Can Apple Take a Bite Out of Detroit?
Would you buy a cell phone from an automotive manufacturer? How about buying a car from a consumer electronics company?
I’ve been following the recent rumors about Apple’s bold venture into the auto industry. Part of me is intrigued by the idea, but I’m also somewhat skeptical.
In case you haven’t heard, Apple Inc. reportedly has a team of more than 100 engineers working on a top-secret project in Silicon Valley called Titan. Their goal is to rethink and reinvent the automobile.
Apple is famous for using contract assemblers, such as Foxconn, to produce its products. The company has reportedly had discussions with Magna Steyr, the auto industry’s leading contract manufacturer.
Can a company synonymous with laptop computers and cell phones succeed in the automotive arena? Don’t laugh. Some experts believe it could happen sooner rather than later.
In a way, it makes perfect sense, since automobiles today resemble computers on wheels. And, there’s more computer power packed into just about every vehicle now on the road than was onboard the Apollo 11 moon-landing mission.
Another tech giant, Google Inc., has already dipped its toes into the auto business. Its self-driving car concept generated a huge amount of publicity when it was revealed last year.
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Ola Henfridsson, a professor of information systems and management at the UK’s Warwick Business School, believes it’s only a matter of time before the traditional auto industry is sidelined as technology firms muscle in on the sector.
“It used to be that competition within the car industry was locked into the boundaries of the car manufacturers, but suddenly there are nonautomotive companies taking parts of the markets,” says Henfridsson. “They are imagining a future where a car communicates with its environment, where what will be important in a car’s functionality is not something that GM or Volkswagen can deliver.”
On the other hand, some observers point to infamous automotive startup failures, such as DeLorean and Tucker. They argue that designing and building a cell phone or a smart watch is one thing. Creating an entire vehicle with thousands of interdependent parts and subassemblies is quite different.
Creating a new car company is a daunting task. But, if anyone can do it, I believe Apple is the company. Among other things, the tech giant is sitting on a huge pile of cash—more than $170 billion—that it could pour into an electric car project. And, Apple certainly has an impressive track record of being innovative and profitable.
What do you think? Should Apple develop its own automobile? Does Apple pose a threat to traditional automakers? Will we see other Silicon Valley companies take on Detroit in the near future?
