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I think it has to do with the car industry being the best out of a bunch of bad options. You simply don't need the kind of liquidity Apple has on hand to run a
by Roritharr 10y ago
I think it has to do with the car industry being the best out of a bunch of bad options. You simply don't need the kind of liquidity Apple has on hand to run a business with the current Product Lineup Apple has on offer. Sure they could do more here and there, but compared to the insane amounts of capital Apple has, any effort in the computing/telco space is just pocketchange.
If Apple ventures out of computing and into areas that need that kind of capital to be feasible, you start comparing lots of medium to low margin industries, the car industry being one of them.
When you look at Apple's brand, company focus and in-house experience, there's only a few industries where diving into could make it a relatively safe bet for the capital involved.
Cars make sense because they are complex technology, already very brand and UX focused in their usual sales processes, and there is a lot of money to be made in the optimization of the supply chain, all things which Apple is second to none.
There were surely other options and I imagine are still being discussed in Cupertino.
Large Scale Urban Development seems like a similar viable candidate, but the salescycles and product lifecycles are probably too much at odds with the rest of Apples business. But the prospect of an build to order Apple Campus must seem quite exciting to some people that are having a blast building the new spaceship.
Among other industries, i could also imagine the Hotel industry being on their marks for similar reasons.
- coredog64 10y agoThat supply chain optimization comes at the cost of having to fight 50 pitched political battles with some very entrenched interests (dealerships).
- csours 10y agoThe supply chain is on the other end of the process from the dealerships. Supply chain -> Assembly (manufacturing) -> sales (Dealership)
- Bluestrike2 10y agoI can't see Apple (or any other car startup, for that matter) going any where near the dealership model. There are too many problems with it and too little flexibility. If it weren't for legacy agreements that effectively hamstring manufacturers, it's likely that there would have been some significant changes made years ago. Anyhow, Tesla has already done the hard work of confronting it and making consumers aware of an alternative. The biggest problem will be dealing with their influence over state legislatures. Tesla already upset dealerships; the idea of someone like Apple (with their capital on hand, experience, and influence at the federal level) following in Tesla's footsteps will be enough to terrify dealerships into some pretty heavy-handed action. As for the supply chains, there are a lot of differences between the supply chain for consumer electronics manufacturing and automobile parts, but Apple's experience is still intensely relevant. I think it's likely that they'll have a lot of successes in dealing with it, despite those differences.
- SEJeff 10y agoSeems like for a distribution model, Apple would go the way of Tesla and forgo them entirely. In fact, it would be amusing to see Apple fight legal battles that help sell Teslas in states where they've outlawed it due to the huge dealer lobby. If anyone could slug that one out and win, Apple certainly has the expertise and capital to do it.
- zwily 10y agoTesla will have already won most the battles before Apple starts fighting, I'm guessing.
- ams6110 10y agoIndeed. I would be a little nervous if I were a traditional brick-and-mortar car dealer franchisee right about now. Because if Tesla gets the laws changed, what's to stop the big manufacturers from just selling direct as well.
- greglindahl 10y agoExisting auto manufacturers have signed contracts with their existing dealers. All states have laws that protect those contracts. Tesla is not attacking those contracts and those laws. Tesla's attacking laws that say that all new autos have to be sold by dealers. That's quite different, and only a few states have such laws.
- deleted 10y ago[deleted]
- maxerickson 10y agoThe businesses you mention have much lower margins than premium consumer electronics. Apple branded condos would be a poor use of the brand. They should just give the money to shareholders if that's all they can think of.
- Roritharr 10y agoThats the point, there are no other industries that provide a ROI as high as Apples while needing that much cash and benefit from Apple Position. Hence the choosing of the best of Bad options. Giving the money to shareholders surely would be an option, but Apple's Board seems to think going toward another big industry is a better Option.
- Zigurd 10y agoApple appears to be able to defy gravity in smartphone margins. Let's see how they do with cars. Some people think Tesla has a 25%+ gross margin. And Apple has the capital to do something similar at a the scale of auto industry incumbents.
- ams6110 10y agoIt's one thing to talk yourself into an iPhone that costs a few hundred dollars more than the competition. It's another thing to talk yourself into an iCar that costs $50,000 more (assuming...)
- Zigurd 10y agoPorsche reputedly makes $23,000 in gross margin contribution per unit. That's probably worth 50 VW Golfs in margin contribution.
- dingaling 10y agoWith the capital they have on hand they could literally start space hotels as a business; they have more cash than the horrifically cost-inefficient ISS cost and just short of the entire Apollo program ( about $150 billion adjusted for inflation ). Compared to options like that, building cars just looks like selling sugary water. Why not put 90% in the pot and really move things forward?
- deleted 10y ago[deleted]
- sangnoir 10y ago> Why not put 90% in the pot and really move things forward? Job security? I bet the shareholders would revolt at the first sign of faltering on a $150 billion project. Sugary water might not be exciting, but it is nice and safe and won't get the C-level execs fired.