In his latest “Power On” newsletter, Bloomberg’s Mark Gurman says Apple killed its Apple Car plans because of “hubris” and moving too fast. Here are key points from his report:
° According to someone involved in the decision making, it was as if Apple had tried to skip all the early iPhone models and jump right to the iPhone X. Instead of just planting a flag in the ground with a good-enough car (with an Apple user interface, slick Jony Ive-designed interior and exterior, and an iPhone-like buying experience), the company bet everything on the wrong horse: autonomy.
° There were other major problems as well. That includes the project’s cost and the inevitably hefty price tag for consumers, as well as the razor-thin (or nonexistent) profit margins that a car might ultimately yield. All of this was compounded by indecisiveness among Apple’s executive team and the inherent production challenges in manufacturing a car. But ultimately it was the hubris that cursed the effort.
° The auto market is harder to crack than smartphones, computers and MP3 players. It has evolved over a century and is filled with far more competitors and more complex supply chains — and requires a ton of capital. It was a gamble to even try creating a Tesla clone, let alone a vehicle that would transform the industry.
° The company could have just followed the playbook of its previous hit products, which didn’t try to accomplish everything at once. Don’t forget: The first iPhone lacked 3G, the initial few iPods didn’t have a color screen, and the Apple Watch wasn’t waterproof until its second generation.
° A self-driving vehicle would have made a “big splash.” And it’s probably the only product category that could bring in serious revenue right from the start. Apple had looked at pricing vehicles at $100,000 apiece, meaning it wouldn’t take long for the company to have a multibillion-dollar moneymaker on its hands (even if those sales didn’t translate to big profits).
This info from Gurman is from the free edition of “Power On”. If you like it, consider subscribing to Bloomberg.com—you’ll receive the newsletter earlier and get exclusive access to a Q&A section.
