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%.
Well it's not like I'm suggesting they shouldn't explore it. Apple explores a great many things as evidenced from their patent filings alone, and that in turn benefits the products they do bring to market. The 69% margin is what was widely reported after the teardown of the iPhone 6. But still 40% is an incredibly healthy margin compared to the automotive industry.
Why that obsession with margins? I guess margins are also in proportion with the overall price of the goods to be sold. A car would cost orders of magnitude more than anything Apple sells right now (except the gold watch), so a margin lower than the 2X% of macs would be acceptable. That would be the 18% that Porsche is achieving right now. My guess is that Apple could better that significantly.
The ultimate mobile device would also have vertical takeoff capabilities. If Apple were to do something really great in mobility, then make a VTOL vehicle for the masses, not some silly Tesla battery car knockoff! Yawn! Oh wait, batteries are not going to cut it for a VTOL vehicle.
Let me say it this way; Apple was never, ever , E V E R going to build TV sets. It never even crossed their mind.
Now; apply the same thing here.
While you consider this a complement, if Apple were the type of company never even considered building a television set they'd be a heck of a lot less successful than they are.
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.
You just don't get it. Every time "Apple" and "car" are mentioned in the same sentence, this is the secret code for Apple building a car. We will have pie in the sky when we die, for sure.
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.
The way the urban dwellers are killing each other right now, ill stick to rural areas.
"There were many things that led to the iPhone at Apple,” said Schiller. “We were searching for what to do after iPod that would make sense. If we can make the iPod, what else can we do?” Apple employees tossed around ideas like making a camera, a car, and other “crazy stuff,” Schiller said."
He and Steve Jobs used the phrase 'bet the company' in interviews to describe their investment in mobile phones:
The phone was the obvious choice because it followed on directly from the iPod and more capable feature phones would cannibalize the iPod anyway.
There's no obvious next step beyond the phone - there is a direction to go but not a path to get there. Microsoft, Samsung, Facebook are trying to figure out VR and in general it's this category of wearable technology but it's not a big market relative to phones because not everyone wants to wear the same type of product and in general the idea of wearing anything is taking a step back. That's why contact lenses and corrective eye surgery were invented, so that people wouldn't have to wear glasses.
The first consideration with a new market isn't the profit, it's making a significant impact. The iPod launched amongst cheaper music players at $400 and it brought iTunes with music purchasing and easy management. Tesla has gone a long way to modernizing the car but they are struggling with manufacturing and it's not easy to own and conveniently charge an electric car yet. Apple builds over 250m products per year. Tesla is at about 35k products per year. If Apple can apply their operational efficiency to building cars then they can make them cheaper and faster than Tesla. They can expand internationally much more easily and have the capital to support charging/replacement facilities worldwide. It's a market that can support multiple companies and Tesla has been going it alone for a while against the legacy car manufacturers.
Still, if Apple had plans for it, I doubt they'd burn up $100b doing a stock buyback. They could have bought GM and Ford with just a little more than that.
"The car is the ultimate mobile device, isn't it?" Williams said at Re/code's Code Conference
Wow nobody got the play on words.
...car is the ultimate mobile device
Do you get it??? No?
What is another word for car? Automobile. What are the origins of this word?
Quote:
ORIGIN late 19th cent.: fromFrench, fromauto- ‘self’ + mobile ‘mobile.’
"Oooooh now I get it."
A car is a mobile device because it can move you from point A to point B.
He doesn't mean a car is a mobile device in the sense you can put it in your back pocket and carry it around. He means it's mobile in the sense that it can move.
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.
Yeah, cause Apple will just do the same thing everyone else is doing to achieve the same margins, right?
First of all, the numbers you're quoting are for gasoline powered vehicles, which will have no bearing on what Apple manufactures.
Second, Apple manages the most effective and efficient supply chain on the planet. If they do make a car, they will apply all their skills to make the entire manufacturing process as ultra efficient and cost effective as possible. Third, there is no rule that Apple has to maintain the same margins on a vehicle that they do for their electronics in order to make the business lucrative and viable.
Regarding the margins. I guess there will be more ways to monetise the car of the future. With humans alleviated from the burden of driving, you have them captured and bored for potentially hours at a time each day. Film/music/app downloads, advertising.
Plus, lets just say the Apple Car is more like an automated taxi service, the margins increase substantially. With some very crude math:
Average 1 hour US taxi ride roughly: $180
iTaxi has the potential to be operational 24 hours a day, but lets say each car is only on pick up half that time, so potential taxi fare of $180 x 12 = $2160 per day.
365 days per year x $2160 = $788,400 !
An average US car costs $31,000 but lets say each iTaxi costs Apple over 3 times that at $100,000 to build.
That's 700% profit margin in the first year alone! Each car will have an operational lifetime of say 5 years and the profits significantly increase further.
This looks to me like a very likely candidate for disruption. Traditional human driven taxi's could be priced out of the market whilst still retaining high profit margins!
Sure there are other costs to remove from the equation such as energy, repairs, etc. But my point is, your 5% margins using todays business model may likely be outdated in the future.
Yeah, cause Apple will just do the same thing everyone else is doing to achieve the same margins, right?
First of all, the numbers you're quoting are for gasoline powered vehicles, which will have no bearing on what Apple manufactures.
Second, Apple manages the most effective and efficient supply chain on the planet. If they do make a car, they will apply all their skills to make the entire manufacturing process as ultra efficient and cost effective as possible. Third, there is no rule that Apple has to maintain the same margins on a vehicle that they do for their electronics in order to make the business lucrative and viable.
"Apple defeats laws of gravity, speed of light to be exceeded in new products."
Just wanted to get to that headline before someone else does.
What is another word for car? Automobile. What are the origins of this word?
"Oooooh now I get it."
A car is a mobile device because it can move you from point A to point B.
He doesn't mean a car is a mobile device in the sense you can put it in your back pocket and carry it around. He means it's mobile in the sense that it can move.
Did that really need an explanation :-); that was kind of evident.
Comments
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%.
Well it's not like I'm suggesting they shouldn't explore it. Apple explores a great many things as evidenced from their patent filings alone, and that in turn benefits the products they do bring to market. The 69% margin is what was widely reported after the teardown of the iPhone 6. But still 40% is an incredibly healthy margin compared to the automotive industry.
Why that obsession with margins? I guess margins are also in proportion with the overall price of the goods to be sold. A car would cost orders of magnitude more than anything Apple sells right now (except the gold watch), so a margin lower than the 2X% of macs would be acceptable. That would be the 18% that Porsche is achieving right now. My guess is that Apple could better that significantly.
Another question: does Apple make any money off licensing CarPlay? I am fairly certain it is NOT an open standard!
Oh crap… Here we go again.
Let me say it this way; Apple was never, ever , E V E R going to build TV sets. It never even crossed their mind.
Now; apply the same thing here.
Oh crap… Here we go again.
Let me say it this way; Apple was never, ever , E V E R going to build TV sets. It never even crossed their mind.
Now; apply the same thing here.
While you consider this a complement, if Apple were the type of company never even considered building a television set they'd be a heck of a lot less successful than they are.
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.
You just don't get it. Every time "Apple" and "car" are mentioned in the same sentence, this is the secret code for Apple building a car. We will have pie in the sky when we die, for sure.
The way the urban dwellers are killing each other right now, ill stick to rural areas.
They did before the iPhone according to Phil Schiller:
http://www.wired.com/2012/08/phil-schiller-testifies/
"There were many things that led to the iPhone at Apple,” said Schiller. “We were searching for what to do after iPod that would make sense. If we can make the iPod, what else can we do?” Apple employees tossed around ideas like making a camera, a car, and other “crazy stuff,” Schiller said."
He and Steve Jobs used the phrase 'bet the company' in interviews to describe their investment in mobile phones:
http://www.cnet.com/news/apples-schiller-iphone-was-a-bet-the-company-product/
The phone was the obvious choice because it followed on directly from the iPod and more capable feature phones would cannibalize the iPod anyway.
There's no obvious next step beyond the phone - there is a direction to go but not a path to get there. Microsoft, Samsung, Facebook are trying to figure out VR and in general it's this category of wearable technology but it's not a big market relative to phones because not everyone wants to wear the same type of product and in general the idea of wearing anything is taking a step back. That's why contact lenses and corrective eye surgery were invented, so that people wouldn't have to wear glasses.
The first consideration with a new market isn't the profit, it's making a significant impact. The iPod launched amongst cheaper music players at $400 and it brought iTunes with music purchasing and easy management. Tesla has gone a long way to modernizing the car but they are struggling with manufacturing and it's not easy to own and conveniently charge an electric car yet. Apple builds over 250m products per year. Tesla is at about 35k products per year. If Apple can apply their operational efficiency to building cars then they can make them cheaper and faster than Tesla. They can expand internationally much more easily and have the capital to support charging/replacement facilities worldwide. It's a market that can support multiple companies and Tesla has been going it alone for a while against the legacy car manufacturers.
Still, if Apple had plans for it, I doubt they'd burn up $100b doing a stock buyback. They could have bought GM and Ford with just a little more than that.
Why do you people keep trying to paint "futures" based on "pasts"?
I know, I come across this so often.
Wow nobody got the play on words.
...car is the ultimate mobile device
Do you get it??? No?
What is another word for car? Automobile. What are the origins of this word?
"Oooooh now I get it."
A car is a mobile device because it can move you from point A to point B.
He doesn't mean a car is a mobile device in the sense you can put it in your back pocket and carry it around. He means it's mobile in the sense that it can move.
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.
Yeah, cause Apple will just do the same thing everyone else is doing to achieve the same margins, right?
First of all, the numbers you're quoting are for gasoline powered vehicles, which will have no bearing on what Apple manufactures.
Second, Apple manages the most effective and efficient supply chain on the planet. If they do make a car, they will apply all their skills to make the entire manufacturing process as ultra efficient and cost effective as possible. Third, there is no rule that Apple has to maintain the same margins on a vehicle that they do for their electronics in order to make the business lucrative and viable.
Regarding the margins. I guess there will be more ways to monetise the car of the future. With humans alleviated from the burden of driving, you have them captured and bored for potentially hours at a time each day. Film/music/app downloads, advertising.
Plus, lets just say the Apple Car is more like an automated taxi service, the margins increase substantially. With some very crude math:
Average 1 hour US taxi ride roughly: $180
iTaxi has the potential to be operational 24 hours a day, but lets say each car is only on pick up half that time, so potential taxi fare of $180 x 12 = $2160 per day.
365 days per year x $2160 = $788,400 !
An average US car costs $31,000 but lets say each iTaxi costs Apple over 3 times that at $100,000 to build.
That's 700% profit margin in the first year alone! Each car will have an operational lifetime of say 5 years and the profits significantly increase further.
This looks to me like a very likely candidate for disruption. Traditional human driven taxi's could be priced out of the market whilst still retaining high profit margins!
Sure there are other costs to remove from the equation such as energy, repairs, etc. But my point is, your 5% margins using todays business model may likely be outdated in the future.
Yeah, cause Apple will just do the same thing everyone else is doing to achieve the same margins, right?
First of all, the numbers you're quoting are for gasoline powered vehicles, which will have no bearing on what Apple manufactures.
Second, Apple manages the most effective and efficient supply chain on the planet. If they do make a car, they will apply all their skills to make the entire manufacturing process as ultra efficient and cost effective as possible. Third, there is no rule that Apple has to maintain the same margins on a vehicle that they do for their electronics in order to make the business lucrative and viable.
"Apple defeats laws of gravity, speed of light to be exceeded in new products."
Just wanted to get to that headline before someone else does.
Wow nobody got the play on words.
...car is the ultimate mobile device
Do you get it??? No?
What is another word for car? Automobile. What are the origins of this word?
"Oooooh now I get it."
A car is a mobile device because it can move you from point A to point B.
He doesn't mean a car is a mobile device in the sense you can put it in your back pocket and carry it around. He means it's mobile in the sense that it can move.
Did that really need an explanation :-); that was kind of evident.