Poor, poor Apple. The richest company in the world (it slides up and down, but is always hovering close to the top) just wanted to find an automaker to be its dance partner for its autonomous electric car project. He probably imagined that companies like Hyundai and Nissan would give themselves up for the mere opportunity to contribute with all their latest technology and manufacturing knowledge to a vehicle for which they would not receive credit in the market.
Well, what a surprise – it didn’t happen. After Hyundai discussed with (and leaked) a potential partnership and then Nissan was commented to have done the same, Apple met with a handful of automakers with nothing to show for it. Now she has little choice but to turn to a third-party manufacturer, such as Magna Steyr or her family friends at Foxconn, according to a new Bloomberg report.
It always seemed that things were going to be this way. This Apple game wooing automakers ended up as a miserable Bachelor season where none of the contestants wanted to be there, but it nevertheless appeared anyway. Apparently, Apple met Ferrari during this exploratory phase, reports Bloomberg, which is tragically funny. There are no details on what this discussion involved, but whatever the subject, “the talks have not progressed”.
Hyundai, Nissan and Ferrari are not impressionable startups prepared to be confiscated – they are multinational corporations that have been making cars for longer than Apple has been making computers. I would say that much of Apple’s success in the past two decades may be due to its surprising lack of arrogance. Sure, he speaks loudly, but for the most part he stays on his way, he doesn’t introduce anything until he’s really ready and he doesn’t get involved in strange corporate connections and acquisitions that everyone can clearly see that they are doomed to start. To think that this could essentially include an automotive brand established as a contract manufacturer is not characteristic of Apple, but exactly the kind of arrogance you would expect from a company in its position.
Of course, making cars is difficult and expensive, and I understand why Apple wanted to give it a try. As Bloomberg correctly points out, it reflects how the company builds its gadgets. Tim Cook’s team designs the product and someone else builds it.
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But there is a difference between asking, say, Magna Steyr to make your car and asking Hyundai. The latter has its own cars to sell, with its name on them. It probably won’t be as exciting if the result ends with a smashing success. A useful Bloomberg analogy:
A longtime manager at Apple and Tesla Inc. said it would be as if Apple asked rival Samsung Electronics Co. to manufacture the iPhone. Apple wants to challenge the assumptions of how a car works – how the seats are made, what the body looks like, the person said. A traditional automaker would be reluctant to help a potentially disruptive competitor, said the person, who asked not to be identified discussing private matters.
Yes, Apple has a history of revolutionary industries. It has changed the way record companies distribute music and the way people buy it (well, until Spotify appears). It has also changed the way the software is distributed. But changing paradigms in how people find and use content is a very different beast from an end-to-end reinvention of how cars – probably the most complex physical “good” we buy – are made.
It is also much more difficult to make money right off the bat in this business. “Auto Industry profit margins are lower than Apple’s current model, ”said Bloomberg, citing Goldman Sachs analysts in a recent note to investors.
By opting for a partnership with a company like Magna, Apple can avoid the inevitable conflict of egos that would likely break out if it chose a consumer-facing factory partner. There is still a part of me shocked that a company with as much sales experience as Apple did not save time and admitted it earlier.