Cars: Maybe Not Apple’s Best Next Market

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For months, rumors have circulated that Apple is at work on something automotive-related.

If you believe the rumors, this so-called ‘Project Titan’ has undergone several shifts in recent quarters. At first, it seemed that Apple was pursuing the design and manufacture of a full-fledged automobile, possibly with self-driving technology and an electric motor. According to a recent article in Bloomberg, however, that focus has drifted to vehicle software.

Whatever Apple’s vehicular goals, it faces a lot of competition in the years ahead. Tesla, having already cornered the high end of the electric-car market with its luxury sedans, is now aiming for the mid-tier with its upcoming Model 3; in the wake of Tesla’s success, other automakers are increasingly interested in electric vehicles.

Meanwhile, a number of tech firms are exploring autonomous vehicle technology, including Uber and Google. Uber already has self-driving cars on the roads of Pittsburgh and San Francisco; the company’s CEO, Travis Kalanick, eventually wants to eliminate human drivers in favor of software.

While Apple has a (much deserved) reputation as a company that crashes established markets with new innovations that allow it to carve off market-share, the automobile industry is notoriously hostile to new competitors. The up-front costs are huge, and building out the necessary manufacturing infrastructure requires highly specialized knowledge. Vehicles must also meet all sorts of regulatory requirements, and the margins on sales tend to be low.

Yes, Apple needs to expand into new markets. The downside of being one of the largest companies in the world is that Wall Street is only satisfied by quarterly profits roughly the equivalent of a mid-sized country’s GDP. But automobiles risk becoming a money-sucking quagmire, even for companies full of brilliant people; Tesla risked annihilation more than once over the past few years.

When Apple co-founder Steve Jobs died in 2011, the company was notable for concentrating on only a few distinct product lines: mobile devices, personal computers, and assorted peripherals. In the years since his passing, the company has expanded into wearables, and may enter the VR or AR game. If you listen to some critics, none of that is enough—they want the company to bring out something that will radically change the world.

But given their complexity and cost, cars might not serve as Apple’s best way to reach that goal. With pundits questioning the company’s focus and attention to its core product lines, it might be time to concentrate on other opportunities.

Image Credit: Denys Prykhodov/Shutterstock.com

Comments

One Response to “Cars: Maybe Not Apple’s Best Next Market”

December 22, 2016 at 4:30 pm, Alan lorek said:

Apple and Tesla need to merge, the infrastructure already exists. Tesla has the know how of electric car’s, Apple has the know how of electronics.

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