51–60 of 269 posts
Earlier quoted context omitted.
Tesla makes 25% margin on their cars.
But still loses money
The idea that Apple is going to "pivot" is fatuous. Are they working on some non-phone products that they hope will be big? I'm sure they are. Could they conceivably find that one of those products achieves massive traction and overshadows the iPhone (especially as the market for smartphones cools)? Sure, though I'd bet against it actually playing out like that. Is Apple making a big planned play to radically deempha…
There are no guarantees that the iPhone will generate anything like the profits of the last several years indefinitely. There are a number of strong headwinds including the end of carrier subsidies, market saturation, a weak global economy, increasingly mature competition at much lower price points etc. I don't think they're in crisis but they do have a real problem on their hands. Of course they have a lot of room t…
But smartphones are also clearly not going to crash and burn. Even if people don't replace them like clockwork every year or two years, there is going to be a healthy market for iPhones for a long, long time. There are still people without smartphones, there are still large markets with low Apple penetration, and they have an enormous install base and developer support -- and, as you say, positively absurd profits to cut into eventually.
Does Apple dream of another product that will be as big as the iPhone, but is yet in its infancy, with its growth ahead of it instead of behind? Well, of course they do. How could they not? Will they launch new products? Of course they will. Might one of them be a car? It might. If the stars align for Apple again, might we in ten years say that they are not the iPhone company, but rather the X company? Yes, that is possible.
But:
1. There is no possibility that Apple is planning to pivot in any meaningful sense of the word. "Pivot" does not mean "launch a new product and hope it takes off." Pivoting is simply not something that the most valuable company in the world does in the face of some cooling of demand. Pivoting is what desperate start-ups do.
2. If the leaders of Apple are basically cool-headed people who do not entirely buy some kind of superheroic mythology of what Apple is capable of, they are probably aware that the iPhone was a literally singularly successful product in the history of, like, the world, and that the odds that lightning will strike twice and they will have another product that successful or even more successful are lower than the odds of lightning literally striking the same person twice. It is possible that Steve Jobs was not a basically cool-headed person. I think that Apple's current leadership is.
3. And specifically, the product that makes us forget the iPhone just straight up can't be a car. There is just no demand for a car that can support an Apple-in-2015 type valuation, especially at iPhone-like profit margins, double-especially in a world in which autonomous cars makes any meaningful jump in the utilization of each car. And PS: approximately 0% of Apple's current employee base would be useful in Apple-as-a-car-company.
According to this chart, Apple spent $6B in 2014 and is projected to spend just over $10B in 2016. For comparison, in 2014 Volkswagen spent $13.5B, Samsung spent $13.4B, and Microsoft spent $10.4B. [1] Apple has, historically, not been a big spender when it comes to research, tending to favor short-term, tightly focused research over long-term, curiosity driven research. Over the last few years their research budget…
What's interesting is how aggressively they're moving into the car space if that's what's happening. The phone people had no idea, they got blindsided thinking Apple wouldn't have the guts, would never commit the money.
Earlier quoted context omitted.
Automotive is a low margin, high liability industry. I think Google is approaching this correctly in staying out of the hardware (for the most part.) Apple developing a full car that has to meet x & y regulation from every single different country could end up being a big disaster. Tesla isn't even profitable and has a cash burn that makes a winter furnace seem tame. I don't see how Apple can escape that reality too.…
> Automotive is a low margin, high liability industry. It's a lower margin for the classic companies that use a dealer model to sell cars. Direct sales like Tesla have pretty decent margins. It's unlikely Apple would use a dealer model. That's pretty outdated and will eventually go away (though not without kicking and screaming from the existing dealers). Don't forget many Android phones have awful margins but the iP…
Look, the margin on a $700 iPhone is somewhere in the vicinity of 30%. That means that the price that an iPhone user pays for the privilege of having an iPhone per se is about $200, maybe $300 on the outside.
For a car whose manufacturing costs are $30,000, a 30% margin would mean selling at $42,000. The size of addressable market that can afford to spend $12,000 on Apple brand is microscopic compared to the market size of people who can pay $300 on Apple brand. The "luxury" market for cars is inherently much, much, much, much, much smaller than the luxury market for smart phones.
So if Apple does try to attain iPhone-like margins in the car market, they will necessarily address a tiny market. If they don't, they'll still address a much smaller market than the smartphone market, and with smaller margins to boot.
I think the ideas presented appear somewhat contradictory. I may be missing something here because the following 2 ideas seem contradictory to me. 1) Apple's secrecy 2) Apple's pivot If they're pivoting, why be secret about it? One of the reasons provided was that being public about new products could hurt current product sales. If it's an entirely new product line (ie. car), I have a hard time believing someone will…
If Google started braying tomorrow about making cars then car companies would respond. They'd have a harder time rolling out their product.
Is this a surprise? Isn't it well known that Apple is working on a car? I think the big question here is not are they working on a car, but can they deliver a car that represents a significant improvement over what's out there. And that i'm highly skeptical of, unless they deliver full autonomy. But there is just no way Apple is going to beat Google to market with that technology. So, I agree they're working on a car…
> But there is just no way Apple is going to beat Google to market with that technology. Why? Apple is possibly the world's most effective company at synthesizing industrial design and software in premium devices sold to consumers. Google is a web/cloud services and advertising company. The reason presumably is that you can't see what Apple is doing in public, while Google has a car that still can't drive itself in t…
While obviously Google is historically a web/advertising company, they're showing a lot of strength recently in machine intelligence, like with Google Photos auto-tagging or AlphaGo.
Earlier quoted context omitted.
> Automotive is a low margin, high liability industry. It's a lower margin for the classic companies that use a dealer model to sell cars. Direct sales like Tesla have pretty decent margins. It's unlikely Apple would use a dealer model. That's pretty outdated and will eventually go away (though not without kicking and screaming from the existing dealers). Don't forget many Android phones have awful margins but the iP…
No, that's a really bad analysis of margins on cars. Look, the margin on a $700 iPhone is somewhere in the vicinity of 30%. That means that the price that an iPhone user pays for the privilege of having an iPhone per se is about $200, maybe $300 on the outside. For a car whose manufacturing costs are $30,000, a 30% margin would mean selling at $42,000. The size of addressable market that can afford to spend $12,000 o…
I'm not seeing how. You post is talking about market size. The parent I replied to was only talking about margin. Two very different things which, as you were pointing out, will have two very different outcomes as far as profitability due to market size but that was never something brought up in the context of the original conversation.
> So if Apple does try to attain iPhone-like margins in the car market, they will necessarily address a tiny market. If they don't, they'll still address a much smaller market than the smartphone market, and with smaller margins to boot.
Smartphones are one of the biggest markets in the world so of course they will be addressing something smaller. Though car market is still pretty huge especially in the corporate selling of vehicles. What if Apple sold fleets to taxi / uber / lyft type companies? Maybe they create their own rival to uber / lyft and you can get picked up in an Apple car.
Seems there is so much speculation here that no one is going to be able to paint an accurate picture of what Apple's entrance into the car market would look like let alone figure out what the margins and revenue would be.
Earlier quoted context omitted.
> But there is just no way Apple is going to beat Google to market with that technology. Why? Apple is possibly the world's most effective company at synthesizing industrial design and software in premium devices sold to consumers. Google is a web/cloud services and advertising company. The reason presumably is that you can't see what Apple is doing in public, while Google has a car that still can't drive itself in t…
For one because there is no evidence of it. Apple are secretive but at some point you have to take a car out on an actual road to see how it fares. And get government permisison to do so. The fact that Apple has done neither leads me to suspect Google is further ahead.
So who knows?
According to this chart, Apple spent $6B in 2014 and is projected to spend just over $10B in 2016. For comparison, in 2014 Volkswagen spent $13.5B, Samsung spent $13.4B, and Microsoft spent $10.4B. [1] Apple has, historically, not been a big spender when it comes to research, tending to favor short-term, tightly focused research over long-term, curiosity driven research. Over the last few years their research budget…
Just imagine how much fun Ive would have designing an orbital space station. What's interesting is how aggressively they're moving into the car space if that's what's happening. The phone people had no idea, they got blindsided thinking Apple wouldn't have the guts, would never commit the money.