Wry & Dry

Apple car?

W&D has often pondered: when a company has 'first-mover' advantage in a market and that market then becomes saturated with new entrants, what does the company do?

Consider Apple, the company that introduced iProducts to the world: the iPod, iPhone, iPad and iWatch (or, more accurately, the Apple watch).  Each of these products has now been copied and imitated globally.  Notwithstanding the amazing brand that Apple has*, to where does it now go?

If W&D's mail is true, it's the route down which Henry Ford marched a century ago; the motor vehicle.

But the Apple car would be an electric and, eventually, driver-less vehicle.  Apple is said to have hundreds of employees working on 'Project Titan'.  It would obviously be chock-full of Apple-type technology.

Apple car 2

However, there are some problems.

Firstly, Apple doesn't have experience as a vehicle manufacturer (remember, there is no white-labelling of an Apple product).  History suggests that Apple would want an iCar.  The electric vehicle world belongs, with one notable exception, to existing manufacturers: Nissan, BMW, VW, Mitsubishi, etc.

The notable exception is Tesla.

Secondly, Apple doesn't have experience in driver-less technology.  The autonomous vehicle technology world currently belongs to Uber, Google and Tesla. 

Thirdly, Apple is late in the race.  It certainly wouldn't have 'first-mover' advantage, as it has had in three of it's four major iProducts.  

But Apple does have, well, some experience in technology, broadly defined.

How does it catch up?

a) Team up with a manufacturer.  Hence all the recent noise about Apple buying some or all of McLaren, the British F1 racing car manufacturer**.  McLaren is known for its expensive cars, design aesthetic and focus on customer service.  But none of those features would immediately benefit Apple’s work on a car.  But few people know of the McLaren Applied Technologies part of McLaren.  

McLaren Applied Technologies is a technology consulting firm that applies some of the technological advancements gleaned from decades in the racing world to any number of scenarios. 

b) Team up with an autonomous vehicle designer.  Hence the noise about Apple buying Lit Motors, a San Francisco-based company that designs two-wheeled vehicles, including a fully electric, gyroscopically stabilised vehicle.

So, perhaps Apple has given up building its own vehicle and instead will build the underlying technology platform.  Hence its three major internal teams at Titan: one focusing on software, another on self-driving sensors, and a third on mechanical hardware. 

Perhaps W&D will see an iMcLaren by 2020.  Perhaps not: Apple currently enjoys profit margins of between 35% and 45%.  Operating margins in the motor vehicle business are about 10%.  

The only reason Apple would get into this business is if it foresaw that the margins in its traditional businesses were going to drop and it could enter the car business with margins considerably closer to 30%.

Nuh.

*Apple is the world's most valuable brand, for the third successive year.  Its brand value of USD162 billion is more than twice that of next ranked Google (USD80 billion) and Microsoft (USD76 billion).

**McLaren was established by New Zealand-born race driver and car designer Bruce McLaren in 1963 and first competed in the Formula One world championship three years later.  It ranks second only to Ferrari in the number of drivers’ titles won. McLaren has also achieved the transition from developer of industry-leading technology to a full-scale producer of street-legal cars in just six years.