
How Apple Scaled Back Its Titanic Plan to Take on Detroit - _davidturnbull
https://www.bloomberg.com/news/articles/2016-10-17/how-apple-scaled-back-its-titanic-plan-to-take-on-detroit
======
Animats
Did Apple ever really have a "titanic plan to take on Detroit?" There's no
indication that they even built a prototype chassis. This may just be mis-
reporting of autonomous vehicle R&D.

Apple's strength in automatic driving should be the development of better, and
better-looking, sensors. Apple does electronics and small hardware well. Those
Velodyne LIDAR things are rotating kludges, look awful, and cost way too much.
There are better approaches known. (I'm a fan of the Advanced Scientific
Concepts LIDAR, which works great but costs too much because it's made by PhD
physicists in Santa Barbara.) Existing automotive radars are dumber than they
could be. Those are straightforward engineering problems that Apple could
solve.

Building cars is a low-margin business. If Apple became a successful car
company, their stock would decline.

~~~
bronson
> Building cars is a low-margin business.

So is building phones.

~~~
Animats
Not for Apple.[1] Margins on iPhones are huge.

[1] [http://fortune.com/2016/04/04/apple-iphone-
se-3/](http://fortune.com/2016/04/04/apple-iphone-se-3/)

~~~
ArkyBeagle
But the cost of phones is a couple of zeros ( at least 1.x zeros ) off the
cost of cars. What keeps people from buying more expensive cars is how much (
and what sort of ) financing they can qualify for.

~~~
OscarCunningham
So Apple needs to start a bank as well as a car company!

------
rmason
Speaking from Michigan and not Silicon Valley I've got to wonder which auto
manufacturer would buy Apple's software?

All the major manufacturers have announced programs for self-driving cars
except Fiat/Chrysler. They mention Ford which has stated they will be in
production by 2019.

Now I would suppose if Ford, GM, Mercedes, Toyoto or any of the Chinese car
makers were to have their software fail Apple might be an awfully nice
fallback.

FYI Ford learned massively from its problems with Microsoft's Sync technology.
All the engineers knew it would be a complete disaster but that news wasn't
passed up to the execs. Now engineers have been brought into the process.

[http://www.detroitnews.com/story/business/autos/ford/2016/10...](http://www.detroitnews.com/story/business/autos/ford/2016/10/06/myford-
touch-system-suit/91704242/)

~~~
Matthias247
Most automotive companies don't do software themselves and even don't have the
skills to do it but buy it from a supplier or contractor according to their
specification. At least that's the case for the infotainment domain I'm
working with. So I guess those plans and concepts for self-driving technology
also heavily utilize 3rd party software from suppliers who have specialized in
that. In this case Apple would just replace the other supplier. Of course with
the risk that the feature set and behavior of the software does not match what
the OEM expects.

------
rdlecler1
Making cars, while a hard problem, isn't as hard as making cars self driving.
Seems sensible to master the second first.

~~~
RubenSandwich
Agreed. Let's pretend that Apple released a car two years from now, that in
true Apple fashion is highly polished, but does not include some sort of self
driving functionality while their competitors do. I doubt in that scenario
that Apple's car efforts would fare well as self driving is going to change
the way we think about cars.

~~~
sangnoir
They could license Google's driving tech: Google is open to partnership. The
first iPhone proved that Apple hardware and Google software can be a winning
combination.

------
djyaz1200
Apple's move into auto seems to have been about recruiting. For a brief time
some of the most talented young engineers were favoring Tesla over Apple
because the mission was more interesting.

~~~
duaneb
Has this stopped?

~~~
deelowe
Yes. People are starting to realize how brutal it can be working for tesla.

------
stcredzero
_By the end of 2015, the project was blighted by internal strife. Managers
battled about the project’s direction, according to people with knowledge of
the operations. “It was an incredible failure of leadership,” one of the
people said._

This is in stark contrast to the compartmentalization of new projects that
Apple under Steve Jobs was able to accomplish with the development of the
Macintosh and the iPhone. Is this evidence that Apple is unable to do that
now?

~~~
oddevan
Maybe. Could also be that a car project is much more complex with more
opportunities for "battl[ing] about the project's direction." One manager
wants to emphasize a modern cockpit, one an electric drivetrain, and one full
autonomy. And a leader that understands consumer electronics well enough to
navigate "an iPod, a phone, and an internet communicator" might not understand
cars enough to navigate a car project the same way.

Thus, we get Mansfield in to say "no, we're focusing on this first; we don't
have a car without it." This would be like Jobs (or Forstall) coming in to say
"we're focusing on a multi-touch OS X first; we don't have a phone without
it."

So, to answer your question: maybe. :)

------
ArkyBeagle
The sheer complexity of establishing a car brand is not what it used to be,
but it's still something on the order of nation-state hard - I have a source
who used to work an Hyundai back before the S. Korean economy crashed in the
Asian Tigers mess ( he then emigrated to the US ) and the car-making
experience in Korea was akin to war by his lights.

Since he was also in the Korean Marines, I trust his judgement.

------
hodder
As an Apple shareholder, I am thankful Apple has shelved plans to dump
billions into a cyclical, low margin, low return business.

~~~
coldtea
Low margin? They wouldn't be making Yugos. Like with their laptops and such,
they'd be targeting the higher end of the market.

Cyclical is also great -- that's exactly what the laptop and especially the
phone market are.

~~~
intoverflow2
Apple products haven't been the high end of the market for a long time,
they're mass produced, mass consumed, purely disposable tech.

~~~
j2bax
Do tell us what the high end of the laptop and mobile device market looks like
and what products occupy it.

~~~
intoverflow2
My current Macbook Pro cost me about £1100. No part of it is user serviceable
so it's disposable.

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.

~~~
coldtea
> _My current Macbook Pro cost me about £1100. No part of it is user
> serviceable so it 's disposable._

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).

------
jamesfmilne
Good!

Maybe they can get back to making some new laptops, and some desktops (Mac
Pro, Mac Mini), that don't suck!

We shall see what October brings.

~~~
mwfunk
Blame the stock market. Once a company has a solid product line in one area
that doesn't suck, every publicly traded company is under tremendous pressure
to move into new markets rather than iterating on previous successes, often to
the detriment of preexisting products. The stock market for tech companies
rewards growth and just about nothing but growth (and punishes a lack of
growth), Amazon being a perfect example. In a way, Amazon's strategy since its
inception could be characterized as playing to investor expectations of growth
more than running a business.

Also, if you look at all the big tech companies (American ones at least) over
the past 30 years, there's a recurring pattern of a company becoming
preposterously successful, then spending a decade or more reaping the benefits
of that success while repeatedly throwing money at the wall for different new
projects to try and find something else that sticks. Meanwhile core businesses
can lose focus and wither on the vine while huge piles of money and
engineering talent get wasted on things that either go nowhere, or break even
and fade away years later.

Until the last few years, post-1995 Microsoft was a perfect example of this.
If there was a product category that was significant enough to be the basis of
some other company's entire business (dialup Internet access or search engines
or personal finance software, for example), they would spend many years and
billions of dollars creating a Microsoft version of that product, based on the
idea that they could siphon growth from a known and already-proven segment of
the industry. I don't think this was due to a lack of vision or incompetence,
I think that that just appeared to be the most effective way to meet
investors' demand for growth and new revenue sources.

Google is in a similar bind. Think of how long it's been since they have
effectively attained a search monopoly. They created a perpetual money machine
(ads) that to this day provide the vast majority of their revenues. For 15+
years they have been expending titanic resources on trying to find a way to
transition from a company that gets >= 90% of its revenue from ads, to a much
larger company with many more revenue streams. They've had some great
successes, but they have yet to break out of the trap of fundamentally being a
company driven by ad revenue.

~~~
forgetsusername
> _Blame the stock market. Once a company has a solid product line in one area
> that doesn 't suck, every publicly traded company is under tremendous
> pressure to move into new markets rather than iterating on previous
> successes, often to the detriment of preexisting products._

First of all, I'm not sure there's any evidence to support your claim that
public companies are under pressure to diversify over iterate.

Second, public companies have _chosen_ to go public. It doesn't just happen.
So, blame _them_.

> _lso, if you look at all the big tech companies (American ones at least)
> over the past 30 years, there 's a recurring pattern of a company becoming
> preposterously successful, then spending a decade or more reaping the
> benefits of that success while repeatedly throwing money at the wall for
> different new projects to try and find something else that sticks._

In other words, luck is a substantial portion of success.

------
adamio
I think Detroit and other manufactures are fearful of automation. If you ask
them what the future looks like its driving assist technology. Fully automated
driving kills the emotional experience that is used to sell cars.

~~~
qeternity
The bigger issue is that autonomous cars make it extremely easy to massively
boost utilization: driver assist still means your car sits at home, work, etc
when not in use. This in turn means more cars are required by society.
Autonomous cars can achieve much higher levels of utilization.

This is the real reason legacy car makers don't want fully autonomous
vehicles.

~~~
smelterdemon
A car being driven all day (especially in cities, where the demand will be
highest) is going to wear cars down incredibly fast. Manufacturers won't see
that big of a hit if fewer people buy cars, if those people will replace it
every year or two.

~~~
Zigurd
If it is profitable, it will be financeable.

------
swombat
Apple could just buy Tesla instead, it's only $20b or so. Pocket change.

~~~
_ph_
Teslas Market cap is over $28B, and to buy it, Apple would have to pay a large
premium on top of that.

------
denzil_correa
It will be interesting if Tesla's "unexpected announcement" is related to
this!

------
willvarfar
So Apple change to the approach that Google have been taking all along?

------
ChemicalWarfare
The dilemma here is this - make your own car or partner with a manufacturer.

Partnership means smaller profit margin in a very tight market. The Big 3 for
example barely make any money when selling cars (as opposed to pickups) these
days, so to get a reasonable margin the price would need to be jacked up...

Making your own - the barrier to entry in that industry is VERY high which the
article kind of alludes to talking about how it's hard to find suppliers
willing to sell small batches of parts etc. There's a reason there aren't that
many auto manufacturers around, and the ones that are out there aren't exactly
the kinds of revenue generating machines as apples and googles of the world.

------
ynniv
It's only when Steve isn't at the helm that we hear about internal projects
that have no direction. It was good while it lasted.

~~~
applecarcont
The interesting question is what has Jony Ive been up to? The Apple Watch
needed a design reboot (and the Edition is practically dead) and now
supposedly so does the Apple Car (at his behest[1]). A third iteration of the
iPhone design and no new Macs designs (yet). He/Cook seized power from
Forstall but there's been little outright success/breakthroughs to show since
then

[1] [http://appleinsider.com/articles/16/01/25/apples-project-
tit...](http://appleinsider.com/articles/16/01/25/apples-project-titan-at-
crossroads-team-in-hiring-freeze-source-says)

~~~
AppleCarThrowAw
From what I've heard (and take this with a pyramid of salt because it's an
anonomous internet comment) Jony Ive is essentially on a sabbatical and hasn't
been seen on Apple's campus since before Summer. If I had to guess, he wants
to leave Apple, but is staying on either until some unspecified product reveal
or because he has to wait-out stock options or something.

~~~
applecarcont
He wasn't at the Fall iPhone event iirc...

~~~
ibero
he was. you can see him chatting with Stephen Fry in the background of this
product shot.

[http://imgur.com/a/f8lt9](http://imgur.com/a/f8lt9)

------
PhoenixWright
A couple of takeaways from this article:

Apple has a problem with leadership. When managers aren't buying into a
vision, mostly because it's murky at best, that is a big problem.

SV hubris believing you can go into any industry and disrupt the incompetent
incumbents is laughable. FB found this out with phones and it sounds like
Apple and Google are now figuring it out with cars.

The Netflix idea works here too: Apple and Google have to become more like GM
and BMW before GM and BMW become more like Apple and Google. GM will have an
awesome electric with a better range than a Tesla Model 3 this year! If they
ever figure out aesthetics and software they will win.

Finally this article highlights what Musk has done at Tesla. They are the
closest SV company to actually figure out manufacturing. It still remains to
be seen but if they do it Tesla will be the market leader in cars.

~~~
coldtea
> _Apple has a problem with leadership. When managers aren 't buying into a
> vision, mostly because it's murky at best, that is a big problem._

That's the inverse of what would actually be a big problem: managers BUYING
into a "murky at best" vision.

> _SV hubris believing you can go into any industry and disrupt the
> incompetent incumbents is laughable._

Isn't that what people said about music players and then about phones? Heck,
they are already the #2 watchmaker in the world in profits too...

> _FB found this out with phones and it sounds like Apple and Google are now
> figuring it out with cars._

Neither Google nor Apple have ever released in car. If anything, their
setbacks are related to the advanced self-driving stuff they aspire to make,
not some issue competing with existing car tech or distribution or anything.

Besides, tons of companies have entered the car market and gave established
car companies a run for their money already. The Japanese obliterated the
established Detroit order for example, and new Chinese cars are as good as
anybody's for general use. Tesla also come out of nowhere and cornered a niche
of the market. Heck, traditional car companies are so complacent and
derivative that if anything it's the inverse of hubris to believe one can do
better.

Nowadays, when most of the manufacturing the expertise is in assembly lines in
China and the like, creating a new car to compete with existing models is
laughably easy -- especially if you have $500 billion lying around.

~~~
skybrian
You're comparing entirely different things.

Chinese cars are barely being imported in the U.S. (Three models so far). It
has taken many years to get this far, and will take longer for them to have a
similar reputation as, say, Korea.

Tesla has done well in the luxury car market, but they've been late and had
quality issues. The Tesla 3 is not out yet and there is still a big risk
they'll fail.

So, "laughably easy" is a major exaggeration. It's possible to launch a new
car company but nobody finds it easy.

~~~
coldtea
> _Chinese cars are barely being imported in the U.S. (Three models so far).
> It has taken many years to get this far, and will take longer for them to
> have a similar reputation as, say, Korea._

Yes, but the US is a mere 5% of the global population and about 20% of global
GDP (down from decades ago). You can be a huge player and not even play in the
US market. The Chinese are already selling their cars in many global markets.

> _Tesla has done well in the luxury car market, but they 've been late and
> had quality issues. The Tesla 3 is not out yet and there is still a big risk
> they'll fail._

Tesla doesn't have Apple's half a trillion in the bank though. And which
established car maker didn't have quality issues at various times (and still
today)?

