Moving Information vs Pounds
Chris Lattner’s jump from Apple(AAPL) to Tesla is surprising. That’s like leaving NASA to go work for a company that makes horse saddles. As I had written yesterday, the whole self-driving car thing is wildly overblown. Autonomous vehicles and electric powertrains are lipstick on a very mature pig. Regardless of what Peter Thiel thinks, the real exciting things in tech in the future will be outgrowths of the smartphone market, because moving information, not pounds, is where the value is.
If you had told journalists fifty years ago that one day we’d have fully-automated factories where robots built us our products, they probably would have written similar utopian type stories. They would have imagined a future where no one had to work and everything was so cheap it was virtually free. They would have been ignoring the real underlying economics. We now have fully automated factories, but people still need to work and iPhones aren’t free. So, no, self-driving cars aren't going to change the world as much as people think unless automotive companies can change the laws of physics.
So, should Apple pursue the automotive market at all? Yes, because they build the best operating systems in the world. Because Apple controls both their hardware design and manufacturing, there are things they can do that no one else is equipped for. That’s why we have 3D Touch, Live Photos, Dual Cameras, and security like Fort Knox on Homekit. Using Bluetooth on iOS is now light years ahead of Android.
Apple should pursue automotive because the auto makers are in over their heads when it comes to customer interface. Just like they defer to the tire companies to design their tires, they should look to Apple for help with their information and entertainment needs. And because Apple is already a world class manufacturer, you only need to deal with one company. This would greatly simplify hardware updates and changes.
But what’s in it for Apple? First, volume. If Apple were to make and sell its own car, the volume would very small for a long time. But if they were to manufacture modules for other automakers, this volume could grow quickly and be much higher on a unit basis. Second, it would be a logical extension of their ecosystem. If an investment in automotive leads to X% of Android owners switching to iOS, then it’s an investment with a high return.
It’s an unfortunate move upon Ford and Toyota’s part that they are forming an alliance to try and keep software companies out of automotive. This will put them at a disadvantage in the long run if they can’t make this high-stakes gamble pay off. An operating system with a myriad of interfaces and good security is hard to do.
Do they really think they can out-do Apple or Google when they have only a tiny fraction of the volume and resources? Could they derive a competitive edge if they are successful? Yes. But by that logic, maybe they should design their own smartphone that integrates with their car while they’re at it. They’d have about as much chance of success on that one too.
It’s helpful that they are forming a multi-company alliance. At least they recognize that alone no single auto company stands a chance. However, assembling a room full of butchers isn’t going to help you if you need double-bypass heart surgery.
Related: Changing the World Is for iPhones, Not Cars
So, should Apple pursue the automotive market at all? Yes, because they build the best operating systems in the world. Because Apple controls both their hardware design and manufacturing, there are things they can do that no one else is equipped for. That’s why we have 3D Touch, Live Photos, Dual Cameras, and security like Fort Knox on Homekit. Using Bluetooth on iOS is now light years ahead of Android.
Apple should pursue automotive because the auto makers are in over their heads when it comes to customer interface. Just like they defer to the tire companies to design their tires, they should look to Apple for help with their information and entertainment needs. And because Apple is already a world class manufacturer, you only need to deal with one company. This would greatly simplify hardware updates and changes.
But what’s in it for Apple? First, volume. If Apple were to make and sell its own car, the volume would very small for a long time. But if they were to manufacture modules for other automakers, this volume could grow quickly and be much higher on a unit basis. Second, it would be a logical extension of their ecosystem. If an investment in automotive leads to X% of Android owners switching to iOS, then it’s an investment with a high return.
It’s an unfortunate move upon Ford and Toyota’s part that they are forming an alliance to try and keep software companies out of automotive. This will put them at a disadvantage in the long run if they can’t make this high-stakes gamble pay off. An operating system with a myriad of interfaces and good security is hard to do.
Do they really think they can out-do Apple or Google when they have only a tiny fraction of the volume and resources? Could they derive a competitive edge if they are successful? Yes. But by that logic, maybe they should design their own smartphone that integrates with their car while they’re at it. They’d have about as much chance of success on that one too.
It’s helpful that they are forming a multi-company alliance. At least they recognize that alone no single auto company stands a chance. However, assembling a room full of butchers isn’t going to help you if you need double-bypass heart surgery.
Related: Changing the World Is for iPhones, Not Cars
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