Tim Cook recently confirmed that Apple is working on ‘autonomous systems.’ As usual with Apple, details are sparse, but it’s likely that autonomous cars are part of this.
Apple is so great at connectivity, aesthetics, and entertainment that any vehicle they develop will incorporate these as table stakes. With that in mind, I can see three potential scenarios for how Apple might play in the autonomous car market.
The first scenario is to enter cars as a Trojan horse to sell more iPhones. It’s the most conservative play–and a nod to the fact that Apple’s revenues are 60% driven by iPhones. Elon Musk has already said he thinks of Tesla as a ‘sophisticated computer on wheels.’ One could imagine an Apple car that is a Tesla-like product—one with comparable speed, self-driving technology, aesthetics, and features–but is so seamlessly integrated with the Apple ecosystem and requires a new
iPhone, or some kind of blend of iPhone, iPad or MacBook. However, Apple is under a reasonable amount of pressure to prove it’s more than just an iPhone company, so I imagine they will strive for more.
The second play is to try to use its technological aptitude to create a vehicle that solves a particular problem. If Apple goes this route, it should target younger consumers who are growing up with Uber, Lyft, and Zipcar. A teenager old enough to drive is twice as likely to have a smartphone as they are a driver’s license. Some of them may never enter the car market, or may at least significantly delay a move toward ownership.
One way to appeal to this demographic (and to the parents who often finance young drivers’ transportation) is to focus on safety. Auto accidents are the number one cause of death for teenagers, accounting for over one third of deaths in this age group. Nearly every teenager knows of someone who has had a bad accident or a near miss–many are due to texting and driving.
Rather than cutting off connectivity while driving (which is relatively easy to do), an Apple vehicle would likely use Siri to help make driving safer. In fact, Siri plus facial recognition could play the ‘safe and cool’ aunt or uncle—someone who cares about you, but won’t necessarily ‘narc you out’ to your parents for bad behavior. It can call out the weather or traffic conditions, identify if you’re getting sleepy, and otherwise identify hazards or distractions and urge you to be more careful.
What parent who could afford it wouldn’t pay a premium for a car like this?
The third playbook for an Apple vehicle is to create new categories, via breakthrough product innovation and breakthrough business model innovation. The iPhone is the best example of this—its success hinged not only on the device, but its connection to iTunes and the App store. Perhaps even more critical to its success was the the billions of dollars of subsidy provided by the telecom companies to drive the sales of iPhones. Apple is at its greatest when its innovation is a powerful bowling ball expertly delivered to knockdown multiple industries at a time, smartphones, telecom/data and music and entertainment all at the same time in the case of the iPhone.
Apple’s car growth strategy should not just pursue a “pie splitting” strategy by knocking off or one-upping Tesla, but rather create a new category of self-driving cars that is very different and is less focused on cars and driving itself and goes beyond to disrupt multiple industries at a time.
Apple has a great intuitive feel for how consumers see a market, versus how manufacturers see it. I doubt Apple designers will see the market in traditional segments, such as small cars, luxury/sports cars, SUVs, trucks and minivans/vans. I think they will see it as different use-cases for why consumers get into a car—commuting (small cars), fun toys (luxury/sports cars), useful tools (trucks, SUVs), and living rooms on wheels (minivan).
To me, the minivan is the guiding light. In 1983, the original minivan saved Chrysler from bankruptcy. I’m not a car guy, but I absolutely love our Honda Odyssey minivan. It’s is perfectly designed for our family of five. But it’s also clear that the minivan concept is due for an upgrade.
And if you can put a living room on wheels, what else could you put on wheels? Think of the ultimate home office with printers, a desk, and video conference abilities so pharmaceutical reps and traveling sales people don’t have to squat at Panera or Starbucks all day. How about a man cave on wheels? Or a kitchen? Could they figure out how to do a bathroom? Is that part of their play in health care?
My hope is Apple will do more than just sell more iPhones or use its technological prowess to create a safer way to drive. This is an ambitious company, and it should aim for the seven-ten bowling split and try to crack the code on crashing the office, home, and car categories together.