital * would have experience building/running plants * would know how to manage a long supply chain extremely well * carries huge cachet, allowing them to stand out in a competitive market. * Is not afraid to exclusively target the high-margin side of the market. * Knows a thing or two about entire sectors undergoing a revolution. * Has lots of experience building retail networks.
Well, what do you know, that sort of looks like Apple.
As for "not enough wow space" being available - that's what people thought about the phone industry as well.
Would I bet on Apple being a success? Probably not. But if anybody were to take on that market, Apple's one of the more well-placed contenders.
Copypasta from a comment I made on reddit about Tesla, many of these points also apply to Apple, especially the battery knowledge...
"You could argue that Tesla is in the battery pack business, and only incidentally in the car business. When electric cars ultimately take off, not only will their vehicles be perfectly positioned, they can sell the know-how to the slow moving incumbent car makers who are struggling to play catch up. They already have a likely unsurmountable lead in battery pack knowledge (things like software to control charging and discharging certain batteries to extend the life of the pack, compartmentalised batteries to reduce fire risk and crucial battery cooling systems), and their fleet gathers more data daily, while the rest of the car industry makes half-hearted hybrids, or technologically inferior, range-limited cars."
"They already own the high end, and once the Gigafactory pumps out batteries in full force, they'll own the low end, at least initially. Not to mention, another industry, solar PV, is growing and growing but badly needs storage tech to reach full potential. Guess who has a market-ready, solar PV-complimenting battery pack, and will soon have an enormous factory churning out battery packs? They are going to sell these packs to the world for decades."
> Building cars is massively capital and plant intensive
Apple has buckets of cash, they need something huge to move the needle and to show the world they're still innovative, and EVs are likely it.
> heavily dependent on supply chain logistics
Tim Cook's specialty. Apple has lots of experience in dealing with a complex supply chain dealing with huge volume.
> and the market is already extremely competitive.
I would argue the market for EVs/autonomous vehicles is quite different from ICE cars. For one thing, existing car makers are only dipping their toes in the EV market, instead of going toe to toe with Tesla directly (e.g. BMW has the i3 and i8, but no high-volume EV version of the 5 series to take on the Model S directly). So it's going to be a landgrab for EV market share. Existing car markers are heavily invested in extremely refined diesel and petrol engines and the associated paraphernalia like turbos, they probably wish EVs would just go away. Also, they rely on service and repairs for a significant chunk of revenue. EVs are mechanically simpler, and will require much less maintenance. So the traditional business model will be disrupted, again something incumbents don't want.
If version II or III of the Apple car offers autonomy, then we can imagine a city car which is designed to be a taxi, which means you only ever rent it. Again, this is an alien concept to existing car makers, who rely on dealer networks selling to end customers. So this would also favour new players not bound by older business practices.
In short, with Apple's battery expertise, huge cash reserves, supply chain experience and the relatively open market for EVs/autonomous vehicles, I'd say now is a great time for Apple to get into the market. They are also betting on the trend of lithium ion batteries getting better and cheaper every year[1]
[1] http://rameznaam.com/2015/10/14/how-cheap-can-energy-storage...
In fact, when I was first sold on the concept, the guy who started the company talked me through how he imagined a "home base station" that he'd use while there, and how he wanted the device to smoothly hand off to the mobile network if he took it out of the house.
The choice of a tablet over a smaller phone was about a convenient screen size, coupled with the initial devices being tied to the home anyway. But "everyone" around us had PalmPilots, and "everyone" expected PDAs and phones to merge eventually (and they did, sort of, but to see Palm giving in and going with a keyboard was a disappointment).
The challenge was that around the time the iPhone launched, people did not believe the market was there yet, nor that the hardware was ready, largely because "everyone else" had a go too early, failed, and essentially shelved the idea for the next decade as something that was way too early.
What Apple got exactly right and everyone else messed up was the timing.
E.g. we were shopping around our tablet prototype in '99 and 2000 based on a 100MHz or thereabouts 486 clone w/32MB RAM running Opera and a custom UI w/resistive touch. It was a fantastic device at the time, but the combination of not yet being able to provide a proper GSM enabled device, too short battery life, low RAM, slow, horrible resistive touch, and it was a device that would have appealed mostly to a small niche of geeks, but to work financally it needed to be a mass market device.
With the available hardware in 2006 we'd have a great starting point if we had started around then. But when we started in '99 the discussion was never "can these hardware constraints work in a way that can appeal to a mass market?" but "this is the price we need for it to work as a mass market device, and here are the tech specs that can fit within that price" and then we tried to make something that could be mass market from that... way too early.
To be clear: I'm not trying to downplay what Apple did. They made a product that appealed to a vastly larger market because they understood. But it wasn't because nobody else believed in touch enabled smart phones or tablets, but because they approached it from a usability and marketability perspective first, while everyone else were thinking like geeks willing to sacrifice usability for a "imagine if.." ideal of devices that were ultimately quite unfulfilling.
When the iPhone came out, a lot of us were pretty much "so what?" because we still did not understand the significance of that wait. We'd seen full screen touch, and we'd seen PDA's married with touch, and we'd seen larger tablet type devices (basically laptops with pivot screens mostly), and the iPhone to many people who'd been through the first round of hype around these type of devices just seemed like more of the same at first.
Until it became clear just how much of a difference the hardware advances and Apple's design had made to the whole thing.
We absolutely agree about their timing, and I think it's important not to underestimate how important it is to understand when the time is right and not get caught up in constraints that applied last year because that's when you started thinking about it.
It's very possible that we'll see something similar with cars. A lot of people have worked on driverless cars for a very long time, and the question is how much of the current designs are based on preconceptions that seemed to make sense a few years back, but where things can be done better today.
I get that I'm not representative of the market, but my pattern of using a smartphone involves a lot of email. I don't see that going away, as a lot of my communication involves people in other timezones.
I was way more productive in this when I had a blackberry, but, of course, it did suffer horribly when using the web.
It won't change, but I wish there was enough demand to keep up competition for phones with keyboards such that there was a decent physical keyboard android.
> What Apple got exactly right and everyone else messed up was the timing.
My [perhaps mistaken] understanding is that Apple had been working on it for a while; but rather than try before the hardware was ready, and shelve the idea, they kept working on the idea until the hardware caught up. They had a solid idea of how it should work, and waited until it could, rather than have it just be a thing they tried and gave up on.
Here's an early article on our attempt [1], and you can see how far the specs were from a tolerable tablet or from being able to shrink the it down to a phone form factor (the original design actually called for a very small dumb handset for the tablet that magnetically attached to the speaker magnets in the tablet, and induction charged; amusingly Sony finally relased a handset for one of their phablets a couple of years ago - we were over a decade ahead of our time ;) )
[1] http://www.zdnet.com/article/freepad-norways-alternative-to-...
As someone who was there on the consumer side, with an HTC Wizard bought in 2006 -- the year before the iPhone was released -- I completely agree with this. I did make the sacrifice of usability, because having the Internet accessible everywhere on a touchscreen was awesome. I didn't understand the iPhone either. From the perspective of the hackfest that was Windows Mobile 5/6, I saw a very limited and locked down device.
At the same time, it was still a choice between finally getting a more responsive interface or giving up front/rear cameras, GPS, 3G cell radio, third party apps, multitasking, copy/paste, an actual file system I could browse, streaming audio (anyone remember Shoutcast stations? They're still around!), streaming video, hell...even changing my wallpaper or ringtone to something that didn't come with the phone.
I totally get why Apple succeeded and in many ways they deserved to: they didn't try to out-WinMo WinMo. They looked at the things that Microsoft, RIM, Palm, and the rest weren't doing and targeted those things. They saw who wasn't interested in having a miniature version of a laptop but loved simple and responsive electronics (thousands and thousands of regular consumers). That business savvy put them in a really strong position that continues to this day.
Granted it didn't help that you needed to switch carriers to AT&T and spend even more than the cost of existing smart phones to get one but clearly they improved that along with all the rest.
I'm still far from an Apple fanboy and I find using iOS on my iPad to be frustrating at least once every week or two but business/market success isn't about pleasing me. It's about pleasing enough people to make a good profit and clearly they've got that part down.
Not saying your number is wrong, I'm just really surprised.
Tesla on the other hand, makes 3 models, they are not trying to cater to every single market, so they can afford the focus and very high profit margins that come with it.
Does the research only apply to the Veyron? I'd be surprised if they can't use advances there in other lines of cars or get patents that they can profit from when used by other car manufacturers.
It does however speak to good marketing to say "we make this car for the love of making cars" rather than "we use this as a way of targeting R&D that we can then exploit in other vehicle lines".
/cynicism
Last quarter, they had 1.4 Billion in cash and had a $280 Million shortfall. In ONE quarter.
That's AFTER accounting for the +$350 Million-ish they brought in from the Model 3 pre-orders btw. I don't think they are going to repeat the +350ish thousand preorders at +$1000 cash per anytime soon.
The gross margin on Model S is indeed 25%, and the gross margin on Model X is also expected to exceed 25% once volume production is finished ramping up.
Tesla only had to go Model S -> Model 3, just as originally planned, and they'd be much more profitable than today. Model X, despite its 25% margins or so, isn't making money due to manufacturing issues. Its too complicated with its Falcon doors, and doesn't really have an impact from a sales or marketing perspective.
Instead, Tesla spends billions ramping up Model X, only for GM Bolt to release before the Tesla Model 3. BMW and other companies are catching up as well.
Even the Nissan Leaf may release a 200+ mile model before Tesla's Model 3, all because of the delays incurred with the Model X divergence.
I really think the Model X divergence was a mistake. If Model 3 launched just a year earlier with more money in the bank, Tesla would be in a much healthier position.
This is why startups underestimate their expenses.
Model X was initially thought necessary to produce enough revenue through the time at which Li-ion batteries could be produced cheaply enough in large quantities to launch a cheaper, good electric car. That the Model S turned out to be so popular wasn't at all obvious in 2012, when it first entered production.
For comparison Acura only sold 167,843 units in 2014 and they have some models for ~10,000$ less.* And they have an extensive dealer network. Honda their parent brand sells well under 2 million cars a year and is a major automaker.
*List price on a new ILX is 27,990 but this assumes people are paying sticker price.
Besides, those pre-orders are refundable $1K deposits, not someone who has put down $30K right now for delivery 2 years hence.
Having Tesla front-run a lot of this stuff is pretty smart if they are intending to go that route though.
