DRIVERLESS cars: Apple ups the ante with meeting in California The “is Apple building a car?” rumour mill has received added grist with the news that Apple execs have been meeting Californian legislators responsible for self-driving cars. The Apple car project is believed to be called “Project Titan”. The Guardian reports that Apple’s legal eagle Mike Maletic had an hour long meeting …
Apple aren't about to go into the automotive building business because the profit margins simply aren't there so it's not an area where Apple would be interested. Consider some of the best operating margins in the automotive industry are 6% where Apple runs nearer to 30%. That's a huge gap and not something I believe Cook and Co. would be interested in floundering about in. No, Apple likely wants to develop the software and network infrastructure to wrap up with a pretty bow and sell to automakers. It isn't going to compete with Carplay, it's going to be Carplay Autonomous Edition but with a catchier name like Apple Drive seeing as the "i" bit is going a tad stale.
But in the middle and upper price ranges there is plenty of profit to be made.
How else could the likes of Ferrari stay in business?
Good point though about "i" being a bit stale. You forget that BMW uses 'i-Drive'. Apple won't want a blttle with them especially if Apple might want to use their carbon fibre technology.
If Apple wasn't in the smartphone business today and were rumored to be entering it, you'd say there's no way they will because there's almost no profit to be made - Samsung being the only one currently making any profit at it and showing YoY declines in profits for almost two years running now and looking like they may be on their way to joining the rest in the no-profit commodity Android world.
By attacking only the premium end of the market as they always do (which is where the first few generations of self driving car will be anyway) they can make it work if they have enough volume. If they could get 10x Tesla's volume they could probably get the fixed cost (factory, supply chain, service network) low enough to make it work at their accustomed margin. That level of sales won't happen overnight, even with Apple's dedicated fans (spending $500-$2000 on a phone or laptop is very different than spending $60K on a car) but the iPhone started modestly and look where it is today.
Remember, when you look at auto company financials you are looking at companies that sell across the whole market. VW Group has Bugatti and Lamborghini mixed with Seat and Skoda, for instance. Even the Audi nameplate by itself has everything from $100K+ cars down to the A1. Apple will never sell at the A1 price point. All the office and administrative expenses automakers pay, Apple already pays and won't have to pay twice, which further reduces down their margins compared to what Apple could expect if it entered the business.
You're forgetting that in 2007 when the iPhone made its debut it was priced lower than what was then the top tier. At $600 the top of the line, 8 GB, iPhone was at least $100 cheaper than the Nokia N95 and it wasn't long after that Apple dropped the price upsetting many early adopters and it wasn't barely a year when the recently introduced 16 GB iPhone was down to $400. Recall the BB Curve 8300 was about $450 and even Motorola's Razr flip phone was going for around $300.
Consider that what Apple does best is design, UI/UX and marketing and ask what doesn't Apple do. Apple doesn't manufacture anything, it's all contracted out. It would take a whole lot for Apple to start from scratch in the auto manufacturing industry and all that initial cash outlay would deplete their reserves for R&D. Heck Fiat only started back in the US because they could buy the infrastructure cheap by buying Chrysler.
You make in interesting point about the high end with Bugatti, Lamborghini and let's toss in Ferrari and ask if they could survive without their parent company. Considering none had managed to make it on their own the answer is no. The profit from the premium brands comes from the massive infrastructure that already exists due to building Golfs and 500s in sufficient volumes.
Tesla is the interesting one since they are trying to change the paradigm but they aren't yet profitable. I hope it works for Tesla but I don't see Apple jumping of that cliff when it's so easy for car makers to go bankrupt. No, Apple is going to do something that will allow them to partner with existing manufacturers albeit maybe on a more grand scale. I can see an ad which touts "brains by Apple and brawn by [BMW, MB, etc] all beautifully blended in the new Feudal Lord Series. Stop being a lowly vassal and buy one today."
You can't sell Bugattis and make decent profit because they are so eye wateringly expensive only a few can afford them. Apple isn't going to target the $100K plus market, but I could see them going for say $60K. There's room to sell a couple million a year there (eventually) if they have a good car, and no reason they couldn't built them for $40K with two million cars to spread the fixed costs around. If they only sell a quarter million a year the fixed cost per car goes up a lot and the margin gets mighty thin.
Don't forget that currently their marketing is counting on a 12-18 month upgrade schedule. Not likely with a car but maybe they could pull it off if they're willing to pull off the battery+software upgrade for a few years. No matter what, it isn't going to be an easy transition like the iPod to iPhone push was. I mean that was a factor of two in consumer dollars but iPhone to iPhucking car!?!?! That's a big boy step and likely a major hit below the margin belt in volume.
Yes, it is a big step, and yes it is risky. High risk, but high reward if they're successful. Anyway, at this point they're only studying it, it is all rumor until Tim Cook says "one more thing" and an Apple Car drives by itself onto the stage next to him during some future iPhone announcement.
But in the middle and upper price ranges there is plenty of profit to be made.
How else could the likes of Ferrari stay in business?
Asked and answered, less than a month ago.
Ferrari's margins (and those of other premium brands) are still not in Apple territory. And premium brands are owned by large car manufacturers with economies of scale for things like engine components.
"The test drivers must not have had a driving under the influence (DUI) conviction or an at-fault accident, and must have no more than one point on their licence"
Such unicorns exist?? In CALIFORNIA?
I've discovered a new form of driving stupidity, where I'm sitting at a stop sign, and the driver coming along the through road (with NO stop sign) *stops* and motions for me to go.
Of course if I do pull out, she's free to hit me as she pleases and it would be my fault, so there's no way I'm moving.
So what I do is sit there until she's about to go, then I inch the motorcycle forward. So she stops and waits again. Repeat until she loses patience/consciousness or someone pulls up behind her and lays on the horn. Current record is 9 lurch/wait cycles.
Much like the story where the driverless car was confused by the bloke trackstanding his bicycle...
Do you really worry about other drivers trolling you and hitting you "as she pleases"? If you're that worried, maybe you should get one of those helmet cameras like all the Russians have, so if that ever happens you'll have a record of the other driver stopping and waving you through so you won't be held at fault.
It's always been open season on motorcyclists. We ALWAYS worry about such things as drivers wanting to kill us, because harming motorcyclists most often results in ... nothing for the car driver. After the number of friends I've had injured (sometimes seriously, even fatally a few times) by car drivers in the UK who were most certainly "at fault", but who subsequently weren't even charged let alone fined (including me and the dozy bint who hit me, whose police charges were quietly dropped by the CPS.), the attitude of "they're out to kill us" is pretty well ingrained. Even helmet cameras don't help when the system is geared towards "motorcyclists are always guilty, even when they aren't".
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I don't car if it works or not, just so long as
1) it comes with a picture of Jobs on it
2) it has the Apple logo right across the front of the car
3) It doesn't run out of power halfway along the M4 because I forgot to uncheck the Software Update option and it decided to update itself just as it hit reserve power.
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