A ghost is floating around. A ghost called’Apple Car’. The world is fluttering with the appearance of ghosts. It’s not just a traditional automaker. Even the emerging powerhouse Tesla is making a sense of it. Even the strongest IT players are not slowing down the tension. What is’iPhone’ It’s because of the memories the ghost shook the mobile world.
Can the Apple Car become the second iPhone? Or will the ’10 thousand years of promising’ iPad and Apple TV take the lead? GDNET Korea looks for the answer to this question through the series’Another Ghost, Apple Car’. [편집자주]
It was Reuters News that lit the blurry Apple car embers again. On December 21 of last year, the market was shaken by reporting that “Apple is likely to release an Apple car around 2024.” Reuters said, “We will drastically reduce battery space by adopting a technology called monocell,” and did not hide expectations for Apple’s move.
With this report, the’sleeping ghost’ Apple Car came back into the world. Immediately, there were reports that Hyundai Motor will become an Apple car partner. Although Hyundai Motor Company officially commented that “it has not been decided,” the embers are not easily extinguished. Whenever news about Apple cars came out, the stock price fluctuated.
The Apple Car has never been disclosed. Apple hasn’t even mentioned it officially. There are all kinds of speculations.
Nevertheless, the prospect that Apple will enter the automotive market is gaining momentum. Why? It is because of Apple’s current situation. This is because there is no such thing as a car as a platform that will take charge of the future 5 or 10 years after the iPhone.
Apple without’after iPhone’, car is an inevitable choice
Thanks to the iPhone, Apple has been the world’s best company for over 10 years. It was the first US company to have a market capitalization of 2 trillion dollars. There is even a forecast that it will exceed 3 trillion dollars within the year.
As such, Apple is in its prime right now. But Apple also has a big problem. This is because the ‘next big thing’ that will be responsible for the iPhone does not come to mind. I was looking forward to the iPad and Apple TV, but it was not enough to become a representative product. Virtual reality (VR) and augmented reality (AR) are also interested, but the substance is not captured.
For Apple with these concerns, the car is the best alternative. Cars at the peak of the’mobility revolution’ could be another leap forward for Apple. It can evolve and develop from’platform in hand’ to’running platform’.
Cars aren’t new to Apple. Prior to the development of the iPhone, he was interested in automobiles. ‘Heart of Apple’ Steve Jobs was a reputed car fanatic. Jobs also met with Brian Thompson in person in 2010, the creator of V-Vehicle, to discuss car development work. This fact became known in 2016 by the British daily newspaper Guardian Report.
More interesting facts were revealed in the 2012 patent litigation process between Samsung and Apple. Vice President Phil Schiller, who appeared in court as a witness, revealed that Apple had specifically discussed car development inside Apple before developing the iPhone. Schiller is “We had a debate inside Apple over cameras, cars and other cool stuff.” Testified.
But then, iPhone development was more urgent. I had no choice but to close my dream of cars.
At that time, why did Apple choose the iPhone as the product to be responsible for’after the iPod’? It was because of its continuity with its core business, the iPod. Around that time, as they started putting music on their mobile phones, their core revenue source, the iPod, could disappear altogether. It was the iPhone that came out as a result of the worries to properly save the ecosystem built with the iPod.
Apple’s view of choosing the iPhone was outstanding. Since then, it has been in the top position for more than 10 years. This is thanks to the creation of new added value while maintaining the achievements achieved on the iPod.
But when I think of’after the iPhone’, it is empty. The iPad and Apple TV, which were once expected as successors, It’s not enough to replace the iPhone. If we can’t create a follow-up model, we can’t guarantee the future.
It is related to this situation that many people nodded at the news of Apple car development. This is because there is no such thing as a car as a platform to be responsible for after the iPhone. It is no exaggeration to say that it is almost the only alternative that can sustain the ecosystem grown by the iPhone.
The representative person who has this outlook is Guo Ming-chi, an Apple analyst. According to McRumers, Guo Ming-chi predicted that “cars will become Apple’s representative products (after the iPhone).” “Apple will be able to better combine hardware, software and services (than any other automaker),” he said in particular.
Recruitment of key personnel in 2018… This year, I entrust a new project to the general manager of hardware.
Apple’s interest in cars goes back longer than expected. However, it was in 2014 that it took concrete action. From this point on, Apple has pushed forward with a plan to develop an Apple car called’Project Titan’. This fact was made widespread when the Wall Street Journal reported in a 2015 special report.
Reportedly, Apple’s automotive development team worked in secret in a secret location near Cupertino headquarters. The project was led by Steve Zadeski, an engineer from Ford Motor Company. The project was ambitious enough to have more than 1,000 employees.
Contrary to the ambitious start, the Apple Car development work did not go smoothly. The internal power struggles and leadership vacancy were also endless. Related personnel were also greatly organized. In 2016, there were even reports that Apple had abandoned the automobile development project.
It was around 2018 that the sluggish Apple car project came to life again. This year, Apple scouted two important people.
One is John Giannarea, an artificial intelligence (AI) expert from Google. After joining Apple as Vice President of AI Strategy and Machine Learning, Giannarea is overseeing the Apple Car Project.
Another is Doug Field, who oversaw the production of’Model 3’at Tesla. Doug Field moved to Tesla in October 2013, when he was vice president of hardware engineering at Apple, and returned after five years. Field is leading the Apple car development site.
As they take the lead, Apple is focusing the project on the production side of’self-driving electric vehicles’.
The steps they showed this year are also unusual. Among them, Apple’s long-standing head of the hardware division, Dan Richio, was appointed senior vice president of the new project.
Senior Vice President Li Chio is a hard-working hardware expert at Apple for over 20 years. All of Apple’s representative hardware, including the iPhone, iPad, MacBook, and AirPods, was born through his hands. It is very unusual for Apple to have a hardware expert in charge of the new project.
Currently, the core of Apple’s next-generation projects are virtual reality (VR), augmented reality (AR), and Apple cars. The appointment of a hardware expert as the project manager is inevitable as a sign that Apple will accelerate the development of the car.
Why does Apple work on cars
There have been two keywords that have dominated Apple since 2000. One is Apple’s unique ecosystem, centered on iTunes and the App Store. Once in their’walled garden’, customers never miss it.
Another keyword is the organic combination of hardware and software. To implement this, Apple insists on vertical integration that manages everything from one to ten.
It was the iPod, which was released in 2001. When the iPod was released, the MP3 player market was led by Korean companies including iRiver.
After jumping late, Apple came up with a strategy to create a music ecosystem centered on iTunes. It maximizes user experience by organically combining iPod (HW) and iTunes (SW). Thanks to this strategy, the latecomer Apple quickly leveled the MP3 player market.
This strategy shined even more on the iPhone. When Apple first launched the iPhone in 2007, the touch screen-based user experience (UX) attracted attention. But Apple’s real power was the App Store. The value of the iPhone is maximized by organically combining hardware and software. This strategy broke down the grammar of the smartphone market, which had been devoted to the competition of’device performance’ until then.
Apple, which has become one of the top companies, immediately started preparing for’after the iPhone’. The representative one was the iPad, which was first introduced in 2010. The iPad, a latecomer in the tablet market, enjoyed explosive popularity at the same time as the launch, and raised great expectations as a hit product following the iPhone.
However, the iPad did not exceed the level of prospects. It failed to emerge as Apple’s flagship product as it could not find its own coordinates between the iPhone and the MacBook. The same was true of the Apple TV, which was expected after the iPad.
At this point, Apple’s worries deepen. This is because when the iPhone goes well,’Next Bigshing’ has to be released.
Looking at Apple’s sales structure, we can see why’after the iPhone’ is important. In fiscal 2020, which ended in September last year, Apple’s sales were $274.5 billion. Of these, the iPhone accounted for 50% of the total, with $137.7 billion. Following that, services accounted for 20% with $53.7 billion. Wearables/accessories ($30.6 billion, 11%), Mac ($28.6 billion, 10%), and iPad ($23.7 billion, 9%) followed.
The iPhone is in charge of half, and the service is also playing an insignificant role. Maximizing service sales is the most emphasized part by CEO Tim Cook. However, sales of services including Apple Music are mainly generated through the iPhone. If the iPhone doesn’t do its job, service sales will inevitably suffer.
It’s okay right now. Because the iPhone is still going well. However, it is not known how long the prestige will continue. It is also ominous that the smartphone market has almost reached saturation.
Then, which platform will emerge next to smartphones? To this question, many people think of’cars’. Of course, it is not a traditional car as we know it. It’s a smart car. That doesn’t mean a fully self-driving car that people don’t need to pay attention to. This is the story of a next-generation car that has transformed from a transportation device into a’moving comprehensive platform’.
It is likely that what Apple Cars is aiming for. A platform that can do something similar to what the iPhone did. It is not so urgent yet. The iPhone is more likely to act as a cash cow for 5 years or so.
As such, Apple can move on to the’next stage’ without much difficulty if it makes visible results for Apple cars by the mid-2020s. It has to be said that the forecast that the Apple car will be released around 2025 is closely related to this situation analysis. At least that means Apple is likely drawing such a roadmap.
If you look at Tesla, you can see the Apple Car
So, what kind of model will the car business that Apple dreams of? How competitive will Apple be if it enters the automotive business?
That’s not an easy question. This is because the details of the Apple automobile business have never been disclosed. However, you can infer based on various circumstances. For now, Tesla is expected to be the closest to the appearance of the Apple Car.
Tesla, a leader in the electric vehicle market, is often referred to as the’wheeled iPhone’. It is evaluated for incorporating Apple’s business model into the automotive market.
Why is Tesla strong? Choi Won-seok, author of’Tesla Shock’, analyzes that “the strongest competitiveness of the Tesla Empire is vertical integration and vertical integration of business.” It’s the same way Apple did with the iPod and iPhone.
However, most automakers also pursue vertical integration. What’s so special about Tesla? Responding to this question, Won-seok Choi argued that “If the vertical integration of existing automakers is to make a product, then Tesla is for the whole business that starts with electric vehicles and connects with mobility services, energy, and communications.”
What makes Tesla special is that it is building an ecosystem centered on the vehicle.
The car sales strategy is also different. Unlike most automakers, Tesla uses an over-the-air update (OTA) to boost hardware performance. According to Choi Won-seok’s expression, “It is not a way to provide a car with the best cost-effectiveness in the sales stage, but a way that the value of the car continues to grow after it is sold.”
Both are the methods Apple used to break the smartphone market with the iPhone. So, if Apple does its auto business, it’s likely that it will approach Tesla in a similar way. That’s because that’s the ecosystem strategy Apple has adhered to for 20 years.
However, it is still unclear what the Apple car business will look like in detail. Major foreign media believe that Apple is focusing on developing self-driving electric vehicles. It is expected that a car with the Apple brand will be released. Morgan Stanley is also putting weight on making Apple-branded cars.
On the other hand, there are many views that the scale will be reduced as the Apple Car project progresses. Apple could reduce the scope to providing an automated driving system without making the car itself. Goldman Sachs is a representative institution with such a prospect.
Could the Apple Car be the second iPhone?
As pointed out earlier, Apple is compelled to develop Apple Cars. This is because there is no other alternative to preserve Apple’s business model, which has been passed from iPod to iPhone.
However, it is unclear whether the Apple Car will become the second iPhone. This is because the automobile industry is very different from smartphones.
The car is so big that it cannot be compared to a smartphone. Because it runs through the streets at a high speed, it is not too risky. The replacement cycle is also much longer. Unlike smartphones, which are replaced with new models every two or three years, once a car is purchased, it lasts at least five years.
The business grammar itself is different from the iPhone, which Apple did well. In addition, the auto industry has a weak margin. Even Tesla, the hottest company in the automotive market these days, took 17 years to make a profit.
Looking at the current automotive market alone, Apple’s challenge seems reckless. Neither profitability nor the likelihood of success seems high. However, the answer can be different if you change your perspective. For Apple, cars are not just mobile devices. It may be the leading edge of the’expanded Apple ecosystem’.
When it comes to changing the problem in this way, Apple’s strengths are daunting. The ancestor of Tesla’s successful business model in the automotive market is Apple. The’Apple ecosystem’, which has been built solidly through iPod, iPhone, and iPad, is also a strong strength.
Besides, Apple has a strong place. The accumulated cash alone amounts to 300 trillion won. If you are convinced that it is a future growth engine, you have the ability to continue investing for years. He has a unique ability to jump into the market that is about to settle down and change it to his own grammar. It showed its skills well with the iPod and iPhone.
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There is another reason Apple is afraid. He was always heretic in the market where he first started, but Apple’s unique business formula is consistent. That consistency is now heading for the automotive market. So, many people are looking forward to it and are also nervous.
Can the Apple Car become another innovation rider after the iPhone? That’s not an easy question. To give a more plausible answer to this question, we need to know more about the Apple Car that Apple is drawing. In the next episode, based on the facts revealed so far, we will look in more detail on what the Apple Car will look like.