Apple's Jeff Williams calls cars 'the ultimate mobile device' in discussion on CarPlay

Posted:
in Future Apple Hardware edited May 2015
As the CarPlay rollout slowly marches on and rumors swirl around a possible Apple-branded electric car, Apple operations chief Jeff Williams on Wednesday referred to cars as "the ultimate mobile device."




"The car is the ultimate mobile device, isn't it?" Williams said at Re/code's Code Conference, responding to a question about which new markets Apple is looking at. "We explore all kinds of categories. We'll certainly continue to look at those, and evaluate where we can make a huge difference."

Williams was referring to CarPlay, but his comments are sure to add fuel to the Apple Car fire.

Rumors of an Apple car first surfaced in February of this year, with reports that the iPhone maker was preparing to "give Tesla a run for its money" with a new electric vehicle. Apple is thought to have "several hundred" workers on the car project, which is said to be codenamed "Titan."

The rollout of CarPlay, meanwhile, continues to expand. At the same conference, GM CEO Mary Barra announced that CarPlay would come to 14 Chevrolet models for 2016.
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Comments

  • Reply 1 of 36
    rogifanrogifan Posts: 10,669member
    Of course Williams is going to say he was talking about CarPlay. That will be the standard answer as Apple doesn't want to give anything away. But the question was about the next $10-$20B business. That won't be CarPlay.
  • Reply 2 of 36
    thewhitefalconthewhitefalcon Posts: 4,453member
    Quote:

    Originally Posted by Rogifan View Post



    Of course Williams is going to say he was talking about CarPlay. That will be the standard answer as Apple doesn't want to give anything away. But the question was about the next $10-$20B business. That won't be CarPlay.



    Kinda small for a car business though.

     

    Jobs commented in his biography, when asked who else did vertical integration the way they did, that the car companies were the most clear example. And it's true; while they don't build as much anymore, and they do use off the shelf components in some cases (tires, glass) they do typically design things and have someone else build to their specifications.

     

    (Of the main US brands, Ford designs and builds the most, Chrysler the least, with GM somewhere in the middle)

     

    Basically, I'm saying that Apple's culture translates well to building automobiles.

  • Reply 3 of 36
    mac_128mac_128 Posts: 3,150member
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

    Basically, I'm saying that Apple's culture translates well to building automobiles.


    Apple may very well build a car someday, and while I agree the business model translates similarly, it differs in one very big way -- the car business is by and large a capital intensive, low profit margin, business. The premium automakers make something in the realm of around 6-10% any given year, while most automakers make something less than 5%. In other words, Apple will have to invest heavily to launch the business, only to receive little in return, forcing them to recoup in volume sales, like the rest of the car makers.

  • Reply 4 of 36
    SpamSandwichSpamSandwich Posts: 29,770member

    "Apple Car fire"? Now there's a gigantic assumption.

  • Reply 5 of 36
    rogifanrogifan Posts: 10,669member
    mac_128 wrote: »
    Apple may very well build a car someday, and while I agree the business model translates similarly, it differs in one very big way -- the car business is by and large a capital intensive, low profit margin, business. The premium automakers make something in the realm of around 6-10% any given year, while most automakers make something less than 5%. In other words, Apple will have to invest heavily to launch the business, only to receive little in return, forcing them to recoup in volume sales, like the rest of the car makers.

    When has low profit margins stopped Apple from entering a market? Last time I checked the profit margins for PCs, smartphones and tablets aren't that great for companies not named Apple. And who's to say the car of the future will be anything like the car of the present?
  • Reply 6 of 36
    cykzcykz Posts: 81member
    mac_128 wrote: »
    In other words, Apple will have to invest heavily to launch the business, only to receive little in return, forcing them to recoup in volume sales, like the rest of the car makers.
    Or come up with a radically reimagined mobile device doing a significantly better job than current cars do while presenting a business model enabling high margins.
  • Reply 7 of 36
    rogifanrogifan Posts: 10,669member

    Kinda small for a car business though.

    Jobs commented in his biography, when asked who else did vertical integration the way they did, that the car companies were the most clear example. And it's true; while they don't build as much anymore, and they do use off the shelf components in some cases (tires, glass) they do typically design things and have someone else build to their specifications.

    (Of the main US brands, Ford designs and builds the most, Chrysler the least, with GM somewhere in the middle)

    Basically, I'm saying that Apple's culture translates well to building automobiles.

    I know a lot of people talk about Apple owning the dashboard but when has Apple ever been successful being a piece of technology in someone else's product? How successful could they be without deep integration and what car company will give them that level of access and control? The dashboard is a differentiator. Car companies don't want their dashboard looking just like a competitors dashboard. Apple is all about vertical integration and a consistent user experience. There's no way that CarPlay can grow Apple's revenue base in a insignificant fashion.

    Ben Bajarin is bullish on Apple getting into this market. I don't see how they can ignore it. Heck even Uber is working on their own vehicles. And all the rumors so far suggest Apple is working on something much bigger than CarPlay. The WSJ said Cook signed off on a team of 1,000 to explore this. You don't need 1,000 employees working on CarPlay. And many of the Apple employees rumored to be working on this project come from hardware engineering/manufacturing design. Not the kind of people you'd expect to be working on infotainment systems for other car companies dashboards.
  • Reply 8 of 36
    To the point above on profit margins, that's very much because of the sales system in place and also the good ol' combustion engine. The car sales system is an antiquated relic if ever there was one. Check with Tesla's margins. I would expect them to be at least slightly better (and no dealers who scam off a large portion of the revenue). And as mentioned above, low margins isn't the only issue Apple will look at. It's what they can bring to the product that makes a difference and they could bring a LOT to the product.

    Once you go electric a lot of the knowledge and expertise of the traditional car companies goes out the window. It becomes a tech product. User Interface, wireless updates, GPS systems built in for self nav. These require skill sets that Google and Apple and other technology companies have. NOT Ford. No matter what they say, the big automakers are living 20 years ago. Cars are a technology issue now. The market won't change overnight. But the trend is clear. There will continue to be a need for powerful gas driven vehicles, but that's not where the market will be growing. Self driving, electric solutions will be a growing market. Let Ford make trucks. For 90% of people in urban settings (and by the way America continues to have larger population growth in urban areas than rural, as does the rest of the world) the idea of what a car is will change radically in the next 50 years. Apple would be wise to be watching this.
  • Reply 9 of 36
    rogifanrogifan Posts: 10,669member
    Let's not forget at the D conference in 2012 Tim Cook said "the wrist was interesting". Apple does give clues every now and then.
  • Reply 10 of 36
    sflagelsflagel Posts: 571member
    mac_128 wrote: »
    Apple may very well build a car someday, and while I agree the business model translates similarly, it differs in one very big way -- the car business is by and large a capital intensive, low profit margin, business. The premium automakers make something in the realm of around 6-10% any given year, while most automakers make something less than 5%. In other words, Apple will have to invest heavily to launch the business, only to receive little in return, forcing them to recoup in volume sales, like the rest of the car makers.

    The value chain of the car industry is ripe for more changes. Especially outsourcing the manufacture should now be possible. Tesla outsourced the manufacture of the Roadster, I would not be surprised if Apple managed to convince, say, Fiat, to manufacture a car for them at low cost.

    And when that happens, the "internals" of a car become the important differentiator. Already today, I will buy a car based on the quality of its adaptive cruise control, accuracy of its active lane assist, auto park, etc. But we shall also notice: it's the car companies that lead this technology, Tesla is 3 years behind Audi and Merc in this area.
  • Reply 11 of 36
    formosaformosa Posts: 261member
    Quote:
    Originally Posted by cykz View Post





    Or come up with a radically reimagined mobile device doing a significantly better job than current cars do while presenting a business model enabling high margins.

     

    The US government is already exploring policies to speed up (mandate?) V2V (vehicle-to-vehicle) communication in the interest of safety (by reducing human error). Autonomous vehicles are the next step, and Apple may be targeting this area with all these rumors of automobile development. An autonomous vehicle would be a radically new business model that is not completely entrenched by any of the traditional auto manufacturer players, giving Apple a more level playing field. And such a vehicle is probably 5+ years away from production, giving Apple time to develop it their way.

  • Reply 12 of 36
    mac_128mac_128 Posts: 3,150member
    Quote:

    Originally Posted by Rogifan View Post





    When has low profit margins stopped Apple from entering a market? Last time I checked the profit margins for PCs, smartphones and tablets aren't that great for companies not named Apple. And who's to say the car of the future will be anything like the car of the present?



    Apple is the BMW of PCs, Smartphones, and Tablets. Considering BMW at best can only expect a 10% margin on the cars they sell, where is the evidence to support that Apple could do as well as they do with the iPhone (which some say is as high as 69% on the iPhone 6), after they recoup the billions in capital required to start up a business of this magnitude? Looking at the current industry, even if Apple manages to streamline the auto industry, eliminate the middleman, and generally reduce overhead and increase efficiency, how are they going to do any better than BMW is today (which is considerably lower than what they are used to), even if the car of the future is radically different than what it is today? I mean we're talking about Apple getting into the car business in 5 years time right? What could be so different?

  • Reply 13 of 36
    mcdavemcdave Posts: 947member
    "The car is the ultimate mobile device, isn't it?"

    No. The JetPack2.0* is the ultimate mobile device and I'm still waiting for Google to pull mine out of their arse!

    (* not 1.0, that will have garbage collection issues causing Android to stall and the customer/victim to fall out of the sky - ironically causing real garbage collectors to rush in to clear up, tripping over the open source contributors rushing the other way.)

    GOOGLE, WHERE'S MY F'ING JETPACK!

    Apple won't get into the car business, they'll re-invent the SmartCar category - once Samsung has soiled the term of course.
  • Reply 14 of 36
    rogifanrogifan Posts: 10,669member
    mac_128 wrote: »

    Apple is the BMW of PCs, Smartphones, and Tablets. Considering BMW at best can only expect a 10% margin on the cars they sell, where is the evidence to support that Apple could do as well as they do with the iPhone (which some say is as high as 69% on the iPhone 6), after they recoup the billions in capital required to start up a business of this magnitude? Looking at the current industry, even if Apple manages to streamline the auto industry, eliminate the middleman, and generally reduce overhead and increase efficiency, how are they going to do any better than BMW is today (which is considerably lower than what they are used to), even if the car of the future is radically different than what it is today? I mean we're talking about Apple getting into the car business in 5 years time right? What could be so different?

    I don't know but I think Apple is foolish not to explore it. And I'm not sure where you're getting your 69% iPhone gross margin from considering what Apple reported in their latest financials was total GM of around 40%.
  • Reply 15 of 36
    danielswdanielsw Posts: 905member
    Quote:
    Originally Posted by Mac_128 View Post

     

    Apple may very well build a car someday, and while I agree the business model translates similarly, it differs in one very big way -- the car business is by and large a capital intensive, low profit margin, business. The premium automakers make something in the realm of around 6-10% any given year, while most automakers make something less than 5%. In other words, Apple will have to invest heavily to launch the business, only to receive little in return, forcing them to recoup in volume sales, like the rest of the car makers.




    Why do you people keep trying to paint "futures" based on "pasts"? And why do you insist on comparing apples and oranges?

     

    Just like all of Apple's products: they "get it right" and are not bound to repeat past mistakes. One thing about an Apple Car would be reasonably assured: it's not going to be like any car we know. Though it may take a few lessons from Tesla, Apple has a chance to really re-think the electric automobile.

     

    For one thing, I think Tesla is showing us that the dealership business model is entirely unnecessary. So factor out the huge dealer markup that won't be there for the Apple Car.

     

    For another thing, I don't think Apple is going to have to go to the government, hat in hand, and ask for a loan.

     

    Perhaps they'll throw in with Tesla and its mega factories to ensure adequate battery supplies. Perhaps R&D will come up with better battery designs.

     

    There will be thousands of factors coming together to result in a viable and compelling Apple-branded car which will most likely be more affordable than Tesla's current offerings, and will be compelling enough to prompt a huge number of pre-orders.

  • Reply 16 of 36
    mstonemstone Posts: 11,510member
    Quote:

    Originally Posted by sflagel View Post





    The cavaliers chain if the car industry is ripe for more changes. Especially outsourcing manufacture should now be possible. Tesla outsourced the manufacture of the Roadster, I would not be surprised if Apple managed to convince, say, Fiat, to manufacture a car for them at low cost.



    Tesla hired Lotus to build the Roadster, both small companies and Lotus has virtually no presence in the US, but Apple would need a large auto manufacturer in the US if they wanted to outsource it because that is where the initial customer base would be for an Apple electric car and they would need to go huge to make it a real success, because there are just so many competitors in the auto business. If it was outsourced to Fiat, that would be Chrysler in the US, but I wonder why Chrysler would want to cut their own throat and build cars for Apple? I'd also question the quality of Fiat/Chrysler. 

     

    I would love it if Apple actually got back to manufacturing in the US like they did recently with the Mac Pro.

  • Reply 17 of 36
    dachardachar Posts: 330member
    Quote:

    Originally Posted by sflagel View Post





    The cavaliers chain if the car industry is ripe for more changes. Especially outsourcing manufacture should now be possible. Tesla outsourced the manufacture of the Roadster, I would not be surprised if Apple managed to convince, say, Fiat, to manufacture a car for them at low cost.

    Apple using Fiat? LOL! Surely Apple would choose a quality manufacturer with a reputation for reliable well engineered cars like Honda or Lexus? Fiat would be way down the list.

  • Reply 18 of 36
    thewhitefalconthewhitefalcon Posts: 4,453member
    dachar wrote: »
    Apple using Fiat? LOL! Surely Apple would choose a quality manufacturer with a reputation for reliable well engineered cars like Honda or Lexus? Fiat would be way down the list.

    Honda and Toyota aren't great either. Especially Toyota, who's still recovering from a disasterous decade.
  • Reply 19 of 36
    mac_128mac_128 Posts: 3,150member
    Quote:

    Originally Posted by Mark Fearing View Post



    Self driving, electric solutions will be a growing market.

    No doubt, but will it allow for the same kinds of margins that Apple is used to? People are only willing to pay so much for a car, and then they drive them into the ground. In order for Apple to hold their margins where they are used to, they'll end up being the new Bentley of car makers, priced significantly higher than their competitors and only affordable to its customers who can afford the Edition watch. They certainly don't want to start subsidizing a car. I don't see this much differently than the fabled Apple TV monitor. TVs are a commodity product which are purchased infrequently, and used until they die, and the business operates on razor thin margins. Apple could enter that kind of market, but it doesn't satisfy the parameters of their current business model. But they could do it for much less than building a car, making it a much more reasonable proposition from a capital investment position. 

     

    In doing a little more research, I discovered that Porsche makes a gross profit of 18% on every car it sells. That's the highest in the industry, and drops preciously from there. But they only sold 162K in 2013. That's a significantly smaller amount than Apple sells of anything, and at a much lower profit margin, after a substantial capital investment which needs to be recouped before earning dollar one.

  • Reply 20 of 36
    dasanman69dasanman69 Posts: 12,957member
    To the point above on profit margins, that's very much because of the sales system in place and also the good ol' combustion engine. The car sales system is an antiquated relic if ever there was one. Check with Tesla's margins. I would expect them to be at least slightly better (and no dealers who scam off a large portion of the revenue). And as mentioned above, low margins isn't the only issue Apple will look at. It's what they can bring to the product that makes a difference and they could bring a LOT to the product.

    Once you go electric a lot of the knowledge and expertise of the traditional car companies goes out the window. It becomes a tech product. User Interface, wireless updates, GPS systems built in for self nav. These require skill sets that Google and Apple and other technology companies have. NOT Ford. No matter what they say, the big automakers are living 20 years ago. Cars are a technology issue now. The market won't change overnight. But the trend is clear. There will continue to be a need for powerful gas driven vehicles, but that's not where the market will be growing. Self driving, electric solutions will be a growing market. Let Ford make trucks. For 90% of people in urban settings (and by the way America continues to have larger population growth in urban areas than rural, as does the rest of the world) the idea of what a car is will change radically in the next 50 years. Apple would be wise to be watching this.

    Tesla makes no money.
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