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Apple R&D Reveals a Pivot Is Coming (aboveavalon.com)
280 points by rstocker99 on May 12, 2016 | hide | past | web | favorite | 263 comments

According to this chart, Apple spent $6B in 2014 and is projected to spend just over $10B in 2016.

For comparison, in 2014 Volkswagen spent $13.5B, Samsung spent $13.4B, and Microsoft spent $10.4B. [1]

Apple has, historically, not been a big spender when it comes to research, tending to favor short-term, tightly focused research over long-term, curiosity driven research. Over the last few years their research budget has ballooned, but only in 2017 (projected) are they going to reach levels that the above companies were spending at in 2014. Has Apple's research focus changed?

Perhaps we're not seeing some monumental project in the works, although an autonomous car would be pretty big. Perhaps what we're seeing is Apple deciding to loosen the purse strings and, instead of stashing away obscene piles of money, they've loosened their research focus and now have a lot of people doing whatever the hell they want, much like MS, just because something useful might someday emerge.

Let's face it, Apple has so much money they could probably launch their own space program if they really wanted to.


Just imagine how much fun Ive would have designing an orbital space station.

What's interesting is how aggressively they're moving into the car space if that's what's happening. The phone people had no idea, they got blindsided thinking Apple wouldn't have the guts, would never commit the money.

I think the phone industry just didn't think it possible that real ground breaking innovation in their industry was at all possible. They imagined a phone must have a physical keyboard, couldn't run a decent web browser and Microsoft was already selling the best mobile OS it was possible to make.

It wasn't that they doubted Apple's commitment, they just didn't have the imagination. To be fair to them, Apple timed things perfectly. Even a year earlier SOCs weren't powerful enough to run something like the early iOS. They did in software what they did in hardware much later with the 64-bit transition. They pulled off a superbly executed technological coup just at the point when it became possible to do it at all, beating everyone else to the market by years.

If they're planning to do the same with cars, we have interesting times ahead.

Cars are a terrible industry to get into. Building cars is massively capital and plant intensive, heavily dependent on supply chain logistics, and the market is already extremely competitive. The entire industry is well on its way to switching to electric and/or self-driving.

Selling cars requires a huge dealer network rollout with huge up-front costs for training and spares. Doing it DIY would be insanely expensive, and persuading existing dealers to sign up for a franchise is going to be a tough sell considering Apple's historical treatment of resellers.

Apple under Jobs certainly had the imagination to make a good phone - but the phone industry was always fairly crappy, with very clever internals but mediocre UX.

I don't see much reason to think that Apple under Cook has the imagination to break open the car industry in the same way. The possible competitive differentials are much smaller, and Cook isn't the most creative CEO Apple has had.

If the USP is that Car is electric, looks pretty, and may eventually have some self-driving features - that won't be anywhere close to enough. It's going to need to have some wow to get taken seriously, and even if Jobs were alive and in charge there's limited wow space available.

Of course if it flies and/or teleports, that would be something else.

The car industry is about to go through two completely independent revolutions simultaneously. The move to electric power trains, and self-driving. This is the perfect time for an outsider to enter the market because the incumbents have no advantage in these fields relative to a newcomer. In fact as fundamentally hardware companies they have the same issues with figuring out how to develop first class software that the phone companies did.

Apple has huge expertise in both these areas. Not electric motors sure, but electronics design and manufacturing in general and specifically battery technology on the power train side and software on the self-driving side.

But the key to their potential is software. I think the main reason for Apple's success is their super high quality OS core, code libraries and software development tool chain combined with one of the greatest software engineering culture and talent pools on the planet. They have exploited this advantage ruthlessly ever since the 90s. It underlies the success of all their best products - even the iPod if you bear in mind that iTunes was built on these core advantages. Yes iTunes is a mess now, but it made the success of the iPod possible.

The key to success in the coming car revolution will be software. Computers will control and orchestrate every aspect of the internal operation of the vehicle, and that's before you even get to external operations with self-driving. Only Microsoft has the depth of software development competence and the technology platform resources to compete with Apple in this area, but for whatever reason they just don't seem to be able to get their act together when it comes to engineering complete product stacks rather than individual technologies.

the incumbents have no advantage in these fields relative to a newcomer.

Except their distribution network, reputation/brand value, and marketing reach. And their IP in the non-powertrain components. And their manufacturing knowledge which makes the cars more reliable.

And they can fund the move to electric (or whatever) using existing profits. Whereas any newcomer has to raise money and spend time doing all of these things.

While this is probably the best time for someone to attempt to do those things.. the incumbents definitely aren't starting from scratch.. they still have advantages.

Except Apple would already have reputation/brand value as well. Perhaps even more than, say Ford, since they are known as a technology company, and the cars of the future are electric and self-driving.

You are absolutely correct, it will be a tough challenge, but if anyone is ever going to it, it's now.

>>specifically battery technology on the power train side and software on the self-driving side.

Neither actually.

Battery technology for cars is a very different area of work compared to making battery for phones.

And writing self driving car algorithms isn't exactly the same designing UI on the FreeBSD OS.

> Cars are a terrible industry to get into. Building cars is massively capital and plant intensive, heavily dependent on supply chain logistics, and the market is already extremely competitive.

That sounds perfect for Apple, though—they've got tons of capital, excellent at supply chain logistics, and used to thriving in very competitive markets.

Many car startups have been ground to pieces due to it costing more than their investors ever imagined - Tucker, Bricklin, Delorean, etc.

How many of those car startups had the largest market cap in the world before they started making cars?

Pretty much everything you just said could have car replaced by the word phone, and you'd sound just like MS BB or Nokia in 2007. "Clever internals but crappy ux" describes pretty much every car ever. Regarding dealerships, ever heard of Tesla? It's definitely possible to diy, and Tesla has nothing compared to Apple's resources.

>Regarding dealerships, ever heard of Tesla?

Tesla is trying this model, but I don't know whether anyone can makes claims as to its success yet. Right now they're pretty low volume and are losing lots of money. Maybe the no dealer model scales, maybe it doesn't.

Tesla has 325,000+ pre-orders for the model 3 a 35,000$ car.

For comparison Acura only sold 167,843 units in 2014 and they have some models for ~10,000$ less.* And they have an extensive dealer network. Honda their parent brand sells well under 2 million cars a year and is a major automaker.

*List price on a new ILX is 27,990 but this assumes people are paying sticker price.

At Tesla's current projections, it will take close to 3 years to fill those pre-orders. That's been pretty well understood for a while, so perhaps that had something to do with the number of deposits placed.

Besides, those pre-orders are refundable $1K deposits, not someone who has put down $30K right now for delivery 2 years hence.

Acura is the luxury mark of Honda; it doesn't need to operate at a scale that would make it viable as an independent business.

Tesla also doesn't have quite the clout that Apple does. Apple could literally bully their way in to the self-sales car market...

They'd still be facing the same dealer and local legislative roadblocks that Tesla has been triggering states to create or enforce since they started and they can't just bully through that. It will require lobbying, time and possibly new legislation, none of which is fast.

Having Tesla front-run a lot of this stuff is pretty smart if they are intending to go that route though.

Imagine the Apple talking point. "We want to sell you this car but government protectionist regulation won't allow us". And they do that in every state, starting with the most wealthy, most liberal states and move slowly to the less affluent states. Apple has a lot more die-hard fans than Tesla. Just compare the number of people who have Apple products compared to Teslas. y

> "Clever internals but crappy ux" describes pretty much every car ever.

My '69 Chevelle disagrees.

So the best company to get into the car space, if any were to try it:

* would have lots of spare capital * would have experience building/running plants * would know how to manage a long supply chain extremely well * carries huge cachet, allowing them to stand out in a competitive market. * Is not afraid to exclusively target the high-margin side of the market. * Knows a thing or two about entire sectors undergoing a revolution. * Has lots of experience building retail networks.

Well, what do you know, that sort of looks like Apple.

As for "not enough wow space" being available - that's what people thought about the phone industry as well.

Would I bet on Apple being a success? Probably not. But if anybody were to take on that market, Apple's one of the more well-placed contenders.

> Cars are a terrible industry to get into.

Copypasta from a comment I made on reddit about Tesla, many of these points also apply to Apple, especially the battery knowledge...

"You could argue that Tesla is in the battery pack business, and only incidentally in the car business. When electric cars ultimately take off, not only will their vehicles be perfectly positioned, they can sell the know-how to the slow moving incumbent car makers who are struggling to play catch up. They already have a likely unsurmountable lead in battery pack knowledge (things like software to control charging and discharging certain batteries to extend the life of the pack, compartmentalised batteries to reduce fire risk and crucial battery cooling systems), and their fleet gathers more data daily, while the rest of the car industry makes half-hearted hybrids, or technologically inferior, range-limited cars."

"They already own the high end, and once the Gigafactory pumps out batteries in full force, they'll own the low end, at least initially. Not to mention, another industry, solar PV, is growing and growing but badly needs storage tech to reach full potential. Guess who has a market-ready, solar PV-complimenting battery pack, and will soon have an enormous factory churning out battery packs? They are going to sell these packs to the world for decades."

> Building cars is massively capital and plant intensive

Apple has buckets of cash, they need something huge to move the needle and to show the world they're still innovative, and EVs are likely it.

> heavily dependent on supply chain logistics

Tim Cook's specialty. Apple has lots of experience in dealing with a complex supply chain dealing with huge volume.

> and the market is already extremely competitive.

I would argue the market for EVs/autonomous vehicles is quite different from ICE cars. For one thing, existing car makers are only dipping their toes in the EV market, instead of going toe to toe with Tesla directly (e.g. BMW has the i3 and i8, but no high-volume EV version of the 5 series to take on the Model S directly). So it's going to be a landgrab for EV market share. Existing car markers are heavily invested in extremely refined diesel and petrol engines and the associated paraphernalia like turbos, they probably wish EVs would just go away. Also, they rely on service and repairs for a significant chunk of revenue. EVs are mechanically simpler, and will require much less maintenance. So the traditional business model will be disrupted, again something incumbents don't want.

If version II or III of the Apple car offers autonomy, then we can imagine a city car which is designed to be a taxi, which means you only ever rent it. Again, this is an alien concept to existing car makers, who rely on dealer networks selling to end customers. So this would also favour new players not bound by older business practices.

In short, with Apple's battery expertise, huge cash reserves, supply chain experience and the relatively open market for EVs/autonomous vehicles, I'd say now is a great time for Apple to get into the market. They are also betting on the trend of lithium ion batteries getting better and cheaper every year[1]

[1] http://rameznaam.com/2015/10/14/how-cheap-can-energy-storage...

I don't think anyone didn't think it was possible. Back in '99 I was working on a tablet w/built in phone, and Ericsson had their ScreenPhone around the same time. Both where "tethered" to a base station at home (ours used a custom extension to DECT), I believe, but the intent was always to add proper mobile support.

In fact, when I was first sold on the concept, the guy who started the company talked me through how he imagined a "home base station" that he'd use while there, and how he wanted the device to smoothly hand off to the mobile network if he took it out of the house.

The choice of a tablet over a smaller phone was about a convenient screen size, coupled with the initial devices being tied to the home anyway. But "everyone" around us had PalmPilots, and "everyone" expected PDAs and phones to merge eventually (and they did, sort of, but to see Palm giving in and going with a keyboard was a disappointment).

The challenge was that around the time the iPhone launched, people did not believe the market was there yet, nor that the hardware was ready, largely because "everyone else" had a go too early, failed, and essentially shelved the idea for the next decade as something that was way too early.

What Apple got exactly right and everyone else messed up was the timing.

E.g. we were shopping around our tablet prototype in '99 and 2000 based on a 100MHz or thereabouts 486 clone w/32MB RAM running Opera and a custom UI w/resistive touch. It was a fantastic device at the time, but the combination of not yet being able to provide a proper GSM enabled device, too short battery life, low RAM, slow, horrible resistive touch, and it was a device that would have appealed mostly to a small niche of geeks, but to work financally it needed to be a mass market device.

With the available hardware in 2006 we'd have a great starting point if we had started around then. But when we started in '99 the discussion was never "can these hardware constraints work in a way that can appeal to a mass market?" but "this is the price we need for it to work as a mass market device, and here are the tech specs that can fit within that price" and then we tried to make something that could be mass market from that... way too early.

To be clear: I'm not trying to downplay what Apple did. They made a product that appealed to a vastly larger market because they understood. But it wasn't because nobody else believed in touch enabled smart phones or tablets, but because they approached it from a usability and marketability perspective first, while everyone else were thinking like geeks willing to sacrifice usability for a "imagine if.." ideal of devices that were ultimately quite unfulfilling.

When the iPhone came out, a lot of us were pretty much "so what?" because we still did not understand the significance of that wait. We'd seen full screen touch, and we'd seen PDA's married with touch, and we'd seen larger tablet type devices (basically laptops with pivot screens mostly), and the iPhone to many people who'd been through the first round of hype around these type of devices just seemed like more of the same at first.

Until it became clear just how much of a difference the hardware advances and Apple's design had made to the whole thing.

We absolutely agree about their timing, and I think it's important not to underestimate how important it is to understand when the time is right and not get caught up in constraints that applied last year because that's when you started thinking about it.

It's very possible that we'll see something similar with cars. A lot of people have worked on driverless cars for a very long time, and the question is how much of the current designs are based on preconceptions that seemed to make sense a few years back, but where things can be done better today.

> The challenge was that around the time the iPhone launched, people did not believe the market was there yet, nor that the hardware was ready, largely because "everyone else" had a go too early, failed, and essentially shelved the idea for the next decade as something that was way too early.

> What Apple got exactly right and everyone else messed up was the timing.

My [perhaps mistaken] understanding is that Apple had been working on it for a while; but rather than try before the hardware was ready, and shelve the idea, they kept working on the idea until the hardware caught up. They had a solid idea of how it should work, and waited until it could, rather than have it just be a thing they tried and gave up on.

Yes, that's the story I've heard too, and I can absolutely believe that. While the rest of us threw stuff at the wall and got frustrated when it didn't stick, they had a benchmark to aim for.

Here's an early article on our attempt [1], and you can see how far the specs were from a tolerable tablet or from being able to shrink the it down to a phone form factor (the original design actually called for a very small dumb handset for the tablet that magnetically attached to the speaker magnets in the tablet, and induction charged; amusingly Sony finally relased a handset for one of their phablets a couple of years ago - we were over a decade ahead of our time ;) )

[1] http://www.zdnet.com/article/freepad-norways-alternative-to-...

> ... while everyone else were thinking like geeks willing to sacrifice usability for a "imagine if.." ideal of devices that were ultimately quite unfulfilling.

As someone who was there on the consumer side, with an HTC Wizard bought in 2006 -- the year before the iPhone was released -- I completely agree with this. I did make the sacrifice of usability, because having the Internet accessible everywhere on a touchscreen was awesome. I didn't understand the iPhone either. From the perspective of the hackfest that was Windows Mobile 5/6, I saw a very limited and locked down device.

[0] https://en.wikipedia.org/wiki/HTC_Wizard

Also had WinMo phones prior to the iPhone (and after one Palm Treo). I definitely appreciated the things the first iPhone(s) got right because they were things that always seemed like they should work better on my WinMo devices but were always somehow screwed up (on-chip GPU without the necessary software to use it for graphic acceleration was a big one).

At the same time, it was still a choice between finally getting a more responsive interface or giving up front/rear cameras, GPS, 3G cell radio, third party apps, multitasking, copy/paste, an actual file system I could browse, streaming audio (anyone remember Shoutcast stations? They're still around!), streaming video, hell...even changing my wallpaper or ringtone to something that didn't come with the phone.

I totally get why Apple succeeded and in many ways they deserved to: they didn't try to out-WinMo WinMo. They looked at the things that Microsoft, RIM, Palm, and the rest weren't doing and targeted those things. They saw who wasn't interested in having a miniature version of a laptop but loved simple and responsive electronics (thousands and thousands of regular consumers). That business savvy put them in a really strong position that continues to this day.

Granted it didn't help that you needed to switch carriers to AT&T and spend even more than the cost of existing smart phones to get one but clearly they improved that along with all the rest.

I'm still far from an Apple fanboy and I find using iOS on my iPad to be frustrating at least once every week or two but business/market success isn't about pleasing me. It's about pleasing enough people to make a good profit and clearly they've got that part down.

>>They imagined a phone must have a physical keyboard

I get that I'm not representative of the market, but my pattern of using a smartphone involves a lot of email. I don't see that going away, as a lot of my communication involves people in other timezones.

I was way more productive in this when I had a blackberry, but, of course, it did suffer horribly when using the web.

It won't change, but I wish there was enough demand to keep up competition for phones with keyboards such that there was a decent physical keyboard android.

I've been a lifetime BlackBerry user (from waterloo) and just got the priv. it's a really great device but having the passport on android would be a gamechanger imo

Yes...that passport looks great. Android on a BB Passport would fit my definition of a decent keyboard android phone. The wide format looks like a more natural layout.

"Just imagine how much fun Ive would have designing an orbital space station."

Unpossible. Space stations need to be displayed against a black background (albeit one punctuated with twinkling dots of light). Ive doesn't do black background.

> Space stations need to be displayed against a black background

Depends on your perspective


Not nearly as much fun as he'd have talking about how he designed it.

Not nearly as much fun as YouTubers would have remaking his promo videos :)

You know the word chamfer would factor in somehow. :)

I can't imagine how they could keep a car project secret. Too many people would have to know, and you can't develop a car in a locked room.

To a first approximation, all car companies are extinct.

"Has Apple's research focus changed?"

If it has, honestly, it's because they don't know where to put their money or they've put it all in one thing.

You more or less say the same thing.

"hey've loosened their research focus and now have a lot of people doing whatever the hell they want, much like MS, just because something useful might someday emerge." (This is we have no idea what to spend our money on).

"Perhaps we're not seeing some monumental project in the works, although an autonomous car would be pretty big." (This is we are betting big on this one thing we think has huge potential).

The other option apple has not been fond of is large investments in a small set of things, each of which may be a potential big future.

The first would be quite concerning. If you have companies with large research budgets, and they have no idea what they should spend money on in order to make the next big thing happen, that does not bode well.

> The first would be quite concerning. If you have companies with large research budgets, and they have no idea what they should spend money on in order to make the next big thing happen, that does not bode well.

Why doesn't it bode well? The transistor, the laser, Unix, information theory, and a giant number of other things which form the underpinnings of modern technology came out of Bell Labs, which is the epitome of a place with a large research budget and no specific "next thing to monetize" that the spending was directed towards.

From what I understand of Apple's culture, it's unlikely that it will ever transform towards this, but that's a separate point.

"Why doesn't it bode well?"

For investors, i meant.

" The transistor, the laser, Unix, information theory, and a giant number of other things which form the underpinnings of modern technology came out of Bell Labs, which is the epitome of a place with a large research budget and no specific "next thing to monetize" that the spending was directed towards."

That was research for research's sake. It was, explicitly, not directed at ever making money, but instead, advancing the state of the art. I don't think any of the companies mentioned, or Apple, are doing it for that reason, and for them it does not bode well, because they are hoping to make money.

I could also point out that Bell Labs made any money at all through licensing those inventions. That is also not Apple's business model :)

> "That was research for research's sake. It was, explicitly, not directed at ever making money, but instead, advancing the state of the art."

Advancing the state of the art can lead to making more money, the research results can be monetised, whether they are or not all depends on the intent of those leading the particular institution.

This is a naive way to see things. Creating products and advancing technology are two different things and very often the one do not lead to the other. To create that business model based on technologies breakthroughs you need to have "the dare to fail" mindset and be willing to launch multiple fails before succeeding with one product, that's not Apple way of doing things there business model and reputation is based on creating "perfect" products well integrated which oppose to the technology edge and try and fail way of doing things

If the Apple pattern holds then they will be 3rd or 4th to the mainstream electric car market but it will be marketed as "above and beyond" all products that we have seen to that point.

It's not naive, you just can't predict the ROI.

What I was calling naive is the fact of seeing innovation and creating products as the same thing, it's not.

In that case, you misread what I said. I stated it was possible to monetise the research results. In other words, you can take what you find in the lab and find ways to sell this knowledge. It doesn't matter whether that's through licensing or physical products.

I fully understood what you said, but my point is that usually apple take a known idea or product and try to integrate it in a product with a new level of usability and some new original features but they never create new product based on a complete new technology in a new market. The innovation in Apple had been always incremental in opposition to the example you gave (Bell Lab) and I don't see them changing that.

Apple will probably try to get into car market but in an incremental way, probably by teaming up with some car constructor and doing some part of the car (AI, media...). it make much sense then waking up one morning and revealing a brand new car in a brand new market for them and try to sell it (with all the costs and the risks it comes with).

> "in opposition to the example you gave (Bell Lab)"

I never mentioned Bell Labs once.

As for Apple's record on innovation, I would argue that the Newton could be seen as an innovative product that was a pioneer in its field. Furthermore, most innovation is a refinement on what has come before, that is not a mark of failure for an R&D department.

He's not wrong about the car. Apple filed a patent in October for MONITORING A MOBILE DEVICE EN ROUTE TO DESTINATION (20160112837) along with a handful of other image processing/camera related patents.

So maybe they are developing a car, maybe they are just amping up their IP for the impending shift of tides. However, MacRumors mentions an electric car possibility: Project Titan http://www.macrumors.com/roundup/apple-car/ so a physical product makes sense.

Apple files plenty of IP that never turns into a product.

You are comparing across industries. Apple is a mix of software and manufacturing. As is Samsung. VW is a car company. Further, a better metric is to look at % of revenue spent on R&D.

> You are comparing across industries.

That's the whole point. The argument is that Apple is pivoting into a different industry.

% of revenue spent on R&D would not tell you much here. If a company with $10m revenue spends the same % revenue on R&D as VW, does that mean it's possible for it to bringing out a new line of cars? Setting up to manufacture a car costs a large amount of absolute $, so comparing absolute spend makes sense here.

Elon Musk launched a space program with less than a hundredth of Apple's cash.

In 2015 Apple had ~234B in revenue. 10B is only 4.27% of that. If you look at the percentage of R&D vs sales that's still actually drastically less than they spent in R&D up until about 2005. It could just be that Apple has decided to spend a bit more percentage wise and they have expanded the amount of things they are researching instead of indicating a focus on one specific thing.

It's a car and it's not a "pivot". The Mac, iPod, iPhone, iPad, Apple TV and Watch are all about apply the same philosophy to new product categories and then tightly integrating them. At the core of it is fundamentally rethinking the interface between user and machine.

With cars it makes perfect sense as long as you do one thing first: throw out everything you've read about fully autonomous cars being right around the corner. If instead we're facing a future of semi-autonomous capabilities which still require a human to oversee and guide -- much like the autopilot controls of airplanes -- then there is a massive opportunity to rethink the automobile interface from the ground up around this new hybrid approach.

You can be sure that Apple's car will not just be a Jony Ive designed Tesla. It will involve a rethinking of the user interface. Apple likes to make a 10X difference when entering product categories and that's been the key element. Effective autopilot assistance features can plausibly get us to 10X improvements in safety and convenience.

Apple's functional organization is one of its secret weapons in applying this philosophy consistently across so many consumer categories and creating a halo effect. I would be very surprised if they changed that for computers-with-wheels.

First, Apple's historic design advantage is probably gone - since the competition has greatly improved. For example, the watch didn't offer something significantly different(10x) than other smartwatches.

But i can see your second point being true, maybe full-autonomy will take a long time. So even if Apple will design a great interface, it would probably be copied by competitors fast enough, unless there's some big barrier to copying that interface like the phone had in apps. What could that barrier possibly be ?

The only exception i can think of:

The addition of radio for most cars was an important invention.

So let's go wild - what if Apple succeeds in making siri a true AI, with a great personality, someone you'd have great fun driving with, everyday to work ?

No, think the fundamental cockpit driving control interface. Not just the entertainment system (although that will be a nice synergistic element).

Btw I agree about the watch, but it's also early days. The iPod might not have seemed as radical an improvement on other MP3 players either, at first. In retrospect the details made the difference between the product category working for people and not, and blew the category wide open.

OK, let's talk about interface. The major problem such interface has to solve - is how keep the driver aware enough of the road at times he needs to(legally, at all times) , while making it more FUN for him than regular driving, otherwise, why bother ?

That's why i believe entertainment in some form, is critical.

So maybe that siri personality is also built in such a way to enable all-time awareness by the driver, effortlessly ?

Or another option: maybe they use some kind of brain monitoring machine like eeg, and together with music put you in some kind of meditative state fit for driving, yet very enjoyable ? but doing so in a subtle way ?

10X safer and/or less stressful would be more than sufficient to revolutionize cars. I think the notion that the only thing you can improve on is fun/entertainment is kind of stuck in traditional car thinking. Making cars safer and more convenient via autopilot features is where you get a 10X leap.

I doubt there will be anything like a "meditative state" -- that's dangerous. On the contrary a goal of the UI would be to keep the driver highly engaged with the vehicle computer at all times.

>So let's go wild - what if Apple succeeds in making siri a true AI, with a great personality

With human rights?

Agree, Apple is not going to get into cars unless they can do something fundamentally different. But I do think it is a problem that the car industry already has a sort of Apple Company, Tesla. A lot of what you could have done different has already been done by Tesla. A lot of guys at Tesla are from Apple so that is perhaps not odd.

However do think there are some fundamental differences between Tesla and Apple. Tesla is far more into performance than it is likely Apple ever will be. I think the sporty aspect will not be present with an Apple car. The seating arrangment for kids in the trunk in the model S, is more in line with stuff Apple would have done.

I think Apple will spend a lot of time investigating the current method of controlling and interacting with a car and looking at a way of improving that.

I think Apple will try to make a very pretty car but I can't imagine them going for the almost sports car look of Tesla.

> A lot of what you could have done different has already been done by Tesla.

Not at the software interface level. Tesla has done incredible work at the hardware level transitioning to electrics but the UI is still pretty old school. I.e. your parents could step into a Tesla and not know that there was anything different about it. Apart from having to plug it in, which you tell them is a Good Thing. That and some snappy performance.

If you think just a little bit ahead about where the next user-facing innovation is, it's autopilot. And the big thing to "get" is that it's not going to be some switch you hit that makes the car magically fully autonomous and you just sit back and take a nap. Rather to go beyond very limited scenarios and actually function on the real world road network and weather conditions, it's going to be about the human-computer interface.

So what does that look like? Is it just a flat panel screen in the center console next to your big steering wheel? Is that how the car is going to deliver safety-critical information to you that you need to supervise and potentially respond to within seconds? And how are you going to respond to them, through taps on screen dialogs?

Probably not. And there is where Apple will compete with Tesla, in the human-computer interface, as it did with the Mac, iPhone, iPad, etc... Even though they all had great hardware too, it was software that made a 10X breakthrough.

I know people have said this before and been very wrong for it, but I just don't think there's much in those constraints to innovate (read Blackberry). Unless you change the only fundamental aspects of owning a car (driving, parking, and maintenance), all you're doing is polishing a turd.

If Apple is just building the car, and fully autonomous transport is out of the picture, then all they can hope to do is make it electric and install all kinds of shiny gizmos inside. Battery tech won't advance on their doing, so we can't expect their "revolutionary" change to involve any actual gain in commuting, but we can expect to be inundated with a lot of beeps and boops. Oh and maybe your Apple watch will unlock the doors.

You mentioned Blackberry. Pre-iPhone, the world probably would have said there isn't much you can do to innovate on smartphones. They will always need keyboards so the screen has to be small, etc.

With cars I want to underscore what I said about a "10X" improvement in safety and convenience. That is not just polishing a turd. What does it take to actually get to a car that largely drives itself, on myriad roads and conditions? It is wishful thinking to believe cars will do this all by themselves without drivers anytime soon.

Instead, think of a UI that is much more about "mind-melding" with a human driver. Letting them know exactly what it is planning to do, how it intends on navigating that stretch of Highway 1 without driving off the cliff. THAT will probably require fundamentally rethinking the cockpit. You will be mostly focused on "driving by instruments".

If they can achieve that, then we get cars that really do save thousands of lives and make the journey much more relaxing.

One of the biggest innovations around the iPhone was the unlimited data plan and removing phone control from the carriers. IMHO, that is what changed everything. People could get a smart phone AND finally use it. SJ basically willed the change onto the phone industry. Does Apple have a personality who can do something similar again?

>Unless you change the only fundamental aspects of owning a car (driving, parking, and maintenance), all you're doing is polishing a turd.

I guess the real disruption in the automotive sector would be a focus on mobility instead of owning a car. Have a smartphone app where you could call a shared car from wherever you are whenever you wanted. It appears 10m later, takes you to your destination and then goes back into the pool.

At least in the big cities, a whole lot of people would forgo car ownership if such a service was available.

That service is available. You've exactly described Uber.

Driverless cars would be (further) disruptive but only if driverless cars are actually possible. That is mostly a tech press peak hype cycle fantasy right now. Even Google made a public statement throwing cold water on that, saying it could take 30 years.

Meanwhile the disruption we could actually face is with 10X improvements in safety and comfort via semi-autonomous driver assistance features. A car that mostly takes care of itself, but still requires a human pilot that remains engaged, aware and alert, particularly in situations that are more dicey. You know, like how airplane autopilot works.

Careful, your karma might not take the hit from the autonomous driving crowds at HN. I keep looking at the state of the art systems for autonomous vehicles, and shake my head. I don't expect to see them in use in the US in any serious numbers before I die. The obstacles are just too complex/difficult. We always denigrate people's intelligence, but the human mind is pretty incredible at processing things spatially, even when distracted in a minivan hurtling down an Interstate.

"Effective autopilot assistance features can plausibly get us to 10X improvements in safety and convenience."

So similar to the autopilot feature that Tesla already has in their cars? Plus it isn't going to up safety until there is 100% acceptance in this autopilot feature. Sure your car might be driving safer, but the other people who don't have these features will still be a danger to you.

Tesla's autopilot can and does increase safety even with unsafe vehicles on the road. Look at this video of a Model S moving out of the path of a truck changing lanes into it's space. The car moved before a human driver might have even had time to react.


I think median Software Engineer Salary also followed hockey stick graph over last couple of years, as well as CA real estate prices, so it isn't that clear that Apple grew headcount at all. When iPhone came out there was no app store nor 3rd party apps; when apps arrived they had no push notifications; icloud didn't exist and so on. Products become exponentially more complex, requiring proportional growth in R&D. There may even be tax incentives to maximize R&D spending.

Smart home / smart appliances would be a much more logical step for Apple as it'd be much closer to their area of expertise in electronics. Unlike with iPod and iPhone, there's at least one company that is already doing all the right and hard things around cars - Tesla.

TVs, kitchen appliances, even lights are much better understood and researched. Technology is there, safety/regulatory barriers are lower than with cars, consumer demand is pretty obvious. Yet existing manufacturers releasing product after product with laughable design and usability. Just like used to be the case with Nokia and Windows smartphones.

Is there any actual evidence showing that median salaries are anything but stagnant recently? There may be a few outlier people at a few outlier companies experiencing "hockey stick" growth, but is this true for the median?

Is this a surprise? Isn't it well known that Apple is working on a car?

I think the big question here is not are they working on a car, but can they deliver a car that represents a significant improvement over what's out there. And that i'm highly skeptical of, unless they deliver full autonomy. But there is just no way Apple is going to beat Google to market with that technology.

So, I agree they're working on a car, but I feel fairly confident that it will be an absolute disaster for them. Though most times that's been said about their products in the past decade or two has been a disaster for the person saying it.

I guess it's the magnitude of the effort that is not widely appreciated. DF reported on May 4 (http://daringfireball.net/linked/2016/05/04/manjoo-moonshots) that:

"I know The New York Times can’t say that it’s certain that Apple is working on a car, but I can. They are. Of course they’re working on a pay TV service. It would be astonishing if they didn’t have teams hard at work on VR and AR. The difference between Apple and other companies is that Apple will spend tens (or in the case of the car, hundreds) of millions of dollars on a new product and never ship it. They don’t just say no to ideas — they say no to long-in-development projects."

Note, "hundreds" of millions of dollars. Whatever you say about DF spin (and you'd be right!), the facts he leaks are generally accurate.

The analysis in the OP (exhibit 3) would seem to indicate ~$5B on R&D on hitherto-unknown products since 2014. Which is astonishingly large. Because it's based on company reports, this must be common knowledge for serious tech industry analysts.

> But there is just no way Apple is going to beat Google to market with that technology.


Apple is possibly the world's most effective company at synthesizing industrial design and software in premium devices sold to consumers. Google is a web/cloud services and advertising company.

The reason presumably is that you can't see what Apple is doing in public, while Google has a car that still can't drive itself in the rain that is occasionally seen wandering around Mountain View. I question the methodology of that analysis.

For one because there is no evidence of it. Apple are secretive but at some point you have to take a car out on an actual road to see how it fares. And get government permisison to do so. The fact that Apple has done neither leads me to suspect Google is further ahead.

This logic is flawed. If you want to test something secretly you do it in plain sight and use mis-direction. Buy some Tesla vehicles and put your electronics inside -- can you tell who owns the software and hardware inside when looking at the outside? Use a Chevy volt for the really juicy stuff, nobody will even blink. If you need to test a fancy new sensor, buy a white car and slap Google on the side, everyone knows Google is testing this stuff, so meh!

Android was in development and publically known about for years before Apple unveiled the iPhone. Now all new phones are basically large touch sensitive screens.

So who knows?

Yes, but the regulatory and development hurdles involved in developing an operating system are significantly different to those of developing an autonomous vehicle.

That's a silly assertion to make. Apple is well known for secrecy, and any prototype vehicles driving on the streets are not likely to be branded with their logo. How do you know they aren't already driving vehicles on the roads?

Also, whether they are currently road testing vehicles or not, that doesn't change the fact that Apple is increasing R&D spending.

Government permission was quietly granted already. It was just quietly done.

Source, please?

They seem to frequently fail at software. iTunes is a dog, Mac OS X is getting worse and worse, the Mac App store is horrendous. iCloud is a joke.

They do nice interfaces, and iOS is great. I have no doubt they would produce an amazing luxury car with a beautiful software UI, but I do not see them morphing into a machine learning software powerhouse anytime soon, at least compared to Google. Google Now easily beats Siri and Google Maps beats Apple Maps.

Google Maps' advantage has a lot more to do with data than algorithms. Google Now is probably a better example, though I've never used it myself.

"Google Maps' advantage has a lot more to do with data than algorithms."

Given literally everyone else collected the data well before google, and maps was still better, this seems wrong.

Google developed better ways to get the data and automate it, not just got better data. For years, literally everyone else had better data.

Apple is not even trying, or is leaving their Maps team terribly under resourced. I've been running some experiments submitting the same edits to Google, Yelp & Apple simultaneously (since Apple uses Yelp data), and timing how long each takes to update. The last time I publicly recorded my results:

Google Maps: 40 minutes

Yelp: 3 days 20 hours

Apple Maps: 13 days


I know Apple's policy is to screen edits carefully to ensure accuracy & avoid vandalism, but it's actually making their maps more inaccurate, because it takes longer for errors to be fixed. Google has also started incentivising frequent editors with rewards (like free 1TB Google Drive subscriptions), which helps encourage people to make the corrections in the first place.

OpenStreetMap: 0 minutes

That wouldn't be good, either, since it would mean no quality control of the data going in.

Most first-user contributions to OSM are reviewed by the existing community: for example, many of the regional OSM IRC channels have a bot which pops up first-time edits, so a regular can check on them. It's just that they're retroactively moderated rather than proactively, which avoids new users being disillusioned when their edits don't show.

Not really. Google collect more, like wifi info :/ and images (street view). Google really did revolutionise mapping.

Google Maps was better before they did that.

You can only really do the basics on a test track. If they want to tackle real-world driving they'd have to take it onto real-world streets, and that would probably be impossible to hide.

While obviously Google is historically a web/advertising company, they're showing a lot of strength recently in machine intelligence, like with Google Photos auto-tagging or AlphaGo.

If you say that Apple has more relevant experience, then why doesn't Audi, BMW, Daimler, Ford, GM, Google, Kia, Mercedes-Benz, Nissan, Renault, Tesla, or Toyota beat them both? All of these have more relevant experience than either Google or Apple, because industrial design is not really what car is about.

I would say the chances of one of those companies you mentioned being more successful than both Apple and Google are extraordinarily high. Nothing in your statement conflicts with mine.

>>Google is a web/cloud services and advertising company.

Google is actually an AI company.

As with most Apple-related rumors, the truth is probably something a lot less exciting in the end. If Apple is working on a "Car" you can bet it's just s creep of it's current offerings, so, a car that includes iOS and links to your iPhone, has navigation info in the dash provided by Apple Maps, and has iTunes integration in the dashboard.

A self driving car is not just going to magically appear from Apple. It'll take years, and offering a branded in-car experience with someone like Ford or VW would be a lot more Apple's style.

But then, I've been repeatedly wrong about Apple for years. Still, I feel like when they introduce something these days it's evolutionary, not revolutionary.

So more like an Apple Watch than an iPhone. They don't have the nice systemic headstart ipod and imacs gave them in electronic devices that made the iPhone possible 'all of a sudden'.

CarPlay? We have that already.

The next step for CarPlay might be more than just an iPad-sized screen, it could be the entire dashboard and Apple might have a thing to say about the interior design of cars.

I think a company going from zero to massively produced and heavily scrutinised car in one step is too big a jump without acquiring someone along the way or signing up a existing player.

Maybe they are working on a non autonomous car? The car industry is somewhat similar to the phone industry at the time it was dominated by Nokia and telcos: not evolving, slow to integrate new technologies, terrible legacy UIs ... There is a lot of room for improvement outside of autonomy. I can hear the press mocking the development of a"manual " car like it's the 20th century again, and being ridiculed by Apple commercial success once again, as happened for the iPhone and iPad. Indeed. Autonomous cars are extraordinary difficult to produce but they may be even more difficult to sell while a radically new design of a non autonomous car may still be a great success. Customers are in average much less interested by Autonomous cars than engineers, in my experience.

Ya if I had to guess i'd say that's exactly it. But do we really need an Apple car? What is there really for them to offer in that space? Better UX? Is there enough of a delta there to warrant entering the space?

I grant though that this is a sort of 'unknown unknown'. By definition, the great new things are non-obvious. I may have said the same thing about pre-iphone phones. But I don't really see what they could offer me that would make me want to pay an apple-style premium for a car (other than full autonomy, of course).

> What is there really for them to offer in that space?

Electric cars. Yes, there is Tesla, but not much else. And, as Tesla proved, there is significant demand for an electric car done right (ie, powerful, long range, not expensive). Throw in the brand name and a really nice cockpit design, and you have a hit.

Automotive is a low margin, high liability industry. I think Google is approaching this correctly in staying out of the hardware (for the most part.) Apple developing a full car that has to meet x & y regulation from every single different country could end up being a big disaster. Tesla isn't even profitable and has a cash burn that makes a winter furnace seem tame. I don't see how Apple can escape that reality too.

I'm sort of surprised that Microsoft & Amazon are sort of just sitting back, watching. I guess neither of them care so long as the back end is running on their cloud.

> Automotive is a low margin, high liability industry.

It's a lower margin for the classic companies that use a dealer model to sell cars. Direct sales like Tesla have pretty decent margins. It's unlikely Apple would use a dealer model. That's pretty outdated and will eventually go away (though not without kicking and screaming from the existing dealers).

Don't forget many Android phones have awful margins but the iPhone? HUGE margins. Apple sells premium products. Ultimately it won't matter what the margins are for any of the existing companies when they move into a new industry.

> I'm sort of surprised that Microsoft & Amazon are sort of just sitting back, watching. I guess neither of them care so long as the back end is running on their cloud.

I would be surprised if both companies haven't done some research into this. Microsoft's R&D is pretty famous for working on tons of moonshot ideas, many of which never see the light of day. Amazon seems to move into whatever space they think they can get into. Right now they're kicking ass with their brand new AI initiatives so I think they have their hands full (if I were them I'd shove Alexa into every product I could).

No, that's a really bad analysis of margins on cars.

Look, the margin on a $700 iPhone is somewhere in the vicinity of 30%. That means that the price that an iPhone user pays for the privilege of having an iPhone per se is about $200, maybe $300 on the outside.

For a car whose manufacturing costs are $30,000, a 30% margin would mean selling at $42,000. The size of addressable market that can afford to spend $12,000 on Apple brand is microscopic compared to the market size of people who can pay $300 on Apple brand. The "luxury" market for cars is inherently much, much, much, much, much smaller than the luxury market for smart phones.

So if Apple does try to attain iPhone-like margins in the car market, they will necessarily address a tiny market. If they don't, they'll still address a much smaller market than the smartphone market, and with smaller margins to boot.

> No, that's a really bad analysis of margins on cars.

I'm not seeing how. You post is talking about market size. The parent I replied to was only talking about margin. Two very different things which, as you were pointing out, will have two very different outcomes as far as profitability due to market size but that was never something brought up in the context of the original conversation.

> So if Apple does try to attain iPhone-like margins in the car market, they will necessarily address a tiny market. If they don't, they'll still address a much smaller market than the smartphone market, and with smaller margins to boot.

Smartphones are one of the biggest markets in the world so of course they will be addressing something smaller. Though car market is still pretty huge especially in the corporate selling of vehicles. What if Apple sold fleets to taxi / uber / lyft type companies? Maybe they create their own rival to uber / lyft and you can get picked up in an Apple car.

Seems there is so much speculation here that no one is going to be able to paint an accurate picture of what Apple's entrance into the car market would look like let alone figure out what the margins and revenue would be.

Tesla makes 25% margin on their cars.

I find that shocking. They are using new/expensive technology, high quality parts and low volume production methods and they are making a higher margin than a company like BMW or GM who have the benefit of scale and ability to squeeze suppliers?

Not saying your number is wrong, I'm just really surprised.

BMW or Mercedes make million different models of their vehicles. Some of them make a lot of money, some of them are probably losing money and always will - M or AMG products are very expensive, but they sell relatively few cars every year - their brands keep those cars to be leaders in their sectors, not because there's a huge amount of money to be made on them(good example of that is the Veyron made by the VW group - VW said that they will never make profit on that car, despite it costing over $1 million USD, because the research to make it was so costly. The only reason it exists and you can buy one is so that VW can say they make the fastest car in the world).

Tesla on the other hand, makes 3 models, they are not trying to cater to every single market, so they can afford the focus and very high profit margins that come with it.

>despite it costing over $1 million USD, because the research to make it was so costly //

Does the research only apply to the Veyron? I'd be surprised if they can't use advances there in other lines of cars or get patents that they can profit from when used by other car manufacturers.

It does however speak to good marketing to say "we make this car for the love of making cars" rather than "we use this as a way of targeting R&D that we can then exploit in other vehicle lines".


Well, that's a good point. I'm pretty sure VW uses technologies invented for the Veyron in their other cars, but I guess it's hard to estimate the cost/profit ratio in this case. In any case, the point I was trying to make was that other car companies don't maintain 25% profit on all of their vehicles like Tesla does, because they have a much more varied portfolio of models.

IIRC, Tesla has had only one profitable quarter since 2003, its founding.

Last quarter, they had 1.4 Billion in cash and had a $280 Million shortfall. In ONE quarter.

That's AFTER accounting for the +$350 Million-ish they brought in from the Model 3 pre-orders btw. I don't think they are going to repeat the +350ish thousand preorders at +$1000 cash per anytime soon.

But they are also growing by about 50% year over year (and more!). In 2015 they sold as many cars as Porsche sold in 2000, this year probably as much as Porsche in 2004. Tesla is spending every dollar they can get hold of into growth. The preorders for the Model 3 equal a possible revenue of 15 Billion alone.

Sales went up 50% YoY. Loses went up 83% YoY.

They have the Bank of Musk, which is a massive advantage. Apple does have all of that cash on hand, though, so that's less of an advantage if they are truly working on a car.

This doesn't give a completely accurate picture of Tesla's financial situation. Tesla has MASSIVE capital expenditures and will continue to have so for years. They could probably become quite profitable on a quarter-to-quarter basis by stopping all new development and manufacturing investments, but this would kill their possibility of becoming a major auto manufacturer.

The gross margin on Model S is indeed 25%, and the gross margin on Model X is also expected to exceed 25% once volume production is finished ramping up.

I disagree.

Tesla only had to go Model S -> Model 3, just as originally planned, and they'd be much more profitable than today. Model X, despite its 25% margins or so, isn't making money due to manufacturing issues. Its too complicated with its Falcon doors, and doesn't really have an impact from a sales or marketing perspective.

Instead, Tesla spends billions ramping up Model X, only for GM Bolt to release before the Tesla Model 3. BMW and other companies are catching up as well.

Even the Nissan Leaf may release a 200+ mile model before Tesla's Model 3, all because of the delays incurred with the Model X divergence.

I really think the Model X divergence was a mistake. If Model 3 launched just a year earlier with more money in the bank, Tesla would be in a much healthier position.

I'm undecided on whether Model X was a mistake even when seen in retrospect. It might be the case. But assuming that it was, Tesla couldn't have known this beforehand. Model S demand turned out to be more than twice as high as Tesla initially expected -- at least six months of the Model X delay was caused by the deliberate decision to increase Model S production rather than carry on with the initial plan to produce Model X right away. Maybe Tesla could have backed water at this point, but I'm not sure that it would have been a good risk-adjusted move, given that Model X represents very good diversification in the premium-vehicle segment. There is low overlap between luxury sedan and luxury SUV buyers.

Model X was initially thought necessary to produce enough revenue through the time at which Li-ion batteries could be produced cheaply enough in large quantities to launch a cheaper, good electric car. That the Model S turned out to be so popular wasn't at all obvious in 2012, when it first entered production.

But still loses money

There is a big difference between loosing money because you build and sell individual cars at a loss, and investing in further capacity. They make money on the cars they build and sell, the overall loss comes from investing in the new factories and product lines. This should come as no surprise to anyone familiar with startups.

You're supposed to include capital expenses and depreciation in margins. Just because they're building factories doesn't mean they have higher margins.

This is why startups underestimate their expenses.

The new factory isn't part of the current production cars Cost of Goods Sold because it isn't being used yet. See the matching principle. The depreciation of the factory will absolutely factor into the COGS of the cars it produces in the future, but the increase in sales volume should compensate for that.

I wouldnt be surprised if Apple is working with Tesla for the model 3. They have the money to invest and help, I can see them owning 25% of Tesla for it. But the fact they are hiring away Tesla engineers argues against this point.

Tesla is a public company. Apple would have to disclose a buying significant stake, plus it is publicly available information.

I dont think they have yet, but Im wondering if hiring Tesla engineers is a way to skirt that issue and help to collaborate/co-develop a product. I dont see Apple building it's own car from scratch, especially given Apples quality track record the last 5 years.

Isn't it well known that Apple is working on a car?

Is it? It is well known that they are hiring bunch of engineers with automotive industry backgrounds and are working on something related to cars. However I've also heard from friends in the industry that they're not really hiring people with backgrounds related to building actual car chassis.

I think the jury is still out on whether there will actually be an Apple car (as opposed to an Apple (co-)branded car full of Apple tech).

Apple has made plenty of turkeys in the past couple of decades. It's just that when they succeed, they really hit it out of the park.

I don't understand the confusion on what Apple's next big thing is, they've laid it out time and again.

Come to think of it, I think I just saw a slide with it right on the single slide during the Viv presentation. I went back and found it. Here is the video URL at the time the slide is shown: https://youtu.be/Rblb3sptgpQ?t=51

It's the same thing OpenAI, HARC, and other groups are working on: creating revolutionary intelligent assistants and possibly achieving strong AI. The chance to work on that project at Apple, that I might consider a move for.

Applied AI combined with conversational or AR interfaces to create specialized personal assistants will be the next in the line of game changers such as car, flight, radio, telephone, computer, rocket, internet, cell phone, the web, smart phone, tablets, and data mining.

> I don't understand the confusion on what Apple's next big thing is, they've laid it out time and again. [...] It's the same thing OpenAI, HARC, and other groups are working on: creating revolutionary intelligent assistants and possibly achieving strong AI.

I hope so, but given they released Siri in 2011, and only minimally improved on it since, it doesn't look like they're giving the field much attention. It doesn't look Apple takes it very seriously, and in the meantime Google & Microsoft have released their own superior versions.

> given they released Siri in 2011, and only minimally improved on it since

It's quite possible that their iterative loop on Siri and Siri-like experiments simply doesn't include the general populace. Apple does not have much of a history of touting beta software and using their customers as guinea pigs, but internally they definitely do.

It's definitely possible, but I'm not sure why they wouldn't? The data from millions of users from all over the country / world would be a lot better than a small number of users in a single place. And they still push it as a sales feature, so showing real improvement over time sounds like something they would want.

Still, I hope you're right; I do agree that it's a big part of the future, and seeing it flounder is frustrating.

Do you think that's the only major thing they're working on?

You're right, I think it's definitely not the only thing, but Apple seems to do one main thrust and lots of smaller thrusts. I suspect wearables and the car may be smaller thrusts (which would still be huge expenditures compared to other smaller players), but their AI thrust will be 5-10x the investment of one of the smaller thrusts.

I don't like the idea of Apple (or even Google for that matter) making cars. It seems like such a weird space for a company that makes consumer electronics parts to move into. It would be almost as weird as them starting to build houses. And I don't want to buy all my stuff from one company.

Either way, I'm skeptical that any company is going to make huge, monopolistic profits from selling autonomous cars. It's something that's going to easily commoditizable. Consumers aren't going to care which company their buy their autonomous tech from, as long as it's safe and it works.

A better fit (although much, much, much harder to achieve) for Apple would be a real robot/android. Apple has hundreds of billions in cash to play with and a steady stream of income on the horizon for the next few years. I think they should accept that they don't have to come out with the next big hit every year. They should look 10+ years in advance and try to beat everyone to the last consumer electronic product.

I don't like the idea of Apple making cars for the same reason I'm uncomfortable with their phones: you won't own the car you're purchasing, in most meaningful senses of the word "own". (We have seen this problem with Tesla already.)

To your second point, I'm not sure that autonomous tech will be easily commoditizable. Some companies will have much better tech than others and consumers will prefer them. Think about internet search engines: The easiest of all industries to compete in, yet (or "thus") full of huge, monopolistic profits.

Search engines are free. Whether you own or hire a self-driving car, you're going to have to pay for it, but all you really care about is whether it gets you from point A to point B. It's quite binary--either it works or it doesn't. There is objective and subjective factors the determine preferences towards search engines and phone. But if all driverless car tech works the same, then you're not going to care which one you use as long as it's the cheapest.

> all you really care about is whether it gets you from point A to point B

If that was really the only reason people bought cars, we wouldn't have as many variants, manufacturers, models of cars.

>>It seems like such a weird space for a company that makes consumer electronics parts to move into

Actually if you think of a car as a consumer electronic device, it doesn't seem weird at all!

> A better fit (although much, much, much harder to achieve) for Apple would be a real robot/android.

Either autonomous vehicle is a real robot (and not a bad place to start, given that moving things around is a great task for a robot), or I'm not sure the word has a lot of meaning.

It isn't approaching an android until it's something like KITT, but that's something else.

Do you believe that we will have robots as shown in movies, now that Moore's law is grinding to a halt?

I don't know if it's possible to build a robot like that. Or if will take a hundred years for the technology to evolve to get to the point that will make it possible. I know currently it's not even really possible to get a robot to do a simple task like folding a towel. It'll undoubtably be extremely difficult to make something that's useful and functional. But I think Apple needs to look to something that big if it wants to grow at a fast pace again.

I wouldn't be surprised if the "car" part is a commodity, and the interior/exterior are where Apple builds a better vehicle. The qualcomm chipset that powers an iphone is pretty much the same thing powering an android phone.

Not correct. Apple designs their own SoCs. Samsung and TSMC manufacture them. Really, the only thing in common is that they're both using ARM as the instruction set.

"the last consumer electronic product" - loved that part..

According to venturebeat[0]. Samsung has 1m gear VR users. We all know how apple has a far superior supply chain, creates better software experiences and does things "right".

So is it that much of a stretch for them to actually come out with a mobile VR headset?

Think about it.

- They make the phones.

- They make the vr software.

- They already have the eco-system for you to get apps from and the developers to sell through.

- They can sell upgrades for face/hand tracking, etc.

What about a version of FaceTime, where 2 people can call each other and play a game together?

Within a very short time could exceed what Oculus is doing very quickly.

[0]: http://venturebeat.com/2016/05/11/oculus-and-samsung-have-1m...

I came here to say the same thing. I wonder where all these rumours about a car are coming from? Smoke and mirrors?

Frankly, that idea sounds ridiculous, but the first "good" VR headset is something that Apple is absolutely capable of delivering and importantly, it fits the R&D spending figures in the article (a car would cost them a lot more).

They also happen to have a number of unique strengths such as their own OS, their own SoC that give them a huge advantage over anyone else in market.

It also makes sense that Apple would not want Facebook to gain any traction with the Oculus Store in competition to their own App Store, so frankly it would be a huge strategic mistake for Apple not to release a VR device within the next 2 years. I just think they won't release anything until all the user-hostile kinks have been worked out.

Apple is not, as many seem to be suggesting in this thread, about applying "disruptive UX" to random markets like cars. They are about giving new technologies mass-market appeal. They take something niche (like MP3 players, smartphones, or VR) and they make it into something that everyone wants.

> We all know how apple has a far superior supply chain, creates better software experiences and does things "right"

Um, what? I assure you that "we all" don't agree with your favorite ice cream flavor, rock band or "software experience". In terms of "software experience", Apple aren't showing much hope of catching up to Android on mobile, much of their desktop application software is abysmal (iTunes, Quicktime, etc.), and their desktop OS experience, while decent, gets less "right" with every version.

> We all know how apple has a far superior supply chain, creates better software experiences and does things "right"

"We all know" ? The starting point for your whole desmonstration is assuming general agrement of one of the biggest source of troll of all time ?

The other depressing interpretation is that they're achieving less per dollar spent on R&D (becoming less efficient); they certainly seem to be achieving less per release of product now, so it would be consistent. Maybe there was a time when Apple got the most brilliant people wanting to work there because it was Apple; if that's no longer true, their efficiency would decrease.

(Arguably the same thing happened in K-12 education; when women were largely excluded from other professions, teaching positions were filled by the best women in the workforce; now, many of them would rather be doctors/engineers/lawyers/etc., so the quality of educators has decreased to the market level.)

From looking at the numbers, they would need to be spending 10x more to achieve less per release. It seems much more likely that they're putting their resources into something else, like a car or some other new category. This would also partially explain why some of their more mature products aren't getting anything too interesting, though no one else seems to be moving into the space either. So it could also be that they're is only so much you can do with mobile phones right now.

If their efficiency is decreasing then that's probably more related to having too many products rather than not-smart-enough people. The cost of shipping each new release roughly follows Metcalfe's law, meaning that each existing product/feature you need to support going forward makes the next release exponentially more expensive.

My hope is that the car is a front and they're secretly building arcologies, but in reality they're probably just building some shitty car.

I have to ask: Why cars? Why are Google, Tesla and now Apple supposedly investing in cars?

From the European point of view cars seem to be a dead end. More and more people live in an urban area and more and more young people use public transportation way more often, than cars. Additionally carsharing makes owning a car in a german city kinda obsolete.

So... why cars?

It's because the car industry is about to experience two fundamental revolutions simultaneously. The move to electric drivetrains which will completely change the technical architecture of the hardware, and the move to self-driving. The incumbents have no built-in advantage in either of these areas, which makes it ripe for disruption on two different axes at the same time.

If a move to a new manufacturing process such as carbon fibre gets thrown into the mix, that's three simultaneous revolutions.

> More and more people live in an urban area and more and more young people use public transportation way more often, than cars. Additionally carsharing makes owning a car in a german city kinda obsolete.

It is this. What you're missing is that in the whole wide US, the number of European-density cities where most people can choose to forgo routine use of a car can be counted on one's fingers. The common layout here is a few walkable commercial blocks "downtown", that generally serve as single-destination stops for drivers who live further out.

Self driving is what's required to make the car sharing frictionless and on-demand in less-dense areas. Currently this role is being done with human owner/operators; replacing the humans with software will reduce prices and consolidate ownership of capital equipment. (Interestingly enough, it will also decrease the stickiness of supply. Instead of needing to slowly recruit driver mindshare for a new intermediary, a straightforward investment in a fleet of cars suffices)

That being said, I think this article is a bit hokey. Apple "pivot"? mm hmm.

There is a contrarian argument that self-driving cars will actually INCREASE the demand for vehicles. If a vehicle is self-driving, it can not only act as a taxi, but also act as cargo transporter, delivery guy, etc.

It's not really that much of a contrarian argument.

Basically, here's the deal:

Right now, the cost to own a car is CO and the value received from owning a car is VO.

The cost to rent cars from a taxi-like service is CR and the value received from renting cars in a taxi-like service is VR.

For most people, CO < CR. That is, it's usually much cheaper to own than to rent. With perhaps some exceptions if storing your car is super difficult in your locality.

The VO and VR relationship is much more complex. There are advantages of each model (you can take an Uber when you're drunk, you don't have to look for parking, but on the other hand you can't leave your crap in it and you have to wait for it to arrive and you can't take your kid in it).

Based on the CO < CR and VO <?> VR distribution across people, we have a certain balance where taxi-like services are pretty big, but ownership is the dominant model.

In the autonomous world, VO > VR almost all the time. That is, you get all the advantages of current ownership and pretty much all the advantages of current rental. But the cost of ownership presumably increases (you have to pay for a sensor package now) and the cost of renting presumably decreases (since you no longer have to pay for a driver). So the question is how much do those costs end up changing? Is the sensor package expensive or cheap? How many human costs can the Ubers of the autonomous world actually cut out, and how much utilization can they get out of each car? If the CO increase is small enough or the VO decrease is small enough, you expect to see more car ownership. If not, more car rental.

> public transportation

because private companies don't generally dabble in public infrastructure :)

I think at this point it's less about cars or electric cars, but more about self-driving cars(that happen to be electric). In the U.S. at least, we have a MASSIVE roadway infrastructure that's not going anywhere for a long time. Utilizing that probably looks like a much easier path to automated transportation than does building up the rather sparse network of railways.

Imagine this future in Europe: pretty much no one owns a personal car. When you want to go somewhere you order a car on your phone and within 10 minutes a driverless car arrives and takes you to your detination. Your music plays through the sound system. The back seat is comfy and you have plenty of room to work or surf the internet. The trip could be to the hardware store, or hundreds of miles to visit family.

I feel like OP understands this - the questions is that why do any of that when the younger generation is rapidly urbanizing, in which case "order a car on your phone, wait 10 minutes" seems silly compared to "walk out front door, onto train, be at destination even sooner".

The self-driving utopia is primarily a suburban-centric dream, in many European cities (and a small handful of American ones) it's likely to be less efficient than what already exists.

Around here for example, the subway runs every 2-3 minutes and moves faster than cars - perhaps even self-driving ones. Trips are generally short enough that being able to work/surf the internet is a pretty marginal benefit, and the hardware store is so close that it would be nonsensical to use any vehicle to go there. All of the above pre-supposed long travel times and having to take a vehicle for even mundane every tasks - this is untrue for many cities, where cars (self-driving or otherwise) will likely be strictly inferior to the utility offered by walking or mass transit.

Where I live in the UK, I guess it is part rural and par urban (it's a bit of a sprawl.) Everyone owns cars. Buses run, but your journey is going to take a very long time. Last time I checked to get to the nearest city took over an hour on the bus and 15 minutes by car.

City subways systems take decades to build. Public transport is a shambles outside high density cities, and in many of those. Here in SF, it takes me an hour to get downtown by bus or subway, and 10-15 minutes by bus.

Right, but the idea is that there seems to be a large preference towards high density cities going forward, so it seems like self-driving cars improve a lifestyle that is to some degree actively being abandoned.

I think OP's point is (to paraphrase) "why all this when the population is moving into high density cities where this complex infrastructure already exists and presents a superior choice to cars, self-driving or otherwise".

Or from a more global perspective "why all this when the US is the only major market that is likely to continue having a mass suburban population in the long term, and the rest of the world has already urbanized and will continue to do so, already has highly robust mass transit infrastructure, is actively building even more of said infrastructure, and that is rapidly attracting even more population?"

There is a particularly common dream among American urbanists that suburban America will somehow rapidly urbanize - I don't think that's particularly true, but it's certainly true the rest of the world has urbanized, and will continue urbanizing rapidly. So the question is if self-driving personal cars (as opposed to say, commercial cargo vehicles) will largely be an American phenomenon, and if so, doesn't that present fairly modest total addressable market for a company the scale of Apple.

And I'm living in a high density city, where the public transportation is barely usable.

EDIT: that should be 10-15 minutes by car.

The future seems likely to involve a fleet of autonomous vehicles that we use on-demand -- why not own and operate the fleet? Not to mention owning the technology powering the autonomous cars.

I wish it was possible for Apple to settle in and polish, competently executing on designs that are already very good and slowly improving their entire lineup (including, please, monitors!)

It's rather depressing to consider that excellent industrial design can only be supported on the exponential-looking part of the sigmoid curve.

I imagine they'll keep polishing the existing stuff as they have for a while. It's just they seem to be working on a car too. I'm not sure launching a new product is really a pivot - that term is usually used when junking the old business plan.

I have long thought that Apple was working in secret on a consumer robot; perhaps something on the order of $1-5k price point. It was just a hunch.

I've now begun to think that the increase in what everyone is calling "R&D" is just Apple become too large to any longer be efficient. Perhaps they've crossed that point mentioned in the Mythical Man Month where gains in team size decrease productivity.

>After analyzing the three preceding possible explanations for Apple's R&D increase, we can conclude the only one that actually makes sense is the third choice: Apple is looking to pivot.

Can we really conclude that? Good geez.

I think the ideas presented appear somewhat contradictory. I may be missing something here because the following 2 ideas seem contradictory to me.

1) Apple's secrecy 2) Apple's pivot

If they're pivoting, why be secret about it? One of the reasons provided was that being public about new products could hurt current product sales.

If it's an entirely new product line (ie. car), I have a hard time believing someone will think twice about buying an iPhone because Apple is coming out with an electric car.

Instead being secret seems it may hurt more than help. If I'm in the market for a new car, and there's a real release of an affordable Tesla that has already happened, while at the same time I have no idea what Apple is doing or if they're even going to do it or what kind of timeline the project is on, I'm probably going to buy the Tesla.

Otherwise if I'm somewhat certain that Apple may be coming out with a new car within a year or two, I may decide to hold off with my purchase of the Tesla for the time being in order to consider buying the Apple iCar when it comes out.

Apple doesn't pre-announce things or do concept videos (the only exception I can think of in recent memory was announcing the Mac Pro at WWDC). Things get announced when it's a product ready to be sold. It's tough to say this is the wrong strategy considering the success they've gotten because of it. And there are plenty of counter examples from their Silicon Valley rivals who like to generate PR for blue sky research or things that will never come to market for years (if ever).


Yeah, 7 1/2 months was a pretty huge announcement-to-launch delay for Apple (though the original iPhone went 5). But that's nothing like a "concept video" or "blue sky research" - it was announced as a final product design with the same look and feature set it shipped with (though not with a price), and was probably delayed due to manufacturing issues. The car, on the other hand, is still years out.

When you're trying to get into a new market the last thing you need is for your competition to prepare themselves. Secrecy lets the competition stay complacent. It's a tactical move.

If Google started braying tomorrow about making cars then car companies would respond. They'd have a harder time rolling out their product.

Apple was once considered extremely innovative despite its secrecy because it regularly shipped ground-breaking new products like OS X, its breathtakingly high-design computers in the late 90s and early 2000s, the iPod, and of course the iPhone.

Apple hasn't shipped a successful new product line since Steve Jobs' death, and sales of its last successful major product — the iPhone — now seem to be slowing. Their cloud efforts are famously flailing, and their software is increasingly stale: who here has a folder full of unused Apple apps, with better third-party replacements on their home screen or dock? Almost everyone with an Apple device.

I sit here writing this on a Macbook, unironically. Their hardware manufacturing capability is best in class, and they've managed to hone their existing products' hardware increasingly close to perfection. But innovative? You can't be innovative just by spending money on R&D. You have to ship new products. And for now, Apple seems like it can't.

> Apple hasn't shipped a successful new product line since Steve Jobs' death

I disagree.

The Apple Watch is only "unsuccessful" using a yardstick calibrated to the scale of existing Apple product lines -- in its first year it appears to have achieved sales revenue on the same order as Rolex ($4.7Bn, per Forbes).

(Apple's secretiveness makes it hard to tell how many Watches they've sold, but the low estimates are in the millions, and the high end estimate -- 12 million shipped through 2015, per Canalys -- would put them in the same league as the market leading luxury watch manufacturer, if not ahead.)

If any other company had released a product that replaced the century-old industry-wide #1 luxury brand within a single year it would be seen as truly disruptive and a major breakthrough. But the wristwatch industry is small by Apple standards, and the nascent smartwatch market is still embryonic compared to smartphones, so the scale of sales doesn't match onlookers' inflated expectations of an Apple product.

(As for Project Titan, I expect a bit more than just an electric car, given that scale of investment. Possibly an attempt at redefining how we do intraurban and suburban personal transport, the Apple way. But they'll have an uphill struggle to supplant the automobile with something better, because of all the built infrastructure and regulatory constraints, so at least at first it'll look like "just an electric car".)

> and the high end estimate -- 12 million shipped through 2015

What's interesting is that if you think of the Watch in terms of it being a computing platform, 12 million devices shipped might be considered a bad sign.

Sega had two back-to-back systems that shipped in that League (the Saturn shipped 9.26 million and Dreamcast shipped 9.13 million) and both systems are considered massive commercial failures, so bad that they nearly sunk the company forcing Sega to pull entirely out of the hardware market.

I think that Sega executives would have done backflips for the kind of revenue that Apple receives from those Apple watches... .

I personally find for the price and the (personal taste) ugly design the Watch exceeds the expectations. It's not because something is not pulling the same frenzy like there was with the iPhone and iPod, that it's automatically a failure.

That's an estimated 12MM watches in the first 8 months, which is a good start. The game console numbers are lifetime sales, so the numbers aren't really comparable.

Isn't it basically impossible for Apple to surprise us with a driverless car? Surely all of the process to make a driverless car legal would be in public?

Surely the production line for any kind of car at all would be almost impossible to organise covertly, all the factory space, tooling etc?

I remember the "iPhone" being a topic of rumor for literally years. Leaked photos (some more accurate than others) and a steady drip of information.

Looking back, it was still a big surprise once the details were known. So, a car? Build a roof, sign some NDAs, and do your best.

I was at On Semiconductor in 2007, and it was an open secret around the office that Apple was getting into the phone business. We knew because management kept touting the fact that we had $4-5 worth of the overall BOM in the iPhone and that was going to be awesome for us.

iPhone was announced Jan 2007

The iphone needed to be fcc certified too, they just announced it 6 months prior to selling it to keep the element of surprise.

Getting a phone certified is surely quite a bit different from an autonomous car ready for consumer use?

I wonder if this could also be some smart accounting. The US and other countries have tax incentives that encourage R&D expenditure.

Assuming its a car..

Cars are not phones and I don't see the massive factory/production line being prepared to build the cars nor the investment in battery production that would be required (assuming an EV not an ICE) so unless they buy BMW (LOL!) or another car manufacturer then it will be 3 years minimum from them showing a car to us being able to buy it.

Apple definitely can tear apart the status quo in dashboard/driver UI/entertainment console automotive market. They don't have to make a complete vehicle. Even with semi/fully autonomous cars there's a huge potential for a quality OEM software/sensors package.

Remember aside from the biggest car conglomerates there's a dozen smaller 2nd tier makes who can't afford building self driving car from the ground up. Even the biggest ones invest into it more out of necessity than internal motivation.

The idea that Apple is going to "pivot" is fatuous.

Are they working on some non-phone products that they hope will be big? I'm sure they are.

Could they conceivably find that one of those products achieves massive traction and overshadows the iPhone (especially as the market for smartphones cools)? Sure, though I'd bet against it actually playing out like that.

Is Apple making a big planned play to radically deemphasize smartphone sales in a desperate gamble to become a car company? Of course they aren't.

Even if the smartphone market's high-water mark was 2015, Apple has a hugely successful, almost grotesquely profitable product that will -- assuming they don't do something absurd like pivot away from it -- be the source of incredible value for at least a decade and probably much more. On the back of the iPhone, Apple has grown to a market cap that -- even after recent losses, and despite a weirdly low P/E -- is massively higher than the combined market caps of the top five auto companies.

There are no guarantees that the iPhone will generate anything like the profits of the last several years indefinitely. There are a number of strong headwinds including the end of carrier subsidies, market saturation, a weak global economy, increasingly mature competition at much lower price points etc. I don't think they're in crisis but they do have a real problem on their hands.

Of course they have a lot of room to slash margins to compete so I'm not too pessimistic but the iPhone was really a once in a generation kind of product and I think they've taken most of the easy profits off the table already.

Nothing is indefinite. And, basically, I agree with you. If 2015 wasn't the high water mark of the smartphone market, then some near-future year will be.

But smartphones are also clearly not going to crash and burn. Even if people don't replace them like clockwork every year or two years, there is going to be a healthy market for iPhones for a long, long time. There are still people without smartphones, there are still large markets with low Apple penetration, and they have an enormous install base and developer support -- and, as you say, positively absurd profits to cut into eventually.

Does Apple dream of another product that will be as big as the iPhone, but is yet in its infancy, with its growth ahead of it instead of behind? Well, of course they do. How could they not? Will they launch new products? Of course they will. Might one of them be a car? It might. If the stars align for Apple again, might we in ten years say that they are not the iPhone company, but rather the X company? Yes, that is possible.


1. There is no possibility that Apple is planning to pivot in any meaningful sense of the word. "Pivot" does not mean "launch a new product and hope it takes off." Pivoting is simply not something that the most valuable company in the world does in the face of some cooling of demand. Pivoting is what desperate start-ups do.

2. If the leaders of Apple are basically cool-headed people who do not entirely buy some kind of superheroic mythology of what Apple is capable of, they are probably aware that the iPhone was a literally singularly successful product in the history of, like, the world, and that the odds that lightning will strike twice and they will have another product that successful or even more successful are lower than the odds of lightning literally striking the same person twice. It is possible that Steve Jobs was not a basically cool-headed person. I think that Apple's current leadership is.

3. And specifically, the product that makes us forget the iPhone just straight up can't be a car. There is just no demand for a car that can support an Apple-in-2015 type valuation, especially at iPhone-like profit margins, double-especially in a world in which autonomous cars makes any meaningful jump in the utilization of each car. And PS: approximately 0% of Apple's current employee base would be useful in Apple-as-a-car-company.

I partially agree with your thesis, but:

>> There is just no demand for a car that can support an Apple-in-2015 type valuation

Assuming transportation is on demand and automated, the revenues of that industry will far eclipse the phone industry revenues. Add that with the fact that automated cars are really hard, brand might mean life and death(in the mind of people) and moving people in shared vehicles on-demand has pretty strong network effects - there's a possibility for a bigger business than the iPhone.

But from that to Apple winning that business ? that a low probability bet, so maybe pivot is the wrong word. But Apple can allow itself to try that bet, money is of almost no concern to them

They are not working on "just a car."

They are trying to become a mass transit provider by owning and operating a large fleet of those self-driving cars, renting them out on a per-ride basis.

That is, if they're smart.

Yeah the future of cars is not owning one. Cities don't need more individual car ownership.

> Yeah the future of cars is not owning one.

I think it is more "The future of cars is not _everyone_ owning one." The point is that most cars spend most of their time sat, parked waiting for a single user who is also usually the owner. This is inefficient. I'd rather the car I owned was out earning money while I'm sleeping/working and available just when I need it.

Uber has the right idea, and those that own cars will become part of their network.

Two other industries I see impacted; car parks - my car doesn't need to remain near me; home delivery - thanks, I'll send the car to pick it.

Apple may be developing automatic driving technology, but actually making cars seems unlikely. They mostly outsource manufacturing, after all.

Apple might be working on something to take a bite out of Facebook or Google Search or Amazon's Echo. The next big thing is likely to be "you just talk to it and it does the right thing". Siri with common sense.

Facebook and Google Search are ad businesses, and looking at those businesses they're very small compared to Apple. There's also tons of competition there already and it's outside of the skillset of Apple.

Apple is making a car not self-driving technology. They may develop self-driving technology, but the business will be making a finished product that they sell to customers, not licensing technology to others (which is what Google is doing).

    >Facebook and Google Search are ad businesses, and looking at those businesses they're very small compared to Apple.
FB maybe, but Google? Back in February Google was larger than Apple in terms of market cap. As of right now Apple is back on top, $506B to Google's $491B, explain again how Google is "very small compared to Apple"?

Google's business is 90% ads and they did $16.35 billion in profit in the last year compared to Apple's $50 billion (from Yahoo Finance). Should Apple focus their efforts to get a chunk of the ad $ out there or focus on a business that utilizes their competencies?

All I want is an Ethernet port on my MacBook Pro. Please stop the maddening war on ports.

Edit: sorry I meant Macbook pro

It does. It has two of them in fact.

...via dongle, at US$29 each, thank you very much. Want to connect an external screen at the same time? Too bad.

I'll take built in ethernet and two display connectors on my lenovo instead. Want to add another network port? Well, there's USB3 gigabit, or simply USB-C. If you need native PCIe adaptors, then Dell XPS range comes with Thunderbolt 3 via USB-C.

Sorry, I have to agree with the parent that the port war is growing tiring. Unless there's a plethora of USB-C ports on the laptop we still need our connectors.

Are you thinking of MacBooks? Because the grandparent talked about the Mac Pro who has two normal RJ45 ports: http://www.apple.com/mac-pro/specs/

...yes. Yes I am. Egg on face.

The point still stands though, it's such a shame seeing the minimisation of ports on all systems these days. I can understand using standard ports (usb-c) for peripherals, but essentials such as Ethernet, display and several USB ports (whichever format) should remain built in.

There's a simpler reason for the lack of an Ethernet port. Compare the size of an Ethernet port to a USB port on the Mac Pro and then look at the side of your MacBook Pro. The Ethernet port would not even fit.

I bought a 2012 MacBook Pro (which Apple still sells in stores) instead of a 2015 model partly because it still has an Ethernet port. Apple could definitely make laptops with Ethernet, they're just choosing not to in their desire for ever thinner machines.

I also feel the keyboard and trackpad quality has deteriorated on the thinner devices. I much prefer the snap of the click on the 2012 MacBook Pro trackpad to the Force Touch simulated click.

I've seen expandable Ethernet ports on several ultrabooks - Toshibas in particular. They spring closed when not in use and the bottom half expands when you need to plug in a cable. Apple could manage it tastefully, I'm sure.

There were expresscards in 90s that had Ethernet Jack's. The cable was inserted vertically.

*Edit - parent has also clarified that he has egg on face too. He meant a MacBook Pro as well.

Good news! You don't have to buy the MacBook!

Touche sir

Has anyone mentioned that maybe Apple just doesn't have the focus (Jobs) at the top telling it where to spent R&D? How much did Apple spend on R&D under other CEO's when Jobs left?

I don't think Apple would necessarily have to build their own cars from scratch or solve the alternative fuel issue or deliver a self-driving car to have a significant impact on the automobile industry.

For example, I would personally love a Subaru that had its information and entertainment systems designed and built by Apple and licensed to Subaru. It would also be cool if Apple's designers helped with the overall exterior and interior design.

Ha. If anyone can make a Subaru pretty and user-friendly it's the guys that originally made Unix work as a desktop OS.

Is the car before or after the TV they were definitely going to release a few years ago?

The TV did come to fruition, but they made a set-top box rather than a fully-integrated product. They made a Mac mini instead of an iMac, if you will.

Apple snatched a few Tesla employees and a few people has said that Apple are working on a car. Seems obvious.

Has anybody considered that it might be other form of transportation? Maybe an electric motorcycle or some other cart? All their devices is very personal, could be a personal transportation device?

Apple's mission seems to be to create the best products they know how to build. But environmentalism is pretty highly valued at Apple, so it seems likely that they will move towards things that they think will benefit not only their costumers but also the environment.

But Tesla's mission seems to be about accelerating the adoption of electric cars. They need "everybody" to produce electric cars, so it is in Tesla's best interrest that they build a car. It will be interesting to see if Apple picks up on Tesla's R&D, with the opensource patents and maybe even a Tesla Gigafactory.

But very interesting to follow, hope they make a car and hope they make it great. But I am afraid they lost their cocky edge a few years ago, so it will probably just be a nice new car.

Why not financial services?

There's a handful of small players testing the banking regulations now (like Mondo) to get authorised as basically "iPhone banks" - modern, mobile, without the legacy and technical debt.

With Apple Pay (and their $billion reserves) Apple could conceivably sweep in and buy up these newly regulated challenger-banks and buy their way into FS overnight.

Thanks to all those banks that have seeded Apple Pay with more customers than they could possibly have hoped for.

I don't know if Apple are thinking along these lines, but I do know that it's a great idea either way.

The author is correct that Apple is haunted by the iPhone's success. My 2 cents:

1) The car business delivers lower margins than the iPhone. Even if you compare them to those of premium car companies (like Range Rover, Audi, Mercedes, BMW or Lexus).

2) The iPhone didn't had comparable brands to compete against, when it entered the phone market. It came with a hefty price tag. A sum that was never even considered mass-marketable before. The iPhone created the premium sector for phones. It raised the share of income people considered plausible for cellphones.

The author is also right in that apple is very good at applying their business model to new markets. But

3) to become premium in the car business either means

- lowering their margins

- producing cars that aim at a smaller/niche market (Porsche to Ferrari/McLaren),

- lowering the costs of the supply chain currently in use by other premium car makers.

The last one would be doable, certaintly by Apple. Certaintly with EVs. But I doubt it would be doable without any information leak other than this article.

4) More plausable for apple's margin territory would be an attempt at the user interface of cars. Like appleTv is for television sets or the healthKit-API.

The problem with cars is not the getting-from-a-to-b-part, not the status-part or the comfortable-interior-part. The problem with cars is the user interface-part, it's the outdated-touchscreens-part or the connecting-and-charging-and-holding-your-phone-part. It's the car's software that sucks. And for some that sucking software includes the driving-yourself-part. Reaching out to current premium car-makers also points into this UI/API-direction.

5) Also there are a lot of lower hanging fruits out there, easier to tackle than building a premium car. Like VR or building physical television sets, home automation, healthcare - or wait, software.

I think I would be more excited if Apple were researching ways to remove the cell phone completely, at least in a physical sense. Think about it, with the rise of things like AR/VR for output and Viv for input, what need do we have of a handheld device? Everybody is concentrating on the next iPhone, but what if it is a set of contact lenses and headphones? I think that would truly blow people's socks off.

Sure, Apple could be (and probably is) working on an automobile of some sort, but that seems like it would be difficult to really make a 10x improvement on. Especially with all the rules and regulations about what can be considered a car; it must have mirrors, steering wheel, pedals, etc. The prospect is so limiting. Besides, I think Tesla is rocking the automotive world and Apple would probably be better teaming up with them than going alone.

Just my $.02 worth.

Google glass seemed to be the first step in that direction, but it hasn't proven so popular.

Apple will do it with lapel pins.

(Sorry, Jony.)

No what I think is happening is this:

- Apple is investing more in ancillary services (iCloud, Siri, Maps, new Arm processors, etc)

- More investment into manufacturers to get the latest tech (retina, etc)

- Some of it is lacking focus and spending a lot of "R&D" money in irrelevant stuff (like most big companies do)

Great post.

A keyword is missing - autonomous car - maybe the first couple of versions will be manual but they can be relevant in the long term only if they are working on bringing autonomous cars to the market as fast as tesla/google.

Apple certainly does well in investing in R&D and looking towards some amount of pivoting.

However, this quasi-exponential growth in spending reminds me of a pathetic moment at a EU commission meeting I attended, on research and innovation public funds in 2010.

The EU commissioner basically complained that Europe had no Unicorns like the GAFAs, but wanted to be reassuring: this is about to change. We will prevail, because we'll spend more on R&D (through tax money) than all of these do together.

With the implicit assumption that the more you spend, the bigger the returns.

Car seems likely, yes, but I would place bets on an augmented reality play as well.

Maybe not a huge mystery- they're working on a car, at the very least.

Maybe apple is moving into weaponry, now that would be a pivot!

I really wonder how they will differentiate themselves from Tesla's offerings. Tesla represents the very cutting edge of innovation in the automotive industry being the leaders in autonomy, EVs, battery production, the chargin network, etc.

I wonder if Apple will partner with Tesla to use their Gigafactory batteries and charging network. If not they would have a lot of ground to make up.

Tesla's made enormous strides in core automotive engineering but to answer your question you have to ask, what would make a 10X difference in a product category? That's Apple's rough criteria for entering a space. It's not just moving to electrics.

The answer, at least for Apple, has always been in user-facing software. The hardware is a "pretty box" (to use Jobs' phrase) and certainly there is impressive core engineering there. But the 10X difference comes from fundamentally re-envisioned software platforms and user interfaces.

So this doesn't make much sense for cars if we only think in terms of traditional automotive engineering or "merely" shifting to an electric platform. Tons of incredible feats of engineering, but not a 10X difference in user experience or opening of a new landscape like the Mac, iPhone, etc.

BUT if we look to the (semi-)autonomous future then it's a huge wide-open landscape of innovation. And it's all about the software smarts and user interface. It's critical to understand that the user interface is essential, i.e. that we will not simply jump to fully autonomous cars. They will be cars that interface with human drivers for quite some time. So that's where Apple will compete with Tesla.

And yes getting the underlying (electric) automotive hardware and production right is a huge challenge in and of itself, but ultimately technically feasible. The software layer on top of it is more of a proprietary differentiator in the long run.

Since there was talk about Apple Watch, there also was a lack of wow effect people had expected from it. Considering Apple’s human power, there is something going that takes time. Might be a car, might be something else. Smartphones have plateaued, so they’ve been working on something greater long before growth had slowed down. Time will show.

Has this car thing in relation to Apple been confirmed? Nothing about the word Titan makes me think of cars.

Perhaps some of this is that they are accounting more expenses as R&D for tax reasons?

What are the margins in car industry? iPhone margins are enormous, so how do cars really compare? Is it even worth pivoting into this industry when you're already a big player in a more valuable industry?

They are working on a "next-gen" operating system. Something entirely unlike what we have come to know as a GUI.

I just thought I would leave this comment here so in a few years someone will find it.

I suspect the Titan codename is a trick and they're actually working on single-occupant vehicles.

HMD and transport are the obvious markets to tackle.

There's so much Apple could be doing that are a more natural progression from their existing product lines. They could take inspiration from some of their previous consumer efforts to target entirely new product lines, such as a camera (QuickTake), printer (LaserWriter), or game console (Pippin). A modern version of all these would sell out.

Or they could reintroduce their enterprise/business products, such as XServe.

The electric car idea really won't be ready anytime soon, due to limits of neural-net learning speed.

One of the biggest challenges that Apple has, is what would actually be meaningful? I loved a comment I saw recently that highlighted that a 10 digit revenue item can be counted as largely insignificant to a company the size of Apple.

So, if you start looking at product spaces that have:

1. A meaningful market size (ideally all consumers) 2. A price that is significant 3. Enhances the brand image as chic/cool 4. Is global

You don't really discover too many spaces to play in. They're not going to move the needle with a new printer.

Frankly, if I was Tim Cook, I'd just buy Tesla and be done with it. Goodness knows they have the cash, and Elon has signalled previously that he'd be interested in handing over the reigns once the original strategy was delivered.

I'd like to see them get into construction. They could build residential or office space with amazing attention to detail. I'm imagining the level of design that usually goes into a car interior applied to a home or hotel. There are already builders in China exploring mostly prefab highrises - so imagine if Apple started building a few thousand luxury buildings a year and were able to get the costs down.

This is exactly the sort of thinking that leads to companies becoming irrelevant; almost nothing can move the needle for them, so they fail to see the next thing coming.

The initial theory of disruptive innovation from The Innovator's Dilemma is about this exact issue and how companies can deal with it.

The problem they're facing with the big bets is that they can lose big as well. With iPhone sales dropping 30%/year, they're losing about that much revenue also, since the company's revenue is tied so much to that singular product.

A broad product portfolio will always be more stable over the long term.

Apple already makes the most popular camera and the most popular gaming device: the iPhone.

I’ve read a number of articles about the prospect of an Apple car but most have still left me with more questions than answers.

My main questions regarding an Apple car are the following:

1. Apple seems reluctant to chase market share at the expense of profit. The automotive industry is very well established and from my understanding operates on razor thin margins. Apple seems to be a master of the supply chain but much of this has to do with the fact that they ship such large numbers of very similar hardware. Apple doesn’t ship the most smartphones in the world but they do ship the most of a single model and this allows them to put incredible pressure on their suppliers. Does anyone expect Apple to be able to move so many cars that they would be able to put more downward pressure on suppliers than the traditional automakers?

2. If the strategy isn’t to dominate the market and thus assert downward pressure on suppliers then I would assume the strategy would be to sell a premium car that carries higher margins. Apple obviously has a well deserved reputation as a premium product within the computing/electronics space but is it a given that this would translate to the automotive market as well? I don’t particularly care for a brand’s prestige but I know this does inform many consumers’ decision making. Apple might be viewed as a premium brand compared to Samsung/Moto/Lenovo/HP/etc, but would most consumers be willing to pay a premium for an Apple car compared to a BMW or Mercedes?

3. Is there any reason that Apple’s prowess in the electronics supply chain may not translate well to the automotive supply chain? These two industries seem very different to me.

4. Apple, like almost everyone else in the tech industry, uses outsourced manufacturing for the majority of their products. While there are similar contract manufacturers in automotive, they are not nearly as large nor their use as wide spread, to my knowledge at least. Foxconn was already one of the biggest electronics manufacturers even before they started building iPhones for Apple, I don’t think a Foxconn equivalent exists in the automotive world. I would imagine this may present problems for someone like Apple that doesn’t plan on actually building their own cars, or do they?

5. There is considerable risk when launching a car model, even for the established players, I would assume the potential risk for a newcomer would be even greater. Newly introduced cars seem to suffer from more serious and more widespread problems than newly launched smartphones/computers do, although those often suffer problems as well. Does the potential exist that problems encountered with a newly introduced Apple car may carry over to negative perceptions about the broader Apple brand? It seems enormously perilous to me to risk your brand reputation on one specific product line that traditionally tends to be both very low margin and suffer from frequent defects.

I’m curious what others may think of my concerns or if anyone knows of articles that have gone into more depth with regards to my concerns.

Apple might be viewed as a premium brand compared to Samsung/Moto/Lenovo/HP

Samsung is in #2 spot in global brand valuation. Google, Microsoft, and Verizon round out top 5.


EDIT: Upon a bit more research I find different valuations but still Samsung is up there.

> global brand

> Verizon

There's definitely something wrong with this.

Well Microsoft is up there too so ...

Until the next big thing comes, AAPL shares just hit 2year low so people might be losing their trust/patience.

Apple's not going to pivot. I'm sure they'd like to, but I can't really see what they would pivot too. Instead they'll just throw their hat into the usual next big thing everyone else is chasing - VR / AR and electric cars - of which I don't think they'll have a lot of success in. Their bread and butter will always be the iPhone and they'll ride that wave until it comes crashing to the shore.

If we're going to go on history, it's quite likely that whatever Apple pivots to, lots of people will say "yeah, whatever Apple, that's a tiny market and there are already like four players in there and they're all more serious than you." Then within three years Apple will have taken what seemed not so consequential, completely dominated, expanded the market by several orders of magnitude, and left everybody in their dust.

That's what a successful Apple pivot looks like.

VR, electric cars?! Maybe, but extremely unlikely. Those are obvious things that everybody in Silicon Valley is thinking about and has overhyped to death. Apple would probably take some smaller category that people hadn't thought could hit the big time. IMHO, it's obviously not going to be VR, that's been completely overhyped, sounds cool to nerds but completely impractical and practically useless, and will have basically no impact on the majority of lives out there.

This mythic story was true in the past, but with the Apple watch, they didn't introduce something that different from the competition - most of their win there was because of their brand, their loyal customers and the watch being a fashion item.

I'd say the watch is similar to the iPod; there was competition out there but the general public didn't really care. Then the iPod was released and commentators complained it was less capable and more expensive than its rivals (insert famous slashdot quote here). But the people who bought it loved it and Apple iterated on the design. (With the watch there are a number of studies that say that tech people don't like it but non-tech people love it - personally I sold mine and won't get another till the screen is on constantly and its thinner).

The question is whether the watch repeats the iPod trick of dominating and expanding the market two iterations on. With the iPod this happened when it was no longer tied to the Mac, maybe with the watch that will happen when it's no longer tied to the iPhone?

> but I can't really see what they would pivot too.

If a pivot was obvious, then it wouldn't be a pivot. It would just be the next step in the original plan.


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