Google I/O just finished last week and as is usual the press is oohing and aahing over vaporware that isn’t even being shipped yet. They of all people should know that the demo is always a magnitude of ten times better than what we end up with.
But it got me thinking about how different Apple and Google are. It seems more and more that they are diverging in their strengths as companies. Apple is doing things with materials and processors that are the envy of the world. Google doesn’t even have a real hardware business. But Google is leading the world with predictive assistance. Apple? Not so much.
I wrote yesterday about how Apple’s hardware business would dovetail nicely with auto manufacturing if they chose to go that route in the future. But that got me thinking about the merits between having a hardware vs software advantage in the real world. Apple could quite easily shift gears and start supplying Ford, GM, et al with entertainment modules for their vehicles because of their hardware advantage.
When I worked in automotive manufacturing one of the most critical items we had to manage was our purchase of precious metals. Most people aren’t aware how much gold and silver is necessary to manufacture various electronics. There are certain properties that these metals have that make them absolutely necessary. There isn’t enough precious metal in any one unit to make it valuable but in the volumes that manufacturers have to deal with it is significant.
This is one of the reasons why companies like the one which I worked at supplied electronic sensors to the big automobile manufacturers. Honda’s relatively small 3 million vehicles per year in sales didn’t give it the same clout in purchasing gold or silver as my company which supplied sensors to all the companies. We had economies of scale in purchasing where Honda didn’t.
Somewhere around the 2010 or 2011 timeframe there was an explosion at a silver processing plant where we received most of our silver. The impact to our manufacturing was devastating. We literally shut our plants down for a month which was unheard of. The effects of this shortage rolled up to our customers and Toyota had to delay the launch of one of their new vehicles.
This is where Apple comes into the story. As one of the worlds largest manufacturer of electronic devices they are probably getting better prices on precious metals than anyone else. Also, with their clout, they can demand top priority with shipments of available product when shortages happen. I suspect that Apple is the reason that my company couldn’t get shipments of silver when there was a worldwide scramble of companies looking for a new silver source.
Why is this relevant? Because an automotive electronics supplier trumps any single automaker when it comes to purchasing power. However, Apple can trump any single automotive supplier. If the financial analysts at Apple are looking for complementary markets where they can flex their muscles and be an instant force to be reckoned with, it could be automotive.
I bring up precious metals to illustrate how Apple’s position is vastly different from Goo_gle’s. Remember, Honda doesn’t want to hire an army of coders to develop Honda OS if they only have 3 million vehicles to allocate their costs over. Google could supply an OS but when it comes to hardware or material purchasing power they are helpless.
Could Google team up with the automaker to make in-car electronics? Sure, but that is like you buying a lawnmower and then having to design it and put it together yourself. The automakers want someone who can handle the entire solution from design to production. Could Google team up with Samsung or HTC to develop something? Samsung isn’t about to become more reliant on Google so that’s never going to happen and no other hardware maker has scale that even comes close to approaching Apple.
Today’s Apple devices are expensive due partially because they are customer facing products in which Apple chooses premium materials and employs premium manufacturing processes for finishing. The world hasn’t seen Apple turn it’s full force and fury towards a behind-the-scenes component that utilized low-cost materials. If Apple decided to jump into the hyper-competitive world of automotive components I think they have the right complementary strengths to do it.
So while the world is busy patting Google on the back for essentially remembering what you just said, Apple has quietly built a manufacturing juggernaut that is poised for blitzkrieg. Which is the more impressive feat? Which will matter more? Are they even competitors anymore?
I wrote yesterday about how Apple’s hardware business would dovetail nicely with auto manufacturing if they chose to go that route in the future. But that got me thinking about the merits between having a hardware vs software advantage in the real world. Apple could quite easily shift gears and start supplying Ford, GM, et al with entertainment modules for their vehicles because of their hardware advantage.
When I worked in automotive manufacturing one of the most critical items we had to manage was our purchase of precious metals. Most people aren’t aware how much gold and silver is necessary to manufacture various electronics. There are certain properties that these metals have that make them absolutely necessary. There isn’t enough precious metal in any one unit to make it valuable but in the volumes that manufacturers have to deal with it is significant.
This is one of the reasons why companies like the one which I worked at supplied electronic sensors to the big automobile manufacturers. Honda’s relatively small 3 million vehicles per year in sales didn’t give it the same clout in purchasing gold or silver as my company which supplied sensors to all the companies. We had economies of scale in purchasing where Honda didn’t.
Somewhere around the 2010 or 2011 timeframe there was an explosion at a silver processing plant where we received most of our silver. The impact to our manufacturing was devastating. We literally shut our plants down for a month which was unheard of. The effects of this shortage rolled up to our customers and Toyota had to delay the launch of one of their new vehicles.
This is where Apple comes into the story. As one of the worlds largest manufacturer of electronic devices they are probably getting better prices on precious metals than anyone else. Also, with their clout, they can demand top priority with shipments of available product when shortages happen. I suspect that Apple is the reason that my company couldn’t get shipments of silver when there was a worldwide scramble of companies looking for a new silver source.
Why is this relevant? Because an automotive electronics supplier trumps any single automaker when it comes to purchasing power. However, Apple can trump any single automotive supplier. If the financial analysts at Apple are looking for complementary markets where they can flex their muscles and be an instant force to be reckoned with, it could be automotive.
I bring up precious metals to illustrate how Apple’s position is vastly different from Goo_gle’s. Remember, Honda doesn’t want to hire an army of coders to develop Honda OS if they only have 3 million vehicles to allocate their costs over. Google could supply an OS but when it comes to hardware or material purchasing power they are helpless.
Could Google team up with the automaker to make in-car electronics? Sure, but that is like you buying a lawnmower and then having to design it and put it together yourself. The automakers want someone who can handle the entire solution from design to production. Could Google team up with Samsung or HTC to develop something? Samsung isn’t about to become more reliant on Google so that’s never going to happen and no other hardware maker has scale that even comes close to approaching Apple.
Today’s Apple devices are expensive due partially because they are customer facing products in which Apple chooses premium materials and employs premium manufacturing processes for finishing. The world hasn’t seen Apple turn it’s full force and fury towards a behind-the-scenes component that utilized low-cost materials. If Apple decided to jump into the hyper-competitive world of automotive components I think they have the right complementary strengths to do it.
So while the world is busy patting Google on the back for essentially remembering what you just said, Apple has quietly built a manufacturing juggernaut that is poised for blitzkrieg. Which is the more impressive feat? Which will matter more? Are they even competitors anymore?
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