Trying to Understand Apple's Automotive Efforts

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TL;DR: It’s confusing.

Mark Gurman and Alex Webb for Bloomberg Technology:

Apple Inc. has drastically scaled back its automotive ambitions, leading to hundreds of job cuts and a new direction that, for now, no longer includes building its own car, according to people familiar with the project.

Hundreds of members of the car team, which comprises about 1,000 people, have been reassigned, let go, or have left of their own volition in recent months, the people said, asking not to be identified because the moves aren’t public.

New leadership of the initiative, known internally as Project Titan, has re-focused on developing an autonomous driving system that gives Apple flexibility to either partner with existing carmakers, or return to designing its own vehicle in the future, the people also said. Apple has kept staff numbers in the team steady by hiring people to help with the new focus, according to another person.

It’s so confusing to follow Project Titan, which is why I almost never talk about it on here despite me being bullish on the future of cars.

Just as confusing to me is the idea of a completely Apple-designed, Apple-branded car. Even in a very basic sense, it just seems silly to see a car with the Apple logo on it, particularly alongside German brands that have been established for a near-century. I’m not saying the market isn’t there, it’s just that there aren’t enough indicators of Apple being a viable competitor apart from their past successes. Extrapolating based on the little we know about Apple directly relevant to their viability for success in the car industry is oversimplifying how difficult it is to enter this industry.

I was still expecting Apple to pull through with something like this, though, given how entrenched they already are in developing whatever it is they’re developing. I mean, they’re Apple, right? They have all the money and expertise in the world, surely they could pull it off? Well, let’s face the facts…

What are they building in there?

Gurman and Webb again:

“For a quality Apple-branded car they could probably get a healthy margin,” said Eric Paul Dennis, an analyst at the Center for Automotive Research. “They probably weren’t willing to compromise on quality issues” because that could hurt the perception of its other products, he added.

Apple started Titan in 2014 with grand ambitions to make a dent in an auto industry that consultant McKinsey & Co. estimates will be worth $6.7 trillion by 2030. The iPhone maker embarked upon an aggressive hiring spree, and an Apple-designed vehicle was targeted by the early 2020s. The hope was to revolutionize cars in the way the iPhone upended the mobile industry in 2007.

As with any new product category their pursue, there are lots of forces working against an Apple car becoming a reality. But I’m of the opinion that in this case, it’s at the point of becoming overwhelming.

There’s their uncompromising stance on quality, there’s their lack of expertise and experience in manufacturing a premium car at the scale they want (which is probably an order of magnitude larger than the entire luxury car industry combined, at least in the really long term if the iPhone is anything to go by), and there’s the opportunity cost of not being able to collect real data and feedback with each year they aren’t in the market, among others I’m probably missing.

And suppose that a car is not in the works. What else can they make that’s primarily product-based? (I’m assuming Apple’s approach is to continue using their current business model, which is why I’ve crossed out the self-driving platform suggested by Gurman and Webb as a possibility.) A smart battery for electric vehicles? A tracker? A dashboard console? Maybe. Maybe it’s something that I can’t even conceive of yet. But on top of that, Apple’s most probably going to want control over the entire user-experience – over the hardware, software, and services. 

That in itself is an already immense thing to achieve, given that they want to have some level of control over the cars they’ll install their product onto, which would likely require deals with car makers, making those deals nearly unavoidable. And assuming that some of the deals they want to establish won’t come to fruition, whatever Apple’s working on would have a slower roll-out and (again, maybe) provide a fragmented experience across different car models/brands depending on the terms of the deals they’re able to make. (That said, I recognize that Apple has a lot of power in the negotiations they make with other companies in general. I’m just talking about the odd cases wherein they may not be able to have their way, especially if cultural differences with car brands become an issue.)

And even after all that, I think that’s aiming low. This is Apple we’re talking about, and it would be disappointing to learn by 2020 that a tracker is all they’ll have to show for Project Titan.

Or, I could be looking at it all wrong. Maybe CarPlay is the seed that’ll eventually grow into something that people (and car makers alike) will really want to have in the car. At least there are already deals established pertaining to CarPlay, right? Yeah, but what that does is stress a ton more importance on Siri for Apple, as I’m assuming voice will be the main interface with CarPlay in the future. (Unless AR is somewhere in the long-term pipeline. What exists now – a subpar touch-based interface on a subpar console – is tragic.) Going by the rate of improvement for Siri thus far, can it be a good enough primary interface by 2020? I don’t know for sure, but I really don’t think so.

Like I said, it’s confusing to try and make sense of Apple’s automotive efforts, and I really can’t blame them if they pull the plug on it tomorrow – it’s a loss they can take. It’s now just a question of whether or not its a loss they’re willing to take... I think there’s a reason why we don’t hear much about Apple’s pursuits hitting dead ends. (Well, besides TV for the most part.)

Tesla Autopilot Safely Brings Driver to an ER

James Brillon for Dezeen with this incredible story from last month that I totally didn’t forget about or something:

A Tesla Model X has safely driven its owner to a hospital, after he activated the car’s auto-pilot function following a potentially fatal blood clot.

The 37-year-old driver, Joshua Neally, was returning home from work when he suffered a pulmonary embolism in his lung. As he pulled onto the highway, he felt sharp pain in his chest and stomach.

Rather than call an ambulance, the Missouri-based lawyer chose to activate his car’s self-driving function. After a 20-mile (32 kilometres) drive, Neally took control of the car to steer and park it, before checking himself into the emergency room.

Obviously, what he did is unadvisable, but I think the day’s fast approaching when doing something like this will actually be the more advisable option in the same scenario. It seems to already be second nature for this Tesla owner.

Source: Dezeen

Didi Buys Uber in China

Davey Alba for WIRED:

Uber, the biggest ride-hailing company in the world, is set to merge its business in China with Didi Chuxing, the homegrown ride-hailing favorite in the world’s most populous country, according to the two companies.

More specifically, Didi will buy Uber China, Uber’s Chinese branch, acquiring all its operations. Uber will exit the country, though Uber will continue to oversee its own app. After the merger, Didi will be worth $35 billion, a significant lift in valuation even after the financial boost it got when Apple agreed to invest $1 billion back in May.

Here’s an interesting comment from Uber’s CEO regarding the merger:

“As an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart,” Uber CEO Travis Kalanick wrote in a blog post explaining the merger. “Uber and Didi Chuxing are investing billions of dollars in China and both have yet to turn a profit there.”

Monopolization + struggling to turn a profit? Wonder what that’ll mean for prices. (Also factor in the growing upper-middle class.)

Still, this is the first battle Uber has truly lost. And it shows that at least so far, no US tech company has successfully figured out how to unseat its Chinese counterpart in China, no matter how hard it was willing to try—or how much it was willing to spend.

This totally undermines how much Apple is ingrained in today’s China as a premium brand. I don’t see Xiaomi finding a way to totally knock down Apple as long as the quality of their products and retail experiences remain unchallenged. Tesla seems to be finding its way up, too, opening up dealers in premium locations.

Uber totally failed because of the nature of their product: while undoubtedly complex, it’s still easy to replicate. Thanks to China’s weak IP laws, Uber couldn’t stand a chance.

Source: WIRED

Didi, and the Potential for Ride-hailing

Mark Bergen for Recode, summarising comments made at Recode’s Code Conference by Didi president Jean Liu:

Didi, China’s biggest ride-hailing company - and the recipient of a $1 billion investment from Apple - says it books four times the number of daily rides as the entire U.S. market. And it’s just reaching a tiny slice of Chinese consumers.

That’s from Didi president Jean Liu, who said the company now books 14 million rides a day in China at Day Two of the Code Conference.

That’s absolutely crazy - four times! Goes to show that while their economy might be slowing down, spending is absolutely not. Almost every consumer market is flourishing. “But in China…” is becoming a tired remark when talking about tech nowadays, but it’s that real. While Uber might still be the face of ride-hailing, its market share and overall direction suggests that shouldn’t be the case in the near future. They’re being cornered very quickly… more on that later.

And she said that the company has only penetrated one percent of China’s population. That room for growth in its home market, Liu added, is the rationale for why it continues to raise capital from companies like Apple.

”We have to find the most strategic [valued] partner because this industry is still in its infant stage,” she said. “You need a lot of strategic help.”

That’s what truly impresses me. Even four times the U.S. market isn’t enough when that’s a mere percent of the market you’re operating in.

In another article from Recode, Johana Bhuiyan details an alliance between ride-hailing/-sharing companies announced at the same conference:

The global anti-Uber alliance just lobbed what the four companies hope will be another blow to Uber. At Recode’s third annual Code Conference, Anthony Tan, the CEO of Southeast Asian ride-hailing app Grab, announced the official launch of a feature that allows any Grab loyalists to hail a Lyft using the Grab app when traveling to the U.S., all in their local currency.

According to Tan, Lyft users will also be able to hail a Grab car in Southeast Asia in the next few weeks. The Grab-Lyft cross-booking is just the latest aspect of a global partnership between China’s ride-hail app Didi, India’s Ola, Grab and Lyft.

Once the alliance pans out and we see more cross-booking between these companies, that would create a huge worldwide network of hail-able cars no matter where you are in the world - something Uber foolishly tried doing singlehandedly by brute-forcing their way into any market they wanted.

How the alliance will turn out in the long-term, that’s a different thing altogether. The massive potential is there, even in China alone. My guess is that Didi will eventually absorb their allies - unless they could somehow differentiate - but still somehow “glocalise”, maybe by maintaining their existing brands as they are.

That’s to say I think Didi will turn out the grand winner since the population-success correlation seems to be completely causal.



Google Launches Self-Driving Minivan With Chrysler

Adrienne LaFrance for The Atlantic on Google’s collaboration with American car maker Chrysler, the 2017 Pacifica:

...picking a minivan for Google’s first direct collaboration with an automaker is really about what the Chrysler Pacifica - and minivans more broadly - represents. Boring ole safety and reliability. This is the kind of car that gets a tumble of kids to and from field hockey practice without incident; it is not a vehicle you expect to see speeding down the freeway, weaving in and out of traffic.

In other words, Google’s interest in self-driving minivans has to do with building public trust, a hurdle facing the developers of driverless cars that’s arguably even greater than the remaining technological challenges.

One thing, though: Who buys minivans from Chrysler? Even if people end up buying this thing in droves, how much of that success could be attributed to Chrysler? I feel Google only picked Chrysler so they could charge more for their technology.

Anyhow, read on to further understand the hurdles self-driving cars have to face going forward, particularly public acceptance.