Apple. The car company? Thoughts? Opinions?

[vudooca]

Original Article: Here.

This is an interesting development that we should be aware of.

Apple Inc. may already be positioned to evolve into a global automaker in many ways that other Silicon Valley companies aren’t.
The Cupertino, California-based tech company has put a few hundred employees to work on a secretive project to develop an electric automobile, a person familiar with the matter has said. While Apple often tests ideas that don’t get released, the work underscores the company’s long-held desire to play a greater role in the automotive space, which is ripe for more of a merging with users’ digital lives.
“It makes a ton of sense,” Gene Munster, an analyst with Piper Jaffray Cos., said Saturday in an interview. “If you would’ve said 10 years ago, ‘Apple is going to be in the car business,’ I think people would’ve said you’re crazy -- because it would’ve been crazy -- and today it’s a much different company that’s able to tackle these massive addressable markets.”
Apple, with a market capitalization that’s more than $700 billion, needs to continue growing sales in iPhones, its largest revenue generator, while also expanding into new markets, such as automobiles, if it’s to reach a $1 trillion valuation, Munster said. He added that he doesn’t think Apple would bring out a car in the next five years.

Nonetheless, Apple boasts some advantages versus other Silicon Valley companies with car ambitions. Tesla Motors Inc., which delivers less than 10,000 vehicles a quarter, surprised investors last month when Chief Executive Officer Elon Musk said the company wouldn't be profitable until 2020.
Apple’s strengths as a potential automaker include:
1. $178 Billion
The automotive industry churns through cash at an astonishing pace. Apple, as it turns out, has a cash hoard of almost $180 billion. As Musk said last week, Apple is “just running out of ways to spend money. They spend money like it’s water over there and they still can’t spend enough of it.”
While the old rule of thumb was that it cost about $1 billion to develop a new car, those costs are now being spread over more vehicles as traditional automakers work to use vehicle platforms for more models, said Dave Sullivan, an automotive industry analyst with AutoPacific. That would be one challenge for Apple, as would a lack of experience building cars, though Thilo Koslowski, vice president and automotive practice leader at Gartner, said they could acquire those manufacturing skills.
“It’s well understood because it has been around for 100 years,” he said of building cars. “What isn’t that well understood are the pieces that Apple would potentially bring to the table.”
2. The Ultimate Mobile Device
Apple has built its fortune on creating products that are compellingly designed and that integrate software in such a fashion that immerses users’ lives deeper into the Apple world, further hooking them for future upgrades. And it already has car-suited technology -- mapping software, for instance -- ready to go.
“The car is one of the most important and critical pieces of the puzzle that you need to master if you want to interact with customers wherever they are,” Koslowski said. “It’s pretty important to have a phone that’s connected, and can show you your calendar and do all kinds of other things, but now extending it to this other device that happens to have four wheels.”
3. Car Guys?
The car business seems simple to outsiders, tempting some to think they can do better than Detroit, which spent a generation sliding toward bankruptcy reorganizations before re-emerging to new profits.
But the modern automotive industry has a mixed record on how outsiders perform. For every Alan Mulally, who jumped from Boeing Co. to oversee Ford Motor Co.’s renaissance, there’s a Bob Nardelli, the former General Electric Co. executive and Home Depot Inc. CEO, who was at the helm of Chrysler during its bankruptcy. Tesla has so far succeeded while Fisker Automotive, another high-profile electric car company, had its assets sold off in bankruptcy.
Apple, meanwhile, has a unique mix of executives with tech and auto experience. The company has long hired engineers from the automotive space, often with experience in supply chain management, battery technology and user-interface experience.
Luca Maestri, Apple’s chief financial officer, spent 20 years at General Motors in areas of finance and operations. Eddy Cue, the influential senior vice president of Internet software, is a car enthusiast and on the board of Ferrari. Steve Zadesky, vice president of iPhone product design, who is leading Apple’s car effort, spent time working at Ford earlier in his career. Marc Newson, a well-regarded industrial designer who joined Apple’s secretive design team last year, did a high-profile concept car for Ford in 1999.
4. Retail Network
One of the strengths -- and weaknesses -- of traditional automakers has been their dealer networks. It’s hard to open up store fronts around the world fast enough to get the scale needed to sell cars. In the U.S., there are added complexities such as state franchise laws that often prohibit manufacturers from selling cars directly to customers.
That’s something Tesla has sought to upend. Rather than selling through franchised dealers, the Palo Alto, California-based automaker operates its own showrooms -- which were created by a former Apple executive -- and takes orders over the Internet. The approach has drawn the ire of franchise dealers and the automaker has butted heads with dealer groups last year in Georgia, Missouri, New Jersey, New York, Ohio and Pennsylvania before reaching compromises.
Apple, of course, already has a giant retail network through its hundreds of Apple Stores worldwide, from Brazil to Sweden to Turkey.
5. Apple Does Global
The automotive business has a global complexity like few other industries, with regulatory, marketing and logistics issues that can trip up the capital-intense business on any given day.
Apple, which designs its products in California but depends upon contractors to assemble them mostly in Asia, is used to managing an on-time supply chain around the world -- something Google Inc. doesn’t do in its day-to-day Internet search business -- and handling the complexities of currency swings throughout global markets. CEO Tim Cook built his reputation at Apple for his ability to navigate those global operations.
“That would be a huge plus should they decide to manufacture cars,” Tim Bajarin, president of Creative Strategies, said.
He said he remains skeptical that Apple wants to get into the actual business of selling cars, rather than just moving deeper into creating operating systems for automakers.
“Doing cars is not in Apple’s wheelhouse,” Bajarin said. “It’s more likely they are trying to create a richer, more immersive electronics experience tied to iOS where not only the audio system but the information and possibly new levels of security through sensors and cameras would be part of what they would offer to other carmakers.”
Apple could be creating concepts, or reference designs, to integrate technology to demonstrate to automakers, he said.

[iHeat]

My iPhone 5s battery can barely last a day, an electric car by apple

[Akinari]

Originally Posted by iHeat

My iPhone 5s battery can barely last a day, an electric car by apple

Perfectly normal considering how miniature the battery in everything but the 6 Plus is.

Honestly this is pretty intriguing to say the least. Will be interesting to see how this goes

[mos_skeeto]

Can't wait till Google releases their car where it's more customizable, sold by every major car manufacturer where they put their own tweaks in causing them to be slower (I hate HyundaiWiz), being slightly less user-intuitive but allows drivers to upload their own gear ratios (after you root the car) and allows you to put weather widgets on the dash and download torrents.

Meanwhile fanatics will complain how iCar only uses Apple's proprietary cable and you can only refill from one power company and how iCar is a rip-off.

[Marshall Placid]

Not a good business for Apple to be in.

Margins on cars are 3% to 5% whereas Apple's current products boast anywhere from the single digits (computers) to 50% (Iphone's, Ipods, etc.). It's safe to say that the $180 Billion cash hoard can be used much more conservatively to earn 3% to 5% in much safer investments or expand into other higher margin CE products.

Apple, to the best of my knowledge, does not actually have their own factories making Apple products. Apple uses a subcontractor (namely Foxconn/Hon Hai) to manufacture and assemble the products. To become a major player in the auto industry, Apple will need to assemble the cars themselves (thereby opening expensive auto factories). The only other way to not invest in factories is to have one of the big auto makers make Apple branded cars. Then, the question is whether consumers would pay for Apple branded cars.

It's not to say Apple will not perform well in the Auto industry, but it will take a lot of ground-up capital expenditures to make it profitable.

IMO, the nascent "few hundred" Apple division is just investigating this possibility, and it probably won't come to fruition.

So, would Apple spend tens of billions on an Apple car that has a high risk of zero return?

Or, would it be safer and wiser to spend much less on expanding into other consumer electronics products that have a higher success rate?

IMO, I really think Apple would come out with many more CE products before they even touch on auto manufacturing.

[Timpo]

Originally Posted by Marshall Placid

Not a good business for Apple to be in.

Margins on cars are 3% to 5% whereas Apple's current products boast anywhere from the single digits (computers) to 50% (Iphone's, Ipods, etc.). It's safe to say that the $180 Billion cash hoard can be used much more conservatively to earn 3% to 5% in much safer investments or expand into other higher margin CE products.

Apple, to the best of my knowledge, does not actually have their own factories making Apple products. Apple uses a subcontractor (namely Foxconn/Hon Hai) to manufacture and assemble the products. To become a major player in the auto industry, Apple will need to assemble the cars themselves (thereby opening expensive auto factories). The only other way to not invest in factories is to have one of the big auto makers make Apple branded cars. Then, the question is whether consumers would pay for Apple branded cars.

It's not to say Apple will not perform well in the Auto industry, but it will take a lot of ground-up capital expenditures to make it profitable.

IMO, the nascent "few hundred" Apple division is just investigating this possibility, and it probably won't come to fruition.

So, would Apple spend tens of billions on an Apple car that has a high risk of zero return?

Or, would it be safer and wiser to spend much less on expanding into other consumer electronics products that have a higher success rate?

IMO, I really think Apple would come out with many more CE products before they even touch on auto manufacturing.

Almost no company would make their product on their own. iPhone for example, the screen is SHARP, CPU is Samsung, etc.
And yes, Foxconn build products for Apple, Sony, etc..

Boeing and Airbus typically outsource their manufacturing process to over 600 companies for each aircraft too.

This happens in automotive industry as well.
Porsche for example, they design the car, outsource all the parts, and let Valmet Automotive build them.
Same as any other car companies too.

[TOPEC]

ur "driving" it wrong

[Manic!]

How is the car going to drive itself without crashing If it's using apple maps???

The Amazing iOS 6 Maps

[Marshall Placid]

Originally Posted by Timpo

Almost no company would make their product on their own. iPhone for example, the screen is SHARP, CPU is Samsung, etc.
And yes, Foxconn build products for Apple, Sony, etc..

Boeing and Airbus typically outsource their manufacturing process to over 600 companies for each aircraft too.

This happens in automotive industry as well.
Porsche for example, they design the car, outsource all the parts, and let Valmet Automotive build them.
Same as any other car companies too.

Yes, I understand.

You are talking about Boeing and Airbus purchasing parts and supplies from hundreds of companies and then Boeing and Airbus WILL ASSEMBLE the parts into planes.

Apple DOES NOT assemble anything.

They have the entire manufacturing process done by another company.

So, Apple, at any time, does not actually make the product.

They design and engineer and find the suppliers but the actual assembling and handling of the manufacturing process is done entirely by a third-party subcontractor.

[Timpo]

Originally Posted by Marshall Placid

Yes, I understand.

You are talking about Boeing and Airbus purchasing parts and supplies from hundreds of companies and then Boeing and Airbus WILL ASSEMBLE the parts into planes.

Apple DOES NOT assemble anything.

They have the entire manufacturing process done by another company.

So, Apple, at any time, does not actually make the product.

They design and engineer and find the suppliers but the actual assembling and handling of the manufacturing process is done entirely by a third-party subcontractor.

ok maybe Boeing and Airbus weren't good example because they have their factory but there are many car companies out there that are letting other companies assemble them.

My point was that you don't necessarily have to have your own manufacturing facility to be successful in car business, just like iPhone.

I'm not saying Apple has enough know-how to design a car that is reliable and last for decades and hundreds of thousands of miles.

[LilRed]

Originally Posted by vudooca

Original Article: Here.

This is an interesting development that we should be aware of.

Great. And every time they do updates a bunch of the car's functions won't work properly until "bug fixes" are released. Of course, upgrades/repairs/parts will only be available for cars six years old or newer - older models becoming very large doorstops. Oh, and forced free U2 . . .

[meme405]

Originally Posted by Timpo

ok maybe Boeing and Airbus weren't good example because they have their factory

Maybe? They were the worst possible examples you could give, I've been to the Boeing tour down in Washington, and actually got to go on the floor and watch some of the people work since I have a friend who is an aerospace technician, and besides supplying like the bare essential parts Boeing does the rest of the work for their aircrafts themselves.

[Timpo]

Originally Posted by meme405

Maybe? They were the worst possible examples you could give, I've been to the Boeing tour down in Washington, and actually got to go on the floor and watch some of the people work since I have a friend who is an aerospace technician, and besides supplying like the bare essential parts Boeing does the rest of the work for their aircrafts themselves.

oh ok...

[Marshall Placid]

I think the safest way to Apple to go into the auto industry is to not become a manufacturer.

Instead, Apple will sell their brand through integration with existing car brands' electronics.

For this, Apple will get a few hundred to a few thousand dollars per car.

It's like a licence to use Apple's software, logo, and brand.

Apple will provide the integration know-how and come up with the software needed for this to happen.

The existing car manufacturers benefit by having increased sales.

Apple benefits by getting a few hundred to few thousand dollars per car sold.

This is far safer than making cars themselves.

[Manic!]

Apple has car play software for cars but here is a big problem. Some people love Apple but others hate Apple and want nothing to do with it. Those people will not buy a car because it's running a Apple OS. You don't want to alienate customers of the OS used in car. Ford had Microsoft Sync and that failed big time.

[yray]

hey, if your car bricks, they give you a refurb car right?

[Jas29]

Rumours of apple buying tesla going around

[european]

Interesting. I like Tesla though

[Spoon]

Originally Posted by vudooca

Marc Newson, a well-regarded industrial designer who joined Apple’s secretive design team last year, did a high-profile concept car for Ford in 1999.

http://en.wikipedia.org/wiki/Ford_021C

[twitchyzero]

you know what they say...competition helps push the envelope...so google and tesla could use more fire...even if Apple has a history of patent trolling we should try and work towards biofuel alternatives at a faster pace

[BoostedBB6]

So its navi will get you to no where you want to be, it will have no battery life and every new model will be like the last one except they make a bigger dash.....oh, and it will cost more than all the competitors who are making a better product that does what its supposed to do.
I think I will pass on this one.

[ZN6]

2. The Ultimate Mobile Device
Apple has built its fortune on creating products that are compellingly designed and that integrate software in such a fashion that immerses users’ lives deeper into the Apple world, further hooking them for future upgrades. And it already has car-suited technology -- mapping software, for instance -- ready to go.
“The car is one of the most important and critical pieces of the puzzle that you need to master if you want to interact with customers wherever they are,” Koslowski said. “It’s pretty important to have a phone that’s connected, and can show you your calendar and do all kinds of other things, but now extending it to this other device that happens to have four wheels.”

I predict more material for the shitty/dangerous driver thread.

[StanleyR]

So if Apple builds this car, will it have Windows?

[ae101]

so when will there be a jailbreak release on it

[Manic!]

Will you have to hire a Genius to work on your car and will it take a non standard plug?