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If Apple were truly serious about building self-driving cars, they would buy one of the big 3 US auto manufacturers. It could buy all 3 with cash and still have

If Apple were truly serious about building self-driving cars, they would buy one of the big 3 US auto manufacturers. It could buy all 3 with cash and still have one of the largest hoards of cash ever accumulated.

coffeevradar 9y ago
Reasonably sure their buying all three automakers would attract the attention of antitrust regulators.
bsimpson 9y ago
The culture and support issues that would incur seem non-trivial.
hkmurakami 9y ago
They wouldn't get the tech they're looking for. Manufacturing scale is not something they need until after they have the self driving tech (and also, I'd just partner with a Japanese or German automaker tbh. Toyota under the current CEO has made moves that hint that it would be open to a joint venture). The main differentiator of current big auto is the engine and drivetrain engineering, which you can circumvent when going electric. It's unclear what you're buying with a big 3 company that actually helps with the self driving part of the problem, which is currently a much larger problem than manufacturing scale and quality assurance.
- erikpukinskis 9y ago
  You're also buying huge liabilities: - constrictive agreements with dealers - rapidly deprecating manufacturing assets - a workforce with sunk costs in last generation skills - a warranty burden on old vehicles - pensions and other union agreements - a beloved brand that the public may not be happy seeing chewed up and regurgitated as iTaxi Supplier 4A If you believe in an autonomous and electric near future, some of these companies should have Yahoo-style negative valuations.
  - fennecfoxen 9y ago
    > - a workforce with sunk costs in last generation skills Often a unionized workforce. You didn't want to use more robots on your assembly lines like Elon Musk, did you? Because these guys are still going to be employed. Period.
  - wellboy 9y ago
    I don't think these points are of any relevance. Once you have stage IV autonomy, you can partner with any car manufacturer you want, you have all the leverage. However, knowledge in cars definitely helps building the technology, since there are so many little variables that you otherwise would oversee.
    - bluGill 9y ago
      You can try to partner. However all major auto manufactures are looking at self driving cars. Some are doing it in house, some are having and existing trusted partner do it. That minor auto manufactures have partnerships with someone major and have reasonable confidence that their major partner will provide the technology. Apple and Silicone valley in general is not a trusted partner, in fact they are the opposite: untrusted. Car manufactures have lost millions of dollars on safety lawsuits. The cowboy coding culture silicon valley has a reputation (not always deserved) for doesn't work, they need controlled processes where they can show the courts they made effort to check everything, starting with the design phase. Car makers expect that they will be sued over a 10 year old car with some parts failing. They need to show the court they did everything possible to anticipate that exact failure case and either ensure it couldn't happen, or if it they handle it. When someone is dead, "we didn't think about that case" doesn't cut it. In short, I don't think Apple or google will get anywhere in self driving cars. They have early demonstrations, but that doesn't mean anything long term. It doesn't even prove they have an early lead (though I suspect they do) since car companies might or might not say anything about where they are. In fact in this case I expect them to be very careful not to say anything: if they say to much a lawyer might argue the car should have been self driving and thus the car manufacture is fault for an accident. As such they need to set expectations that self driving cars are a future thing that isn't ready yet.
ctdonath 9y ago
Over the decades I've noticed how businesses need to recognize and focus on their core competencies - if they don't, they die. Everything must feed that core, and undue distractions are lethal. Occasionally there's a need to pivot, which is deliberately stepping from one competency to another, but that is rare and difficult. Apple's core is to build small computers; everything else they do (music, video, cloud services, Siri, AI, AR, operating systems, etc) are all built to draw customers deeper into the ecosystem for the sole purpose of buying more small computers. Electric self-driving cars, while very nifty, are decidedly not small computers (at best being a tiny part of a large product demanding other competencies); to compete in that market requires scale which Apple could certainly buy but would fiercely compete for the attention vs small computers.
- plicense 9y ago
  I definitely wouldn't call AWS, Echo from Amazon occasional. I think companies come in all shapes and sizes - some focus 90% on their core, some try to spend more time and diverge out to other business segments. Its upto Apple to figure out what to do and what would make it successful.
  - ctdonath 9y ago
    AWS is an offshoot of building the massive system needed to process the "we sell absolutely everything" goal. Methinks they just got so good at it, cloud services just kinda took on a life of its own and grew from there - but still feeds the retailing monster. Echo is a consequence of exploring digital appliances as marketing tools. If you're going to build a device which can voice-interface someone ordering 6 bottles of Tide with extreme ease, doesn't take much more to turn it into a nice music speaker and tell you weather & sports & jokes on request. Echo, Fire, etc are just extensions to feeding the retailing monster. Do notice how Amazon's innovative foray into cell phones crashed & burned hard - despite being lauded as rather a well-built device. That shows how straying too far doesn't work, and that "far" isn't very.
    - traek 9y ago
      In what way is the billions of dollars Amazon is spending on original content "just an extention to feeding the retailing monster"? It's easy to point to one failed product as proof that "straying too far doesn't work", if you can do the mental gymnastics required to classify all their successful products as somehow more connected to their original goal.
valuearb 9y ago
Why would a high margin, high ROE, low capital requirements business like Apple invest in a low margin, poor ROE, high capital requirements business like a car maker? Besides being a poor investment that would lock up lots of their capital, it would also create a ton of management distractions. If they are serious about building self-driving cars, they are probably making a huge mistake. Cars have been a poor business model for quite a long time. Licensing automonomous tech seems like a far better business model.
- Fricken 9y ago
  Everybody and their dog is trying to develop autonomous tech and license it. Autonomous capabilities used to be regarded as the secret sauce, and if you had it, the future of mobility was yours. This is not true. The ability to mass produce a vehicle is the secret sauce. It's the part that's hard to do. But as far as low margins in the car industry goes, that point is irrelevant. Robotaxis are a different ballgame.
  - Eridrus 9y ago
    > Autonomous capabilities used to be regarded as the secret sauce, and if you had it, the future of mobility was yours. This is not true. I think you're right that when we get self-driving cars it won't be due to a single secret, but rather hundreds of years of engineering time dedicated to getting all the kinks out. But this is still a super complicated engineering problem, and not all people/orgs will be up to the task, and will not execute on the same timescales. I think the way this plays out will be determined by how much of a lead the first movers (probably WayMo) will have, and whether companies will cut corners to get something "good enough" out the door, and how the public will react to that. E.g. I think it's a very different world for automakers if WayMo turns out to have a 5 year lead on them, vs a 1 year lead on them. Cruise certainly looks like they are giving them a good run for their money.
- millstone 9y ago
  My understanding is that it's one of the few markets left that can move the needle. The biggest markets are health care, finance, petroleum, consumer electronics, and automotive. PCs and phones are low-margin capital intensive businesses. Apple seems pretty good at commanding high margins in such industries. As for why Apple doesn't license their tech, well, that's not how Apple operates, because then they lose control over the experience. ROKR and the like.
deepGem 9y ago
Apple will not buy any US company using it's cash hoard because of tax implications. They can of course raise debt, similar to what Amazon is doing with Whole foods.
- sumedh 9y ago
  > Apple will not buy any US company using it's cash hoard because of tax implications. Why cant Apple Ireland buy US companies?
Zigurd 9y ago
It wasn't true about mobile phones, a business which had what looked like insurmountably dominant incumbents when Apple entered the business. Instead, Apple changed the business out from under the incumbents. Autonomous vehicles will similarly change the vehicle and transportation industry. That's an inflection point where incumbency matters less.

coffeevradar 9y ago

Reasonably sure their buying all three automakers would attract the attention of antitrust regulators.

bsimpson 9y ago

The culture and support issues that would incur seem non-trivial.

hkmurakami 9y ago

They wouldn't get the tech they're looking for. Manufacturing scale is not something they need until after they have the self driving tech (and also, I'd just partner with a Japanese or German automaker tbh. Toyota under the current CEO has made moves that hint that it would be open to a joint venture). The main differentiator of current big auto is the engine and drivetrain engineering, which you can circumvent when going electric. It's unclear what you're buying with a big 3 company that actually helps with the self driving part of the problem, which is currently a much larger problem than manufacturing scale and quality assurance.

erikpukinskis 9y ago
You're also buying huge liabilities: - constrictive agreements with dealers - rapidly deprecating manufacturing assets - a workforce with sunk costs in last generation skills - a warranty burden on old vehicles - pensions and other union agreements - a beloved brand that the public may not be happy seeing chewed up and regurgitated as iTaxi Supplier 4A If you believe in an autonomous and electric near future, some of these companies should have Yahoo-style negative valuations.
- fennecfoxen 9y ago
  > - a workforce with sunk costs in last generation skills Often a unionized workforce. You didn't want to use more robots on your assembly lines like Elon Musk, did you? Because these guys are still going to be employed. Period.
- wellboy 9y ago
  I don't think these points are of any relevance. Once you have stage IV autonomy, you can partner with any car manufacturer you want, you have all the leverage. However, knowledge in cars definitely helps building the technology, since there are so many little variables that you otherwise would oversee.
  - bluGill 9y ago
    You can try to partner. However all major auto manufactures are looking at self driving cars. Some are doing it in house, some are having and existing trusted partner do it. That minor auto manufactures have partnerships with someone major and have reasonable confidence that their major partner will provide the technology. Apple and Silicone valley in general is not a trusted partner, in fact they are the opposite: untrusted. Car manufactures have lost millions of dollars on safety lawsuits. The cowboy coding culture silicon valley has a reputation (not always deserved) for doesn't work, they need controlled processes where they can show the courts they made effort to check everything, starting with the design phase. Car makers expect that they will be sued over a 10 year old car with some parts failing. They need to show the court they did everything possible to anticipate that exact failure case and either ensure it couldn't happen, or if it they handle it. When someone is dead, "we didn't think about that case" doesn't cut it. In short, I don't think Apple or google will get anywhere in self driving cars. They have early demonstrations, but that doesn't mean anything long term. It doesn't even prove they have an early lead (though I suspect they do) since car companies might or might not say anything about where they are. In fact in this case I expect them to be very careful not to say anything: if they say to much a lawyer might argue the car should have been self driving and thus the car manufacture is fault for an accident. As such they need to set expectations that self driving cars are a future thing that isn't ready yet.

ctdonath 9y ago

Over the decades I've noticed how businesses need to recognize and focus on their core competencies - if they don't, they die. Everything must feed that core, and undue distractions are lethal. Occasionally there's a need to pivot, which is deliberately stepping from one competency to another, but that is rare and difficult. Apple's core is to build small computers; everything else they do (music, video, cloud services, Siri, AI, AR, operating systems, etc) are all built to draw customers deeper into the ecosystem for the sole purpose of buying more small computers. Electric self-driving cars, while very nifty, are decidedly not small computers (at best being a tiny part of a large product demanding other competencies); to compete in that market requires scale which Apple could certainly buy but would fiercely compete for the attention vs small computers.

plicense 9y ago
I definitely wouldn't call AWS, Echo from Amazon occasional. I think companies come in all shapes and sizes - some focus 90% on their core, some try to spend more time and diverge out to other business segments. Its upto Apple to figure out what to do and what would make it successful.
- ctdonath 9y ago
  AWS is an offshoot of building the massive system needed to process the "we sell absolutely everything" goal. Methinks they just got so good at it, cloud services just kinda took on a life of its own and grew from there - but still feeds the retailing monster. Echo is a consequence of exploring digital appliances as marketing tools. If you're going to build a device which can voice-interface someone ordering 6 bottles of Tide with extreme ease, doesn't take much more to turn it into a nice music speaker and tell you weather & sports & jokes on request. Echo, Fire, etc are just extensions to feeding the retailing monster. Do notice how Amazon's innovative foray into cell phones crashed & burned hard - despite being lauded as rather a well-built device. That shows how straying too far doesn't work, and that "far" isn't very.
  - traek 9y ago
    In what way is the billions of dollars Amazon is spending on original content "just an extention to feeding the retailing monster"? It's easy to point to one failed product as proof that "straying too far doesn't work", if you can do the mental gymnastics required to classify all their successful products as somehow more connected to their original goal.

valuearb 9y ago

Why would a high margin, high ROE, low capital requirements business like Apple invest in a low margin, poor ROE, high capital requirements business like a car maker? Besides being a poor investment that would lock up lots of their capital, it would also create a ton of management distractions. If they are serious about building self-driving cars, they are probably making a huge mistake. Cars have been a poor business model for quite a long time. Licensing automonomous tech seems like a far better business model.

Fricken 9y ago
Everybody and their dog is trying to develop autonomous tech and license it. Autonomous capabilities used to be regarded as the secret sauce, and if you had it, the future of mobility was yours. This is not true. The ability to mass produce a vehicle is the secret sauce. It's the part that's hard to do. But as far as low margins in the car industry goes, that point is irrelevant. Robotaxis are a different ballgame.
- Eridrus 9y ago
  > Autonomous capabilities used to be regarded as the secret sauce, and if you had it, the future of mobility was yours. This is not true. I think you're right that when we get self-driving cars it won't be due to a single secret, but rather hundreds of years of engineering time dedicated to getting all the kinks out. But this is still a super complicated engineering problem, and not all people/orgs will be up to the task, and will not execute on the same timescales. I think the way this plays out will be determined by how much of a lead the first movers (probably WayMo) will have, and whether companies will cut corners to get something "good enough" out the door, and how the public will react to that. E.g. I think it's a very different world for automakers if WayMo turns out to have a 5 year lead on them, vs a 1 year lead on them. Cruise certainly looks like they are giving them a good run for their money.
millstone 9y ago
My understanding is that it's one of the few markets left that can move the needle. The biggest markets are health care, finance, petroleum, consumer electronics, and automotive. PCs and phones are low-margin capital intensive businesses. Apple seems pretty good at commanding high margins in such industries. As for why Apple doesn't license their tech, well, that's not how Apple operates, because then they lose control over the experience. ROKR and the like.

deepGem 9y ago

Apple will not buy any US company using it's cash hoard because of tax implications. They can of course raise debt, similar to what Amazon is doing with Whole foods.

sumedh 9y ago
> Apple will not buy any US company using it's cash hoard because of tax implications. Why cant Apple Ireland buy US companies?

Zigurd 9y ago

It wasn't true about mobile phones, a business which had what looked like insurmountably dominant incumbents when Apple entered the business. Instead, Apple changed the business out from under the incumbents. Autonomous vehicles will similarly change the vehicle and transportation industry. That's an inflection point where incumbency matters less.