Are We About to See an Apple Car?
Apple is good at launching new products. In fact, it might just be the best company there has ever been at doing this sort of thing.
Apple was in dire straits when it launched the first iMac. It was a significant change of strategy for a computer company. Instead of fighting the likes of IBM, Compaq or Dell on price points and processor power, Apple built a machine to appeal to the consumer. It was easy to use and it looked great - just the sort of thing that you would want to see in your home. Apple didn't invent the home computer; it just made it better. Emboldened by its success, Apple moved further into consumer electronics with the iPod. MP3 music players were not new, but Apple simply made them better; they made them cool. This was new territory for Apple, and it could be argued that a company like Sony, with its Walkman product, should have cornered the market, but Apple stole the show and the market with the iPod.
Soon Apple moved again and developed what was to become by far their most successful product to date - the iPhone. Much as the iPod did with MP3s, the iPhone came to define a sector that is now known as the smartphone. They did the same in the computer tablet market with the iPad, and now they are attempting to transform the watch market and define the growing sector of wearable technology, in the process perhaps dislodging Google and their rather dubious-looking Google glasses.
In each case, Apple's strategy is pretty much the same. They take existing technology and they simply make it better, moving into a market and dominating it with cool products that people love to own, even at a premium price.
Now it seems that Apple is preparing to attempt this trick on a much greater scale, as rumours grow that it is about to enter the car market.
These rumours have been around for some time. They first emerged when Apple was the subject of a law suit in the US, where it was accused of poaching staff from a firm that makes electric batteries for cars. Staff have also been joining Apple from Tesla and other car companies. The rumour says that Apple is secretly developing an electric car at a laboratory in California.
This rumour gained more credence in May this year, when the billionaire investor Carl Icahn predicted that Apple will attempt to enter the car market by 2020 at the latest. He did so in an open letter to Apple boss, Tim Cook, perhaps challenging him to confirm or deny the rumour.
It is easy to see why Apple might want to break into the car market. Apple's dominance means that its traditional markets, such as tablets, phones and PCs, are nearing saturation point. To grow further, as it surely desires to, Apple needs to find other markets. The car market is huge, selling almost 90 million vehicles each year. It is also lucrative, with typical car prices in excess of £20,000. What is more, the car and tech industries are merging. More and more technology is making its way into cars, and Google is developing its own driverless car. Tesla has also entered the industry and successfully disrupted it with its sporty and luxurious electric cars, so it appears that the time could be right and it could make a lot of sense for Apple to enter the market.
If they do, it is going to be a hugely difficult task. Only 14 new car companies have appeared in the last half century, and of them only Tesla remains. No new volume car maker has been successful. One of the main challenges is in developing a production capability that can match the big car manufacturers. Making a successful car is all about achieving a price point, and you can only do that with huge numbers. When the car makers see new developments, they simply replicate them and they do it on a large scale. This makes it very difficult for any new boys to compete.
On the other hand, Apple has lots of experience in breaking into new markets, and it has the biggest corporate cash pile in the world. Are we about to see the iCar? Watch this space.