Apple Speeds Up Electric-Car Work
wsj.com
wsj.com
Apple's revenue is 180 billion dollars. If they enter a new market, it has to be big. How many high margin billion dollar industries are there? The entire watch market is just around $50 billion dollars a year. If Apple wants to continue growing like it did in the past, the watch is a distraction. They need to aim for something much bigger.
Besides the financial reasons, I think it's the perfect time to break into the market. The switch to electric motors levels the playing field, giving newcomers an edge if they can move fast. But the most important part is the integration of all the systems in the car, most importantly the digital user interface. Todays cars have horrible interfaces. Manufacturers are too busy covering every possible niche with dozens of models, which makes it impossible for them to make a single great car. And even if they tried, they are too dependent on component suppliers to create a single, integrated experience of the kind Apple does.
There are two questions I wonder about:
1. How will Apple be able to make use of their experience in electronics when they move to a completely new industry?
2. What are the technical tricks Apple has up their sleeve? The iPod had hard drives and the click wheel, the iPhone had multitouch and a SoC that enabled a real browser, the watch had force sensitivity, haptic feedback, and a pulse meter. What will the car have?
Completely new industry? Who is the biggest user of lithium batteries in the world? Hint: It is a company with a fruit as a name.
They started talks for collaboration with Tesla because if Tesla creates a Megafactory they HAVE TO use it or their battery prices will be higher than Tesla's. If they can't use it, they will create their own Megafactory.
The electric motors in a electric car are incredible simple compared with internal combustion engines.
The batteries are the most expensive item in a car by far.
"What are the technical tricks Apple has up their sleeve?"
They know abut batteries, they know about recharging batteries. More free capital than any other company in the world, access to the best electronic components and battery manufacturers, very important for power electronics.
"What will the car have?" A good price. It will be expensive, like anything Apple does, but a very good price because of mass production that only Apple could afford(because they can invest billions on factories).
Think on aluminum Apple computers, they sell at $1000, other companies compete with aluminum computers with a similar price. Apple earns 30% margins or more but competition could barely survive, because Apple was the first to sell those and sell in the millions and competition in the thousands.
Samsung has 21% of the smart phone market globally. Apple is at 14%. Samsung also sells a lot of feature phones using lithium batteries.
I'm hoping that many functions won't need a UI any more, such as adjusting the mirrors: http://ieeexplore.ieee.org/xpl/login.jsp?tp=&arnumber=118796...
Passengers would only need direct access to comfort controls, media playback, and an interactive map. I wouldn’t be surprised to see just a single large touch screen on the dashboard, with Siri listening for your directions.
BTW, mirror adjustment on a Tesla doesn't use the touchscreen.
If it is, and by "gigantic" you meant "The small, 2 inch touchscreens on the steering wheel which might be as easy to use as physical controls", then sure, we could talk about that. Seems premature right now, when the public can't try it out.
It doesn't exactly level it. Any new player in the auto industry will have an enormous learning curve and spend billions just to bring their first car to market (I hear Ford spends a billion to bring a brand new model to market and they're established) and get production going. The shift to electric cars may be significant enough to consider it a new industry (replacing the old) where a new entrant could become a dominant player and hold that position even as everyone else slowly migrates. I guess in that sense it is a level playing field.
I originally wondered why Apple would want to do a car until I thought about the above opportunity. That, along with the enormous amount of cash they have, go together. They need to aim really big to have a meaningful impact on the company. They could have bought Facebook, Twitter, or other startups all day long and it wouldn't have the same impact on their bottom line as becoming a dominant auto company. In fact Apple and Google DO buy small tech companies and I have yet to see one have the impact they could get from going big in electric cars (assuming those become a thing, which is not an unreasonable gamble IMHO).
>> What are the technical tricks Apple has up their sleeve?
At this point they don't need any. Make an affordable electric car and they win. If the price is right, people will buy every iCar they can produce. What apple brings to the table is money. IMHO all the other ones (except Tesla so far) have failed because they didn't have deep enough pockets to go all the way.
That said, if it is a car, why the hell do it from CA instead of MI? That's the part I don't fully understand. I have some ideas, but I've never heard an official explanation. Of course they never actually said they're making car either have they?
Watch the car companies. If they thought the days of personal car ownership were over they would be in total panic. There is a strong Freudian association with cars ownership in north america. People are very proud of their cars. That isn't going away anytime soon.
As I have said in other threads, if everyone wants diverless cars, why is there not a single car on the market hardwired to obey speed limits? I'll believe people ready to have their steering wheels taken away when I first see them give up control of their accelerators.
And even if the Apple Car doesn't win on market share (it probably won't), it will lead the car industry in design like the Mac does for computers: Not everyone will own an Apple Car, but everyone's cars will be better because of it.
This is what I see when someone mentions an "apple car": http://oldconceptcars.com/1930-2004/citroen-karin-concept-19...
I agree. It amazes me how many models and variants there are. Look at Volkswagen, they have ~20-25 active Basemodels (Polo, Golf, Passat...) with each Basemodel having a addtional 15-20 variants. You can buy a Golf anywhere from 15k Euro to 40k Euro. But even a much smaller manufacturer such as Porsche has 9 Basemodels with nearly 200 variants.
Who _really_ needs that?
Granted, i never worked in the automobile industry, but the overhead with producing, developing and maintaining so many different models really seems insane.
Additionally there’s a good argument to be made that we hit “peak car” several years ago, so consumer oriented automobiles may not be a real growth industry.
I’d seriously question any business plan that assumes that the transportation mode share of cars, especially individually owned cars, will be greater than it is now.
Maybe I’m thinking too long term here.
That being said, people will always want to travel in style, whether they own the car or not. Think black car versus beaten up taxi. Apple wants to be the luxury brand intersected with technology. Who else does that as well as they do?
Also, as per below, Apple's model of making things which can't be serviced by the owner fits the idea of no ownership.
Finally, this new business model is going to obliterate all the old car makers that can't evolve fast enough. When significant disruption vectors clearly exist that can only be leveraged by the extremely well capitalized... well, this is really a no brainer for Apple.
The only really question is, can Tim Cook create the tech? Google is struggling with it and they are by far the most skillful at AI.
In the end though, we'll all be better off with Apple in the race than out of it.
Honestly, in terms of car manufacturers, I think there are a lot who do luxury better than Apple. Agreed their technology intersection isn't so great, but I'd rather own a BMW outfitted with Apple software than an Apple car.
What does that even mean? Are you from the future?
Motorola used to be at the cutting edge of phones (e.g. Razr) but when Apple slapped their software onto a Motorola phone, it was a terrible product (Rokr).
I think I was overestimating them, but once again think that's a feasible strategy, Tesla vs Apple fanbois arguing on the internet could be the best thing to ever happen to all-electric vehicles, and leave petrol and hybrid cars looking archaic, rather than the current paradigm where its Tesla vs the old industry.
Competing against them on a car is a really interesting play though. Not sure what to make of it just yet.
I'd submit they are the best at getting people to believe they are the best, but are they _actually_ the best? Assumes facts not in evidence.
Tim Cook can't even keep apps made with hacked versions of Xcode out of the app store. He can't keep obvious, infuriating bugs out of iOS or OS X. (I found a few within hours of downloading the public release.)
A self-driving car would be - to mix a metaphor - a legal minefield, and would demand a level of corporate and personal responsibility and reliability that only a handful of organisations, most in med or aerospace, have ever been able to approach.
As a project it's almost literally a moon shot, and a very risky one because industrial car making is a difficult industry with problematic tooling, logistics, and distribution, and very high capital costs.
I think Musk is in with a better chance, because he's a careful, thoughtful, engineer. At Apple, engineering has always had trailed slightly behind branding and design, and the gap seems to be widening. That doesn't bode well, because a project like this needs world-leading engineering before everything else.
Design and marketing are worthless if the product isn't seven or eight-nines reliable and better than human.
As a project it's almost literally a moon shot,
Not even close. Tesla exists. They built a new car infrastructure from nothing. Apple can steal their senior engineers all day long.
if the product isn't seven or eight-nines reliable and better than human.
People are influenced by style and sex appeal, not so much data sheets. Nobody even knows how much memory ships in Apple iOS devices; it's not a performance game—it's a mindshare game.
Also - you have to separate electric car versus self driving car. I think electric car is pretty easy to do (relatively speaking), but I don't think it's a particularly exciting business to get into. Way too low margin and you're fighting against an establishment that will getting into the electric car biz as well. And I agree with comments above, that they all probably do better than Apple.
Whereas self driving cars, done right, will be extremely high margin. It will revolutionize the world and change everything - much like the PC and Smartphone did.
I think self driving cars have the potential to be iPhone versus Android all over again. Apple does the high end luxury market, and Google does the race to bottom, solution for the proletariat market.
I have to believe (car guy) Ive gets what he wants at Apple?
edit: Which would hurt the stock (ie Cook's #1 goal) more in the short term? Announcing a car in 2019 or announcing Ive leaving in 2015? I'm thinking was part of an earlier deal to keep Ive.
Let's consider Jony's performance on software design first. This is what some prominent people have said about iOS 7: The Verge wrote in their review: "iOS 7 isn't harder to use, just less obvious. That's a momentous change: iOS used to be so obvious." In iOS 7 basic usability features such as making buttons look like buttons are now stuffed under Accessibility options. About this, Tumblr co-founder Marco Arment wrote: "If iOS 8 can’t remove any of these options, it's a design failure." (And iOS 8 hasn't.) Michael Heilemann, Interface Director at Squarespace wrote, "when I look at [iOS 7 beta] I see anti-patterns and basic mistakes that should have been caught on the whiteboard before anyone even began thinking about coding it." And famed blogger John Gruber said this about iOS 7: "my guess is that [Steve Jobs] would not have supported this direction."
And what about Jony's other responsibility in the last few years, industrial design? The iPod, iPhone, iPad, MacBook Air and other Apple products are all amazingly well designed and breathtakingly beautiful. But these products weren't designed by Jony Ive all by himself. He designed them under Steve Jobs's guidance and direction. Steve was the tastemaker. Apple's post-Steve products are nowhere near as well-designed.
Consider iPhone 5c, for example. The colors are horrid, and when you add those Crocs-like cases it looks more like a Fisher-Price toy than like a device an executive would want to be seen holding. Then they released some ads for the 5c, and I kid you not, one of the ads had sounds of bleating farm animals. (It was titled "Every color has a story", published on tumblr.) That the 5c didn't do well in the market shouldn't surprise anyone.
Steve Jobs once held a mock funeral for OS 9 with organ music and a coffin. Apple produced plenty of crazy / weird stuff under his leadership. This is one reason that speculating about "this wouldn't have happened under Steve" is a fool's errand.
1) Cars have a useful lifespan far longer than the car loan payment. This will continue to favor private car ownership until the maintenance and upkeep costs outweigh the marginal cost of calling an Uber (or whatever we'll have in the future). I'm not sure when that point will hit, or if it ever will. Electric cars are very low maintenance (battery packs are expensive, but that is fixable).
2) Cars have a significant delta between the high end and low end. You can easily see several hundred-thousand dollar cars driving on urban streets. They're a status/luxury symbol, and aspirational for a large number of people.
3) Cars-on-demand will, for some people, never replace the comfort of having a vehicle waiting for them in their garage/driveway. For the same reason hot desk-ing never caught on, it's nice to have a "home" where you can leave your usual creature comforts when on the road. I don't currently have a car (or car commute), but if I did, I can imagine it being a bit discomforting to have an unusual set of surroundings, lack of creature comforts (my gum in the cupholder, tissues in the center console, my phone already hooked up to bluetooth, etc.).
4) Busses, even if self-driving, are not going to replace dedicated vehicles (see the group shuttles from airports as to why).
It feels like the car as a status and convenience symbol is here to stay for the foreseeable future (certainly our lifetimes). And making cars for upper-middle/upper class folks is very profitable. Sure, Apple wouldn't make a $5000 car no more than they'd make a $50 mobile. But a $40k-100k car? I think they could hit that one out of the park.
I think if you lived in a condo, and there was always a queue of Apple luxury vehicles waiting at the bottom of the elevator, you'd be good to go.
The reason this hasn't taken off before is because people are bad drivers. Borrowed cars get very roughly treated.
Also, try parking in a big city. It's insane. Much better to just get dropped off.
Apple is a company that wants to make money. They'd go into turkey farming if they thought they could make more money there than in phones.
If individual ownership is on the out (it isn't imho and that is a totally separate question from driverless tech) then apple wants to be the company that owns/leases/copyrights/patents the cars, the software and absolutely everything else. Dominance of specific markets is apple's game.
There is a synergy between apple's customer base and driveless tech. Apple owners are generally early adopters with cash to spend on fashion items. As with any new tech, the first few iterations of any driverless car scheme will be short-lived and expensive. Apple knows that its fashion-chasing users will be all over these things. Requiring "drivers" to control cars via iPhones would just be gravy.
They'd return all their cash to their investors before they did that.
Second, Apple could lead the half-automated cars market(using Siri, see my comment down) and use it as a base of cars that would build Apple some self-driving brand, could be upgraded to full self driving gradually, or could be used to collect data to train full self driving.
And Apple is not purely consumer-oriented, of course. If they can work with IBM, they can work with any company that wants a fleet.
I'm curious to find out what price range Apple is coming in at, what makes the Apple car better than alternatives, and how/where they're going to manufacture it at a cost similar to competitors.
But let's say we have a fun interesting friend in the car, talking to us whenever we want, but knows when to shut up or to simplify the conversation when the road demands more of our focus.
Suddenly half-automated driving becomes much more valuable. And possibly ,if you control that and have a large customer base with half-automated cars ,you have a very good path to full self driving.
Well, Apple wants Siri to be that friend.
Edit: Nevermind, it sounds like it will not be autonomous starting out, so they really are entering the mainstream car market.
Maybe the same thing is happening that happened with phones: Apple software on other phones sucked, just like Apple software in existing cars sucks. It's ambitious, but they have the resources and the market is clearly ripe for disruption... why not.
Depends on how you look at it:
- They've been fairly slow to enter the TV market.
- Homekit is out there but hasn't received a lot of attention in recent keynotes.
- Healthkit and related medical technology isn't something they have been extremely quick on.
I could see them potentially working with BMW though.
>John Deere—the world’s largest agricultural machinery maker —told the Copyright Office that farmers don’t own their tractors. Because computer code snakes through the DNA of modern tractors, farmers receive “an implied license for the life of the vehicle to operate the vehicle.”
>Several manufacturers recently submitted similar comments to the Copyright Office under an inquiry into the Digital Millennium Copyright Act. DMCA is a vast 1998 copyright law that (among other things) governs the blurry line between software and hardware. The Copyright Office, after reading the comments and holding a hearing, will decide in July which high-tech devices we can modify, hack, and repair—and decide whether John Deere’s twisted vision of ownership will become a reality.
But in the end, farming will go fully robotic. In contrast with consumer cars, which will always require a human driver.
Always is a long time, brother.
How far is it from the reality now though? I buy cars with very high reliability (usually Honda) just so I don't have to deal with it.
I grew up fixing cars, motorcycles, and snowmobiles with my dad, but these days much of what we did is no longer possible to fix (or even necessary with the case of fuel injection).
Let's not call out Apple as some evil locked down hardware platform company. How user serviceable or after-market modifiable is a Model S? Tesla cars get over-the-air software updates and you sure as hell can't modify it yourself in any non-"illegal hacking" capacity.
They have always wanted to own and control both the hardware and the software, though.
Just because Teslas aren't very hackable doesn't mean it's a good thing.
https://en.wikipedia.org/wiki/Audi_A2#Service_Hatch_.28Servi...
Joking aside, I do think that under Tim Cook, Apple has changed how it thinks about its products from being "beautifully designed premium products" to being "fashionable", and I'm seeing this trend more and more in Apple products lately, which I find a little worrying (for the company's core values and culture, too).
Leaving out driverless car tech, which I'm not sure whether Apple will have ready for launch, I think the Apple Car will look and function like a $100,000 car - but will cost significantly less. Say, half the price. Ive, in a recent interview, spoke about how he hated so many cars on the road. Not because they were cheap, but because they were poorly designed and put together with such little care. I think, unless he's gone off the deep end into the luxury market (which he very well may have!) he would want to produce a car that is really great - but still affordable enough that lots of people will be able to afford it[1].
All of that being said, and no matter how much Apple cares about the mass market, Apple will want to keep their high margins. They'll need to bring down manufacturing costs considerably. However, if anyone can do it, it's Tim Cook. He's well known for being a wizard at managing supply chains. Perhaps it'll be their first product assembled entirely by robots, who knows.
We'll see what happens but if Apple are able to produce a very high quality car at a reasonable price, I suspect that it will be extremely disruptive. In the UK at least, pretty much every car under £30,000 is utter garbage. I'd love it if Apple could change that.
[1] I suspect, as with Apple Watch, there will also be a high-end version of an Apple Car. It will probably have the same functionality (i.e. it won't just be a super-car) but will have extras, like a Hermès leather interior. I, for one, look forward to customising a car like a new Macbook - current car customisation screens are a pain (besides Tesla, actually, theirs isn't too bad).
What?
Modern cars are of incredibly high-quality, even at the lower end of the market.
Take a look at what taxi drivers in the UK use. Today, the taxi fleets are dominated by Skoda[0], Kia and ( in London ) Toyota. Those all cost under £30,000. Well under. Yet they hold up well in the daily urban taxi grind.
Mercedes, BMW and other 'premium' brands are notable by their absence from such fleets. That's because they don't offer any quality differential correlating to their price. They mainly occur in the higher-tier occasional-hire market, aimed at people who want image.
[0] That fact that Skoda is preferred over the same parts wrapped in an Audi or VW body is interesting.
Apple has been very focused on virtual interfaces lately, I wonder what their return to physical will look like.
I'll stop there, but my point is that car manufacturers haven't been able to figure out a "universal interface". Apple was able to do this with the iPhone (touch screen), so I wonder now if they can do it with cars.
There is nothing universal about the iphone interaction except that you touch it, for example it doesn't have a back button which most other manufactures do. Behind that touch screen you have the same mess of buttons/sliders/dropdowns/checkboxes/toggles between different models, as in cars.
Of course everyone has different preferences and that's why they sell cars in more colors than just black.
That's like throwing away your physical keyboard for an on-screen keyboard because your company has adjusted their expectations downwards on your productivity. Sure you might be able to make it work, but that doesn't mean an on-screen keyboard is superior to a physical one.
Though having to use siri for everything like "set temp to 60" "Turn on defrosters" "use turn signal" would start to get irritating quickly.
Not to mention if you're havign a conversation.
A modern driver would have a hard time driving a Model T
Electric only is an option for some, but they are a long way off from working for everyone. Some people still live in places where gas stations are scarce - not exactly the place you want to try to find an outlet for your car.
http://appleinsider.com/articles/15/09/21/apple-has-target-s...
[Update]
Actually, the WSJ also reported. Guess other sites are reprinting.
The number of BMW employees in R&D at the headquarter in Munich is about 20000. There are another 10000 contractors working onsite. This are the numbers for R&D only, not including production. The numbers also don't include the employees of the numerous suppliers.
In addition to that:
BMW is an established car manufacturer. They don't need to develop a car from scratch.
BMW is one of the smaller car manufacturers, I don't have numbers for VW or Toyota.
[1] https://en.wikipedia.org/wiki/Tesla_Motors#Overview
[2] http://www.statista.com/statistics/314768/number-of-tesla-em...
The Tesla roadster was developed together with Lotus and there were only 1000 units produced. Producing a one-off small batch series is in another ballpark than real mass production.
For the later models Tesla partnered with Daimler and Toyota. Toyota produces more cars on a single day than Tesla in a whole year.
I'm enthusiastic about what Tesla does but if they want to play with the big guys they'll have to grow up.
Now, maybe it means that Apple is kidding itself about its ability to make a good electric car. But Tesla didn't have 30,000 people in R&D.
http://www.statista.com/statistics/314768/number-of-tesla-em...
I wanted to point out the huge R&D effort a car company has to undertake even to stay relevant. We are not even talking about the amount of innovation Apple or Tesla are expected to bring to the table.
Another difference between Tesla and Apple is that Tesla has strong partners in the traditional auto industry, namely Toyota and Daimler.
Depends which 1800 employees and how well paid they are.
It's well known that Jonathan Ive and Marc Newson are "car guys"[1], so perhaps it will be a vehicle similar to the Cube[2] - meaning it will have a very low production run - while the underlying technologies, such the batteries, are sold to other manufacturers.
1: http://www.newyorker.com/magazine/2015/02/23/shape-things-co... 2: http://www.macworld.com/article/1153341/cube_10thanniversary...
http://www.asymco.com/2015/03/11/the-critical-path-143-movin...
Without the vision of Steve Jobs, I'm afraid they don't have what it takes to pull this off.
I wonder if this can cause an issue when they begin to get into building products (like cars) that need a high safety factor?
So even someone working with someone on this project may not even know that person is on the project.
Though surely some people do talk amongst themselves...
XNU runs on everything from their Digital AV adapter[1], to the Mac Pro, to (I assume) the car.
[1] https://www.panic.com/blog/the-lightning-digital-av-adapter-...
I would be very cautious talking about any of the problems I was trying to solve with my colleagues if I knew I might breach an NDA and be fired. Culturally, is there some sort of understanding / internal guide rails on this, or do you just kinda hope you don't screw up?
Edit: Mass-reply: Thanks all! Learn something new every day.
For those looking for the same thing, go here, click first link. Should bypass the paywall: https://www.google.com/search?q=http%3A%2F%2Fwww.wsj.com%2Fa...
javascript:window.location="https://www.google.com/search?q="+window.location
javascript:window.location="https://www.google.com/url?q="+window.location
https://www.google.com/search?q=http%3A%2F%2Fwww.wsj.com%2Fa...
Also per the other comments saying "dump the link into google". You can fake it with something like https://chrome.google.com/webstore/detail/referer-control/hn...
> Asked last week by late-night talk-show host Stephen Colbert about Apple’s interest in a driverless car, Apple Chief Executive Tim Cook said: “We look at a number of things along the way, and we decide to really put our energies in a few of them.”