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Comment by jms18 | Hacker News Reader

Ballmer in a 2007 interview with USA Today:

"There's no chance that the iPhone is going to get any significant market share. No chance. It's a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get."

Palm CEO Ed Colligan in 2006:

"We’ve learned and struggled for a few years here figuring out how to make a decent phone," he said. "[Apple is] not going to just figure this out. They’re not going to just walk in."

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They laughed at Einstein, but they also laughed at Bozo the Clown.

A smartphone was solidly within Apple's expertise in 2007. It's a small consumer electronics device (iPod, Mac) with a graphical UI (Mac OS X). Apple had tons of experience building (or more accurately, outsourcing the building of) small electronics. What was tricky about the iPhone was the RF stuff, getting the carriers to cooperate, and cutting data usage to squeeze into the crappy data plans available. Except RF stuff is nearly off-the-shelf, and Apple cut the Gordian Knot for the other two items by partnering with an underdog carrier in exchange for unlimited data plans.

A car is far outside Apple's expertise. Are they going to outsource it to Foxconn like they do with the iPhone, and ship them across the Pacific? Doesn't seem feasible. Will they buy or build their own factory? Doable, but totally new for them. What about sales, service, and support? The iPhone was able to use Apple's extensive network of existing retail stores for that, but cars need garages and mechanics.

Obviously, it can be done. Tesla pulled it off with far less. But there's plenty of room for Apple to crash and burn, too. (Figuratively, one hopes.)

> Are they going to outsource it to Foxconn like they do with the iPhone, and ship them across the Pacific? Doesn't seem feasible.

There is the example of this Italian car sharing service http://www.sharengo.it/

They designed their own car and a Chinese company built it.

Cool! Do you know who built it and how many they're making?

To answer your question I googled the Italian web and found more details than I knew. The story is a little different and I couldn't put together all the pieces of the puzzle.

According to the sources the cars are either designed in Italy and made in China or designed by a Chinese company with Italian designers (not only the style, but at least the navigation system and battery management).

I found some references to the Xin Da Yang Electric Vehicles and the Shandong Xindayang Electric Vehicle companies, which should be part of the same group anyway. The model is called ZD1 and it's a custom version of the iCar0 http://greengomoving.it/prodotti/ That car was sold in Italy at 13 k EUR but didn't sell enough. The business was relaunched as car sharing and it's doing well enough judging from the number of cars I see around. I plotted the invoice numbers against time and it's a line, which could be OK given it's limited to a few cities and they have competitors. They could already have saturated the market unless they open in other cities.

I think they have at most 2000 cars in Italy but the Chinese companies could be making more. I found it on alibaba https://www.alibaba.com/product-detail/China-eec-l7e-80-elec... They say up to 5000 cars per month, unit price up to 8000 USD.

Sources, all of them in Italian

http://www.ilsole24ore.com/art/motori/2015-05-21/share-ngo-p...

http://www.veicolielettricinews.it/sharengo-il-primo-car-sha...

http://www.alvolante.it/news/milano-il-car-sharing-elettrico...

Awesome, thanks so much for all that information. Maybe I'm too pessimistic about the possibility of outsourced car manufacturing after all. Seeing a car on freakin' Alibaba sure gives me a different perspective on it. Apple would need a whole different kind of scale, of course, but that's something the Chinese do well.

Not necessarily. Apple could sell those cars or operate a car sharing service. In the latter case they need to build only a fraction of the cars. Ideally we'll get a self driving car that never stops, going from customer to customer like a cab. That would reduce the number of cars even further.

Whatever thwy'll be I wonder if we'll be able to operate those cars with an Android phone or they'll be iPhone only.

> Are they going to outsource it to Foxconn like they do with the iPhone, and ship them across the Pacific? Doesn't seem feasible.

I have no idea, but they seem to be pretty good at outsourcing manufacturing where it makes sense to do so. I don't see that as a significant blocker to an Apple automobile.

Most of Apples revenue is outside the US now. But i suspect they will do, what Tesla is planning, a factory in each major market.

I wouldn't underestimate them with their war chest and supply chain expertise, and don't forget their roots: https://www.youtube.com/watch?v=dSj6kvv7_Sg

That's pretty.. mundane.

Jobs built a factory. The NeXT computer was made there and the factory was reportedly state-of-the-art.

Of course Jobs is gone but I would guess there are others still at Apple that were involved so that it might not be totally new to them.

I visited the NeXT factory in Fremont, and it certainly seemed state of the art to me at the time.

NeXT Computer Inc. eventually became NeXT Software Inc. and ceased manufacturing hardware. That was 23 years ago. I'd be surprised if any significant presence from that manufacturing team remained in Cupertino today.

I was under the impression due to cost and poor sales, they actually had alternate arrangements to build the NeXT products after a while. It was a nice video and launch story though.

You're right they did get out of the hardware business totally in the later years. But still, they build an an incredible factory that was widely praised.

I'm not talking about getting out of the hardware business.

"The factory that Jobs had configured to produce 10,000 computers every month produced hundreds every month. Because of the low volume, human labor was cheaper than maintaining the automated equipment."

http://lowendmac.com/2013/next-years-steve-jobs-before-trium...

My point was that he built a great factory. That is not diminished by his inability to sell the product.

But, he is gone and as others note it was a long time ago. It's probably not very relevant, in retrospect.

In the entire life of the company, that factory built about as many computers as Tesla built cars just last year. And Tesla is a tiny player. This experience hardly seems relevant. Modern Apple is built on NeXT's software, but I don't think there's much if anything of their manufacturing in there.

You are probably right. Doesn't seem that long ago to me but it really has been decades.

I know what you mean. I often feel like the state of things in the 90s (when I really started with computers in earnest) is "how things are" and all the changes since then are recent developments.

Looking more recently, Apple does have their own factory in the US to make the Mac Pro. I wonder if any of that was intended as a testbed for in-house manufacturing in general.

Your kind of arguments were also made about how Apple was going to disrupt the watch industry, the TV industry, and maybe a few more industries. Watches and TVs are closer to Apple's expertise than cars. Apple still hasn't been able to do anything meaningful in those industries.

I still think that, with cars, Apple will try to do what it did with the Apple TV. Just like they built something that works with existing TVs, they'll try to build something that works with existing cars (or a few car partners). I don't think they'll try to manufacture cars.

Precisely. I think it would be fair to describe the Apple Watch as a flop. Amongst my tech friends, and my watch-loving friends (and a noted intersection of the two), only one owns an Apple Watch. And they prefer their Pebble.

I never understand the point of these posted quotes. Every time someone posts a reasonable doubt about Apple's new ventures, there's always the classic "iPhone rebuttal." Yes, Apple did iPhone, and during that time, some of their competitors laughed at them. What does it prove now? Apple is going to solve every single problem on earth just because they have iPhone? Companies create amazing products, same companies also create horrible products. Just because they had created an amazing product does not mean every single product they will create subsequently will be amazing and vice-versa. Why is it so hard for some people to understand?

What does any discourse on a forum prove? We're debating stuff that we mostly have little clue or hard data about. Most of what we have are narratives, quotes, anecdotes, analogies, etc.

In the old days we called it "shooting the breeze".

I'm sure an auto industry exec or engineer might chime in with some insight, but even that doesn't prove anything, just might illuminate the challenge Apple has ahead of them.

Ballmer was only wrong about which Apple alternative ended up capturing a majority of the market.

It doesn't matter a lot to Apple as they have captured a large portion of the segment of the market that is willing and able to spend more, but Android has more of the total market.

That is a point that most people overlook.

Ballmer was right. He underestimated the amount of money they would make, and also underestimated the size of the various markets, and ALSO got it wrong about who would be the "other" OS but......his core point was correct.

His core point was not correct. iOS has about 39% of smartphone share in the U.S., 27% in China, and 19% in Europe. Those are not insignificant.

They were both right at the time. It wasn't until a few years later that the iPhone was actually competitive. It was really Android (and apps) that changed mobile. None of the companies with great OS teams (Nokia, Blackberry, Palm, Ericsson etc.) could compete with free. All the companies that are successful today are close to the hardware supply chain.

Android only had that opportunity because Apple changed the basic design of smartphones. Until the iPhone, Android was more like the Blackberry of the time. Of course, it wasn't until a few years later that Android phones were decent as the initial ones had issues.

How about the total profit?

Maybe a year ago Apple was selling like 20% of the phones, but making like 90% of the profits. Did things change?

Hard to compare a 100 year old industry with dozens of entrenched companies (many intended for the luxury end of the market) and a medium that was just getting off the ground with the high point being a "decent phone"

Did Ballmer and Coligan really believe what they said? Or were they just trying to put up a brave face? I'm inclined to think it is the latter. Obviously they can't say "oh we know Apple will do very well and kick our butt", right?

Did Ballmer and Coligan really believe what they said?

I believe that Ballmer believed it. Because MSFT in response to this new iPhone was...to let WinMobile, which was already starting to look long in the tooth before iPhone, sit and languish for a few more years. It wasn't until iOS had well and truly kicked their ass that MSFT decided to freshen up WinMo. By then it was too late.

Palm? Eh, maybe Coligan believed it. Then again, Palm was well aware of the Newton because, well, Palm kicked Newton's ass. But Palm knew that Apple could make a mobile device (even if it were pricey). Could adding phone radios and a dialer be that much of a barrier to entry? I mean, Palm obviously figured out how to do it.

To be fair, $500 subsidized was way way way above market and Apple had to cut the price significantly. Without the pricecut, the iphone would have probably been more a premium product instead of the default phone in America. They would have still made a killing, but they would have opened the door for Android to mop up.

Wasn't it the case that the original iPhone was not, in fact, carrier subsidised?

That was where the big price cut in the iPhone 3G (at $199, down from $399) came from?

The original iPhone was, in fact, carrier subsidised. Apple got a cut of the special monthly contract required to use it. If I remember correctly, they had to offer an unlocked version in a few countries and it was several hundred dollars more.

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