Apple’s Long & Windy Road

When you’re the top dog, you’re used to getting your way.

No, I’m not talking about Trump — I’m talking about Apple. The largest public company in the world.

The rich and powerful tech giant has been marching ever higher to a US$1 trillion market cap. Steadily closing in on the massive milestone every quarter.

And in recent months there has been plenty of talk about the company’s driverless car plans. But, the company hasn’t managed to make any serious headway.

As competitors took to the roads, Apple was rapidly falling behind. A mistake that could cost them dearly if they want to compete for the potentially massive market.

However, it wasn’t for lack of trying.

Apple has been thinking about cars for over four years now. The problem is they just never managed to nail down one single direction.

They constantly flip flopped from idea to idea. Devoting time and money to ventures that went nowhere. A team that was once 1,000 strong is now a shadow of its grand ambition.

Back in 2014, everything seemed primed for the perfect venture. As The New York Times reports,

Apple originally began its car project — known internally as Titan and T172 — in 2014. At the time, Apple planned to build a single vehicle that would upend society and industry, in what would be the automotive version of the iPhone.

It was the next big thing. At least it should have been…

Apple seemed like the perfect company for the role. They just needed to bring their trademark design and tech excellence to a box on wheels. Simple right?

They brought together software developers, automotive engineers, rocket scientists and their crack design team to create a modern marvel. And they definitely came up with some crazy and amazing ideas.

But, they quickly figured out that building a ‘new’ car isn’t as simple as it seems. And that is when their plans began to unravel.

It’s not rocket science

After unsuccessfully trying to build a car from scratch, Apple decided they needed help. They began searching for a manufacturing partner that could build their cars. But, Apple still wanted control over the design.

This resulted in a project known as ‘Baja’, which involved two Lexus vehicles. The cars were purchased then fitted with Apple sensors. And today there are close to 55 of these Lexus SUV’s running tests on public roads.

Except, Apple has never partnered with Lexus. Instead, Apple had its sights set on another potential partner: BMW.

It seemed like a match made in heaven. Two companies that produce accessible, but high-end products. Plus, both companies hold design in a high regard.

They held discussions for ‘years’ according to Apple insiders. Talks that constantly went back and forth. And despite their likenesses, they just couldn’t work out a deal.

In the end their similarities appeared to be their undoing. Both companies wanted to ‘own’ the customer experience. And so they split, unable to compromise. 

Apple hadn’t put all their eggs in one basket though, they had also turned their attention to Mercedes-Benz. The other premier German car maker.

Again, talks were tough, lasting over a year. Just like BMW, their interests seemed perfectly aligned, and just like BMW, it was their similarities that undid them.

These are just two of the names in Apple’s little black book today. A list of would-be partners including Nissan, McLaren and BYD Auto.

It seemed as if Apple was doomed to fly alone. Then at last they finally got their breakthrough, a deal with Volkswagen. It wasn’t their first choice but they had done it.

They were ready to hit the road. Just four years later than the competition…

Fashionably late

What you need to understand is that this partnership could lead to anything. All we know right now is that Apple will be using VW T6 vans to make autonomous shuttles for employees.

That means this project could involve just that. A project that helps Apple workers get around and nothing else.

Personally, I wouldn’t blame them if that’s all there is to this story. They’re way behind the competition and they’ve had so many misfires that they may not want to commit more resources to the endeavour.

At this point they could just decide that the driverless vehicle market isn’t for them.

But, I don’t think that’s what they will do.

The fact of the matter is that Apple could still catch up. In fact, it reminds me a little of the company’s past…

In 1997 Apple was on the verge of bankruptcy. It was also the year that they brought back the divisive Steve Jobs.

At the time Jobs was a bit of a maverick, but the company decided to place their trust in him. And for many, he did the unthinkable. He struck a deal with the enemy — Microsoft. A lifeline deal that gave Apple US$150 million to turn their fortunes around.

And as we know now, boy did they ever turn things around. First it was the iMac, then the iBook, then the iPod, iTunes, iPhone…

The company is only around today because of Jobs, and his bold vision for consumer electronics.

Since Jobs’ passing and Tim Cook’s ascension to the top job, not much has changed. The company still does exactly what it did best under Jobs — make great looking and functional devices.

Apple is a company that lives and dies by its ‘aesthetic’. Even if they didn’t have the trademark Apple logo on all of their products, most people would be able to spot them. They’re truly a paragon of design.

And I believe they will try to bring that same ethos to the driverless car. Clearly they’ve tried to in the past, and I believe they will again.

It’s going to be challenging, especially given the competition’s head start. But, if they ever manage to get that iconic Apple logo onto a car bumper then I believe they will have already won.

It’s simply a matter of whether they’re willing to make it happen.

Regards,

Ryan Clarkson-Ledward,
Editor, Tech Insider

Tech Extra

Europe has officially laid down the law. The General Data Protection Regulation (GDPR) framework was launched last Friday and it is not pulling any punches. On the first day, Facebook and Google were both hit hard. The lawsuits were flowing thick and fast and now the two companies are facing a combined US$8.8 billion worth of fines.

Elon Musk may still be pining for a colony on Mars, but Jeff Bezos has more modest ambitions. The Amazon co-founder’s space venture Blue Origin is apparently interested in colonising the Moon. It’s certainly a lot closer than Mars, but it will still be a massive undertaking to make it happen.

Despite all of Tesla’s ongoing production woes, the Model 3 continues to shine. In fact, the car has set a new ‘hypermiling’ (driving a car as far as possible without refuelling/recharging) record. Managing to travel 606 miles (975 kilometres) on a single charge.


Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

To find out more about the publications Ryan works on and how you can subscribe, please click on the corresponding link here:


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