6 ms·

If I was an Apple shareholder (I guess I am, indirectly through Berkshire), this would piss me off. Apple is in a very good business. Cars are a terrible busine

If I was an Apple shareholder (I guess I am, indirectly through Berkshire), this would piss me off. Apple is in a very good business. Cars are a terrible business. Just compare Apple’s margins to any car company. Also, it’s really hard to move into a business that is widely outside your core competency. It can be done, but the effort is huge, and I suspect the median track record is poor.

volta87 6y ago
Same thought.
kansface 6y ago
I'm a small time Apple shareholder and have the opposite reaction. Apple is sitting on 300 billion in cash - I expect them to do something with it. They need to move into some other market because their existing ones are tapped out. Cars are a great fit: 1. Big enough market for an investment of 10s of billions 2. Its international (quit a bit of that money is stuck overseas) 3. Making electric cars isn't too hard (see Tesla) 4. Its a consumer product and they have the best consumer brand which they can easily leverage. 5. The car market is poised to be radically disrupted in the short term - electric cars/self driving cars
- eightails 6y ago
  > Making electric cars isn't too hard (see Tesla) I don't know, I think Tesla is a good example of how difficult it is to penetrate the car market as a new company. It took them nearly 20 years to get where they are today, and it's not like that was 20 years of smooth sailing. From what I've read they came close to going under multiple times. Aren't they the first major new US car company to start up and not go under since the early 20th century? The situation for Apple is certainly different, given their size and the massive leaps in terms of EV tech compared to when Tesla started out, but let's not trivialise the complexity of the task and the inherent financial expenditure and risk.
  - aaaxyz 6y ago
    Tesla's worst year (2017) had them at -3.5B$ cash flow. Apple has 200B$ in cash reserves. With that kind of money they could afford to purchase an existing car company and sustain similar losses for a few decades.
- divbzero 6y ago
  > Apple is sitting on 300 billion in cash - I expect them to do something with it. “Do something with it” doesn’t have to be reinvesting within the company. Apple has been doing a good job returning excess cash to shareholders, spending roughly $250 billion since 2015 to reduce shares outstanding from 22 billion to 17 billion.
- thekyle 6y ago
  > Apple is sitting on 300 billion in cash - I expect them to do something with it. Why can't they just pay it out to shareholders and let them figure out how to invest it?
  - bufferoverflow 6y ago
    They can, but then their company doesn't grow. Why would you do that?
  - ogre_codes 6y ago
    They have been. Apple has returned over half a trillion dollars to shareholders over the past 6 years or so. They have pledged to be cashflow neutral going forward. They do still have a monster cash reserve, but they are also very good to shareholders at the same time. Edit: corrected an order of magnitude error in figures! Thanks umeshunni
    - umeshunni 6y ago
      I think you mean half a trillion
- ksec 6y ago
  I think the Goal would be Uber, but with a fleet of Apple Cars. I still dont see how selling and servicing Apple Cars would work for Apple if it is sold as an originally car. That large investment and sunk cost would be a good use for its Cash. ( And it would be part of their Services Revenue ) Apple also gets to trial and gather Data with their current Map Data Collection vehicle. The problem is there is nothing, absolutely zero indication that we can crack Level 5 self driving within next 5 years. It is always easy to get the first 80%, the last 20%, the small and minor details will often take as long if not longer than the first 80%. We have just arrived at the 80% point, and there is always the illusion of we are close to Self Driving Goal. And we are not. And apart from that there are no indication as to how Apple is competing with Batteries. Tesla as a car manufacture may be easy to replicate, ( only on a relative scale, it is actually difficult to make cars in mass quantities, especially with Apple that demands perfection. Unlike Tesla ) but Tesla Battery is at least 4 - 5 years ahead of everyone else from both technological and manufacturing. And no have seems to have shown a plausible plan of how Apple is going to tackle this.
  - rrrrrrrrrrrryan 6y ago
    Do we need level 5? Waymo has level 4 robotaxis that anyone can request after landing at the Phoenix airport, by just downloading the app. I feel like this use case is sufficient to build a business around.
zarkov99 6y ago
I am an Apple share holder and I am thrilled. How did you feel when the first iPhone came out? Isn't this similar?
_ph_ 6y ago
One can say many things about Tim Cook, but not that he doesn't understand "business". So if Apple makes a car, they certainly have a plan on how to make a profit from it.
- whywhywhywhy 6y ago
  >One can say many things about Tim Cook, but not that he doesn't understand "business". He understands business perfectly, but does he understand product?
  - _ph_ 6y ago
    I don't know, but so far under his lead, Apple managed very well selling the new products they bring to the market.
    - Niksko 6y ago
      Have they? The Apple Watch is selling well now after a few iterations. Have any other products launched that have sold well? M1 looks good, but it's on the back of several years of lackluster laptops and things nobody wants like the touchbar. The pro video and audio community is increasingly alienated by $700 wheels and are switching to Windows or Linux. Earpods have been a success but has the Homepod? Iphones have been iterating but not really revolutionizing. I'd say his record is pretty spotty.
      - _ph_ 6y ago
        I was talking from the business side and if you look at Apples ernings, they are excellent. So excellent that Apple has become the most valuable company of the world. It is the sum of all the products launched and marketed. The Macs had a few bad years, mostly because of the keyboards and the lack of a Mac Pro. They fixed the keyboards and the 16" MB Pro is selling like hotcakes, wait times are often long. And so far their switch to Apple Silicon exceends every expectations. I don't think the pro video and audio community is switching because of those wheels, which certainly are overpriced, but because Apple waited too long for a new Mac Pro and the current machine is extremely expensive. This all might change a lot with Apple Silicon though. Edit: after using the touchbar for a while, I love it. For a lot of tasks it is a great addition to their laptops, especially when you don't have a mouse around.
esclerofilo 6y ago
If you make a different enough product, you don't need to have similar prices to your competitors.
Bud 6y ago
Nobody was making hundreds of billions off of cell phones, either. Until Apple suddenly did.
- crazygringo 6y ago
  Exactly. Apple's not going to go into cars unless it's confident of being able to make equivalent margins. That's the entire point.
x87678r 6y ago
I completely agree but then Tesla came along.
- jtdev 6y ago
  Tesla isn’t really that profitable, especially relative to market cap.
kenhwang 6y ago
Apple makes more money per unit selling an iPhone than most automakers make from selling an entire car. The auto industry has historically been a low margin, low volume, high capital investment industry with significant government subsidies.
- chairmanwow1 6y ago
  They make money from servicing the car, which Apple is quite skilled at capturing as well..
  - kenhwang 6y ago
    Which is expected to be severely reduced with EVs unless Apple's plans are to enter the ICE market.
    - chairmanwow1 6y ago
      Fair point.
    - rrrrrrrrrrrryan 6y ago
      Makes me wonder if they're going to try to make money off of services and subscriptions...
nt2h9uh238h 6y ago
Cars in the future will be different than Cars of the past. It will be a high-margin business. Exactly the same as it was with "dumb phones" to "smart phones". Esp. with semi self driving.
m3kw9 6y ago
They should be very happy in assuming they have a good plan. You are assuming they are planning a traditional biz model.
tsjq 6y ago
is BRK share somewhat similar to a Mutual Fund unit ?
nickik 6y ago
They could have easily bought like 40% of Tesla a couple years ago, instead they were fucking around with their own car idea for years and years. Buying 40% of Tesla would have been a drop in the bucket for Apple, and it would have already payed off big time.

volta87 6y ago

Same thought.

kansface 6y ago

I'm a small time Apple shareholder and have the opposite reaction. Apple is sitting on 300 billion in cash - I expect them to do something with it. They need to move into some other market because their existing ones are tapped out. Cars are a great fit: 1. Big enough market for an investment of 10s of billions 2. Its international (quit a bit of that money is stuck overseas) 3. Making electric cars isn't too hard (see Tesla) 4. Its a consumer product and they have the best consumer brand which they can easily leverage. 5. The car market is poised to be radically disrupted in the short term - electric cars/self driving cars

eightails 6y ago
> Making electric cars isn't too hard (see Tesla) I don't know, I think Tesla is a good example of how difficult it is to penetrate the car market as a new company. It took them nearly 20 years to get where they are today, and it's not like that was 20 years of smooth sailing. From what I've read they came close to going under multiple times. Aren't they the first major new US car company to start up and not go under since the early 20th century? The situation for Apple is certainly different, given their size and the massive leaps in terms of EV tech compared to when Tesla started out, but let's not trivialise the complexity of the task and the inherent financial expenditure and risk.
- aaaxyz 6y ago
  Tesla's worst year (2017) had them at -3.5B$ cash flow. Apple has 200B$ in cash reserves. With that kind of money they could afford to purchase an existing car company and sustain similar losses for a few decades.
divbzero 6y ago
> Apple is sitting on 300 billion in cash - I expect them to do something with it. “Do something with it” doesn’t have to be reinvesting within the company. Apple has been doing a good job returning excess cash to shareholders, spending roughly $250 billion since 2015 to reduce shares outstanding from 22 billion to 17 billion.
thekyle 6y ago
> Apple is sitting on 300 billion in cash - I expect them to do something with it. Why can't they just pay it out to shareholders and let them figure out how to invest it?
- bufferoverflow 6y ago
  They can, but then their company doesn't grow. Why would you do that?
- ogre_codes 6y ago
  They have been. Apple has returned over half a trillion dollars to shareholders over the past 6 years or so. They have pledged to be cashflow neutral going forward. They do still have a monster cash reserve, but they are also very good to shareholders at the same time. Edit: corrected an order of magnitude error in figures! Thanks umeshunni
  - umeshunni 6y ago
    I think you mean half a trillion
ksec 6y ago
I think the Goal would be Uber, but with a fleet of Apple Cars. I still dont see how selling and servicing Apple Cars would work for Apple if it is sold as an originally car. That large investment and sunk cost would be a good use for its Cash. ( And it would be part of their Services Revenue ) Apple also gets to trial and gather Data with their current Map Data Collection vehicle. The problem is there is nothing, absolutely zero indication that we can crack Level 5 self driving within next 5 years. It is always easy to get the first 80%, the last 20%, the small and minor details will often take as long if not longer than the first 80%. We have just arrived at the 80% point, and there is always the illusion of we are close to Self Driving Goal. And we are not. And apart from that there are no indication as to how Apple is competing with Batteries. Tesla as a car manufacture may be easy to replicate, ( only on a relative scale, it is actually difficult to make cars in mass quantities, especially with Apple that demands perfection. Unlike Tesla ) but Tesla Battery is at least 4 - 5 years ahead of everyone else from both technological and manufacturing. And no have seems to have shown a plausible plan of how Apple is going to tackle this.
- rrrrrrrrrrrryan 6y ago
  Do we need level 5? Waymo has level 4 robotaxis that anyone can request after landing at the Phoenix airport, by just downloading the app. I feel like this use case is sufficient to build a business around.

zarkov99 6y ago

I am an Apple share holder and I am thrilled. How did you feel when the first iPhone came out? Isn't this similar?

_ph_ 6y ago

One can say many things about Tim Cook, but not that he doesn't understand "business". So if Apple makes a car, they certainly have a plan on how to make a profit from it.

whywhywhywhy 6y ago
>One can say many things about Tim Cook, but not that he doesn't understand "business". He understands business perfectly, but does he understand product?
- _ph_ 6y ago
  I don't know, but so far under his lead, Apple managed very well selling the new products they bring to the market.
  - Niksko 6y ago
    Have they? The Apple Watch is selling well now after a few iterations. Have any other products launched that have sold well? M1 looks good, but it's on the back of several years of lackluster laptops and things nobody wants like the touchbar. The pro video and audio community is increasingly alienated by $700 wheels and are switching to Windows or Linux. Earpods have been a success but has the Homepod? Iphones have been iterating but not really revolutionizing. I'd say his record is pretty spotty.
    - _ph_ 6y ago
      I was talking from the business side and if you look at Apples ernings, they are excellent. So excellent that Apple has become the most valuable company of the world. It is the sum of all the products launched and marketed. The Macs had a few bad years, mostly because of the keyboards and the lack of a Mac Pro. They fixed the keyboards and the 16" MB Pro is selling like hotcakes, wait times are often long. And so far their switch to Apple Silicon exceends every expectations. I don't think the pro video and audio community is switching because of those wheels, which certainly are overpriced, but because Apple waited too long for a new Mac Pro and the current machine is extremely expensive. This all might change a lot with Apple Silicon though. Edit: after using the touchbar for a while, I love it. For a lot of tasks it is a great addition to their laptops, especially when you don't have a mouse around.

esclerofilo 6y ago

If you make a different enough product, you don't need to have similar prices to your competitors.

Bud 6y ago

Nobody was making hundreds of billions off of cell phones, either. Until Apple suddenly did.

crazygringo 6y ago
Exactly. Apple's not going to go into cars unless it's confident of being able to make equivalent margins. That's the entire point.

x87678r 6y ago

I completely agree but then Tesla came along.

jtdev 6y ago
Tesla isn’t really that profitable, especially relative to market cap.

kenhwang 6y ago

Apple makes more money per unit selling an iPhone than most automakers make from selling an entire car. The auto industry has historically been a low margin, low volume, high capital investment industry with significant government subsidies.

chairmanwow1 6y ago
They make money from servicing the car, which Apple is quite skilled at capturing as well..
- kenhwang 6y ago
  Which is expected to be severely reduced with EVs unless Apple's plans are to enter the ICE market.
  - chairmanwow1 6y ago
    Fair point.
  - rrrrrrrrrrrryan 6y ago
    Makes me wonder if they're going to try to make money off of services and subscriptions...

nt2h9uh238h 6y ago

Cars in the future will be different than Cars of the past. It will be a high-margin business. Exactly the same as it was with "dumb phones" to "smart phones". Esp. with semi self driving.

m3kw9 6y ago

They should be very happy in assuming they have a good plan. You are assuming they are planning a traditional biz model.

tsjq 6y ago

is BRK share somewhat similar to a Mutual Fund unit ?

nickik 6y ago

They could have easily bought like 40% of Tesla a couple years ago, instead they were fucking around with their own car idea for years and years. Buying 40% of Tesla would have been a drop in the bucket for Apple, and it would have already payed off big time.