Cyclical is also great -- that's exactly what the laptop and especially the phone market are.
Margins is super complicated. iPhones don't cost more than Samsung flagships -- Apple's margins seem to come mostly from controlling manufacturing costs. Could Apple assert similar control over manufacturing costs for cars? Maybe! But maybe not. Cars are more complicated than phones.
If a margin inflation gets passed along to consumers, well, there are more people willing to pay an extra $200 (compared to a lower-cost competitor) every few years to have an iPhone than there are people willing to pay an extra $20,000 every few more years to buy an iCar -- just because it's a lot more money. And to be clear, $20,000 is an equivalent margin to the $200, scaled up for costs.
One of the nice things about the electric car business is the the part count is a lot lower, they are basically much simpler devices, and thus should be able to be made much more cheaply.
We may see a Yugo level electric car for $10,000 in a few years.
This would allow for margin expansion, especially if Apple can innovate in the manufacturing side (eg: go one better on automating the factory)
Plus since currently a Toyota RAV4 level vehicle goes for $30k-$40k, if Tesla gets down to the low $30k, Apple could produce a car for the $40k price point and be making $10k-$15k profit on each one.
Lower gross margin than the phone business, but offers the opportunity of significant revenue upside.
Plus with Apple there would be follow on revenue as well.
Since people are in the habit of paying mid $30k for a car right now, while there will be cheaper electric cars at the lower end of the market, Apple wouldn't require people to change behavior to be able to afford a car that gives Apple the kind of margins it wants.
Plus I expect there will be several innovations that are things "only apple can do" that add value-- the interiors of cars and especially the electronics and instrumentation of modern cars are terrible. Even the Tesla which tried a new approach, I think has bad usability. There's a lot of opportunity there.
One of the things that has made me never really believe in Apple's competitive advantage with cars is that beyond an ultra-high talking points level ("design!"), I don't see any reason to believe that Apple has relevant expertise.
Now buying Ford is probably not the way to go. But, Apple can skip a lot of the 'ramp up' if they ever wanted to get into the car business.
There are two things that I hear people say Apple is notably good at:
1. "Design."
2. Controlling a complicated end-to-end extremely high-quality manufacturing process.
For 1, I'm not sure I believe that there is a transferable organizational expertise between designing phones and designing cars.
For 2, I'm not sure I believe that there is a transferable organizational expertise between manufacturing phones and manufacturing cars, and I'm definitely sure that I don't believe that they can transfer organizational expertise to manufacturing cars if they purchase an extant manufacturing process/organization.
I recently drove a car with lane following and adaptive curse control and it kind of sucked. Lane following needed great road conditions so it failed miserably. But, while adaptive cruse control was nice in heavy traffic, it was also clearly tacked on. The acceleration and deceleration was felt jerky.
People can generally drive really smoothly in traffic so why suffer a machines erratic behavior when you need to focus in case it fails. Sure, do the same thing but better seems obvious but iPhone was more a response to poor completion than a truly innovative product.
Seriously, what does that look like? What are the attributes of a person who is good at integrating hardware and software on a phone, and who also is good at integrating hardware and software on a self-driving car? Your example was jerkiness in acceleration and deceleration. The people who are good at mitigating jerkiness in acceleration and deceleration are presumably mechanical engineers and roboticists/AI guys. I don't think that any of those people have been involved in Apple's flagship, reputation-making products so far.
As you allude to, it's easy to say "do the same thing but better." If all you needed was a product guy who was like, "Hey, we should make this better," then it would already be solved.
The best example I can give is stuttering when you drag stuff around. Android phones had issues for years with this because it's not really a hardware or software issue it's both. Eventually you can throw enough processing power to make this go away, but being a few years ahead of that curve is the kind of thing people will pay a premium for. Ed: It's the kind of issue you can't just point at one group and say fix this.
PS: That said, I don't think an iCar is a good idea right now. We seem to be in the Palm pilot stage of self driving cars, give it 15 years and apple could make a killing, but it's still a little early.
Macs have always historically been high-end and Apple's marketshare has historically hovered around 10%. Apple has come to dominate the high-end computer in recent years ― specifically the high-end laptop segment; at one point attaining 90% marketshare of laptops priced over $1,000 ― but that peak has receded and Apple never did penetrate the desktop market as much (which is another important segment foe high-end computers)
On the other hand, Apple's first mobile device (the iPod) was decidedly mass market and mass produced as Apple offered products for every price and segment ending up with over 70% marketshare for ALL mp3 players.
The iPhone is an interesting inflection point. Like the iPod it started out priced at the high end but Apple didn't quickly followup with cheaper products for all segments. Why not? The reason instead is that Apple went the mobile carrier subsidy route. The iPhone is mass market, mass produced and has ~50% marketshare in USA. However in markets where carrier subsidies aren't the norm e.g Europe, Apple has less than 20% marketshare.
Guess which other major technology purchase receives subsidies/payment plans? Cars. Apple could feasibly sell 'high-end' cars on mass market contracts and still retain their margins. However car manufacturing is very hard and Apple doesn't have any leverage from their existing products to force an advantage from the car parts factories...
My first Apple laptop, a Titanium Powerbook was almost 3 times that. Hard drive, keyboard, ram, battery were all user serviceable.
My point was the company isn't what it once was, it's not a high end tech company for the few but a disposable tech company for the many.
In that sense maybe, but not in the "low quality" sense (which disposable also implies, e.g. disposable razors etc). Besides modern cars are not "user serviceable" like 70s cars for the most part either, but they are not "disposable".
>My first Apple laptop, a Titanium Powerbook was almost 3 times that.
The overall price for the high end laptops on the market dropped since the Titanium powerbook though, and modern MBPrs are still priced at the high end segment of today's prices.
You can't expect 1999 prices for a 2016 computer when the tech innovations make both low and high end products more affordable all the time.
>My point was the company isn't what it once was, it's not a high end tech company for the few but a disposable tech company for the many.
"High end tech company" does not necessitate "user serviceable".
The tech in the Mac, compared to the average laptop, is way higher, and the engineering process to build a new MacBook Pro Retina model (from the machining to the logic board, batteries, etc) is far more advanced. Hence, high end of the market.
Nor was the Mac ever "for the few" -- it was always intended as a mass market PC, for those with the money to spare, not just some tinkering propellerhead elite ("the computer for the rest of us"). Heck, they even sold cheaper models back in the day (the Mac Classic, the original iMac, etc).
They are obviously mass produced, as they are consumer electronics, not boutique items.
They still cater to the high end of the laptop/desktop market (which is not the same as the "gamer laptop" or the "high end 20-core rendering workstation" niche market).
What competition do you think they have at that?
They are if not the most, some of the most well designed, well thought out, and innovative custom solutions (from heat dissipation to machining and assembly). The parts they use are the cream of the crop of the respective yields too -- when they mass order Samsung SSDs or AMD cards or memory, they get the best production runs. They don't use the most screaming, 1000 watt, 2-fans greatest speed AMD/Nvidia cards, but for the ones they do use, and that fit the energy/power profile they want to have in their boxes, they use their mass purchasing power to get the best units.
The barriers to entry are insanely high, of course, and that places Apple amongst a handful of companies with the resources to clear those barriers.
Autonomous vehicle pioneers have recently amended their expectations for when autonomous car will be fully realized, claiming it will now be more than 20 years. This is a far cry from conventional expectations in the self driving car world 3 years ago, when it was assumed that one or several big industry players would be mass producing robotaxis by the mid-2020s.
lol
Roads are tough. Sometimes they're covered in snow, ice, rain with poor visibility. Sometimes they're well constructed, other times they're in disrepair. That's just the technical side of the issue.
The social side (at least in the US) is much more difficult. In the foreseeable future, any AV will have to share the road with "classic" cars, driven by humans of modest computing power. Trying to anticipate how they will interact should be interesting to say the least. And in our hyper-litigious and hyper-protective society, the clash between AVs and traditional cars will be difficult to resolve.
Uber may arguably have a first mover and scale network advantage. I personally doubt that will hold.