Jean-Louis Gassée, writing for Monday Note:
Yes, Apple has plenty of money, but the century-old auto industry doesn’t seem like a good way to make more of it. Ford, the healthiest US car company, made $835M in net income last quarter, less than 4% of their $34B in sales. Compare that number to Apple’s record-breaking $18B profit. Tesla, Apple’s supposed rival in the fantasy blogs, pulled in a little less than $1B last quarter, and it lost about 10% of that. There isn’t an inkling of an explanation for why and how a superior product designed and built by Apple would bring superior returns.
And:
Apple’s life today is relatively simple. It sells small devices that are easily transported back to the point of sale for service if needed. No brake lines to flush, no heavy and expensive batteries and cooling systems, no overseeing the installation and maintenance of home and public chargers. And consider the trouble Tesla faces with entrenched auto dealers who oppose Tesla selling cars directly in some states. Apple doesn’t need these headaches.
Fair points, both. An Apple based on small, portable products is a winning formula. Manufacturing heavy, durable goods would certainly be a lengthy stride outside the ecosystem.
It’s funny how the same people will criticize others for bringing up profit as a primary motivation for something Apple “should” do, and then turn around and use “there’s not enough profit in it” as the reason for something that Apple shouldn’t or “won’t” do.
Note Tim Cook’s words on why Apple does what it does:
“We think about doing a great product. And we think that if we do that well, that other things will take care of themselves. And so that’s what we’re focused on.”
If Apple thinks that they can do a great car, and that it’ll be better than any other car, plus solve some one or more problems (carbon emissions, safety, efficiency, or otherwise), and at the same time delight their customers, does that not satisfy Apple’s primary motivations?
In a similar vein, did Elon Musk create the Tesla car company with the primary motivation of making large amounts of money, or because he wanted to push the state of the art in electric vehicles? (For that matter, did he start SpaceX with the primary goal of making money, or to provide easier, better, and cheaper access to space?)
Of course, after the fact, did Apple really expect the iPhone to become such a massive success as it is now? Or did they expect the iPod to get as big as it did? It should be clear that while they may have had high hopes, they didn’t actually have such high expectations (Steve Jobs said Apple was aiming to capture a mere 1% of the phone market by the end of 2008, which was 18 months after the iPhone’s launch). The same would (or should) be how they see working on a car project, now.
If, they decide to do a car, please Apple, don’t make it update its software with iTunes!
I find the “Apple is making a car” rumor whirlwind more tiresome than most.
Well said.
Maybe it’s just to distract us from the TV they’re making.
I know what is actually going on. iOS is being ported to sharks so they can control the frickin’ laser beams on their heads.
But they’re not going to do that if they can’t make money at it. They can talk delighting me all they want, but there’s a reason they don’t sell cheap laptops – they can’t hit their product goals and sell it for a profit. I have zero issues with this (I’m typing this on an Air) but let’s acknowledge that if they didn’t care at all about making money they could price the Air line cheaper and gain even more market share. Same for all their products.
Now, if they could delight customers, build a really innovative car AND price it so it’s competitive with BMW/Audi/Tesla? Then it’s an issue of how many they think they’d sell and whether that is worth the risk.
I don’t see them doing a TV either. Same issue, really. Long product update cycle and limited reason to tie the hardware so tightly to the part that’s not really differentiated (the screen in the TV).
Oops, forgot to include the /s.
I’m more clueless than most regarding sarcasm in text, but I knew it was there. 😉
Let’s write Jony Ive’s script for the video that accompanies the Apple Shark.
“Elegant and inevitable.”
Why look at Ford? Who buys cars from Detroit? Only people that have to, or don’t know any better.
Toyota made $5.1 Billion in the last quarter.
In Issacson’s book, Jobs wistfully talks about the Apple-like vertical integration of US auto makers in the golden years of their dominance.
On an emotional level, the book makes clear there seems to have been some Jobs family love of cars. Likewise, it seems many other C-suiters at Apple are car nerds too.
Yes, this is no longer Job’s company, it’s Cooks. But surely they’ve thought about it, and regardless of who is at the helm, Apple is a company that makes experiences. It seems that if they investigate it and find they can build a better automotive experience around an Apple Car, they would…especially if you look at a less specious example of quarterly revenue to consider what’s in it for the bottom line.
Dude, the TV was to distract us from the car, it’s DEFINITELY happening!
I love it when someone talks about Apple building any kind of factory. It’s like they don’t even realize that Apple, itself, doesn’t build ANYTHING anymore. Hell, they even directly finance their manufacturers’ capital expenditures to further avoid having to build things when even their suppliers can’t build as many as fast as Apple needs. The idea that Apple, a computer manufacturing company that doesn’t even manufacture computers anymore, is going to undertake a huge new manufacturing process in an area TOTALLY outside their core-competency is just ridiculous.
Apple builds the Mac Pro in their factory in Texas.
D’oh! You’re absolutely right.
In my defense, I’d say that by any metric, the number of Mac Pros produced is negligible, but I’ll freely admit that I should have written “Apple, itself, doesn’t build HARDLY anything anymore.”
I haven’t done that since…2011. OTA updates have been available since iOS5. But ok.
Even IF you had to update the software with iTunes, would be a massive improvement of the current situation, where you have to take the car to the dealership and pay $$$$ to update anything.
Apple simply takes the most practical, pragmatic, and cost-effective route. If Apple decides to design/develop a car, and they conclude that manufacturing it themselves is the best way, then they will set things up so that they can do that. Do I think they will? No. But I also don’t think Apple has many rigid rules or ideologies beyond “make excellent, useable, well designed products”. They’ve shown that details to achieve that goal can be shifted and adapted, and Apple has pretty much everything that at once point most people thought they would not do.