Apple changed the way we listen to music and use phones -- so do you really think all of the reports of a so-called Apple Car are really just about it building a car? Even creating an electric vehicle of its own to compete with Tesla doesn't seem bold enough. It is, after all, a company that doesn't typically enter a brand-new market without some idea of how to transform it (and perhaps crush the competition in the process). So what could these rumors be pointing to? There are several possibilities, including building vehicles to test Apple's CarPlay platform, as well as preparing for a world where we won't even need to drive (or own) cars. But, more importantly, they could all lead us toward an entirely new transportation model. Where we're going, we won't need cars... At least, as we know them.
Google's self-driving concept car
Okay, that's a bit of a cheat. Cars like what we have on the road today will likely stick around for some time (though stricter emissions standards and the move toward electric and hydrogen fuel should make them a lot less dirty). Indeed, connected cars were among the more exciting revelations at CES in January. But it's hard to ignore that there are big changes afoot when it comes to getting around. Teens today are less interested in learning how to drive, and are increasingly gravitating toward cities with plenty of public transportation options. Services like Zipcar and Car2Go allow us to grab cars when we actually need them, rather than buying and insuring something that spends most of the day parked. Then Uber and Lyft let us go wherever we want by tapping a button on our phones. When viewed through that lens, the road to self-driving cars seems inevitable -- though it will take some time.
Let's recap what we've heard so far about the Apple car: Last month the Bay Area blog Claycord spotted Apple-registered minivans loaded up with cameras driving around California. They may not actually have anything to do with Apple's broader automotive plans (its 3D mapping technology is cool, but it still needs some sort of alternative to Google's Street View), but those reports were enough to signal something was up. A few weeks later, The Wall Street Journal reported that Apple has "several hundred" employees working on an electric car project code-named Titan. The Financial Times corroborated that with its own story about Apple stockpiling automotive talent, while Reuters chimed in to say it's hearing that the secretive project is actually about a self-driving car. While we don't have a clear sense of what Apple's working on yet (it's certainly not saying anything), most of the reports seem to agree on one thing: Whatever it is, we won't have a full grasp of it for years -- probably not until 2020.
Owning your dashboard
If we want to make sense of where Apple is going cars, it's best to start with what it's already doing. Last year it announced CarPlay, its iPhone-powered infotainment platform, which lets you do things like take calls, get directions and send voice commands to Siri while driving. It's similar to Ford's Sync platform, which was developed together with Microsoft and launched back in 2007, but upgraded with things we expect from mobile interfaces like responsive touchscreen input. We've only seen it hit the road in Ferrari's new FF coupe, but most major automakers -- including Honda, Toyota and GM -- seem eager to adopt CarPlay.
Even though it's a decent first step, CarPlay isn't exactly transformative -- it's simply Apple's first stab at getting into cars. BlackBerry's QNX division, meanwhile, has been working on in-car platforms for years (at CES in January we saw it powering a new Maserati). And Google's Android Auto, which was also announced last year, offers pretty much everything CarPlay does, except it works with Android phones. Instead of choosing one, we're seeing many car makers try to integrate several platforms to give their customers choice.
Apple is no stranger to stiff competition, but connected cars will mark the first time it will have to fight off competitors running on the same device. And, unlike Apple's current wares, your connected car isn't something that it has single-handedly designed and controls. That's one reason for Apple to eventually make a car, but, if anything, that'll be a long-term goal. For now, it needs to figure out a way to make sure you're using its car platform for the next few years.
So why would Apple go to the trouble of gathering hundreds of electric car experts? Think about it: How else would Apple design a killer in-car platform without anticipating where the car industry is headed? It could still team up with an existing car company, but they're notoriously slow when it comes to designing and implementing cutting-edge technology. Apple, like most companies, regularly builds countless prototypes as it designs new products. In a similar vein, an Apple Car could serve as the ideal way to test for the future without actually getting into the car business.
It's no surprise that Apple would go to great lengths to become an integral part of your dashboard. It is, after all, yet another part of the company's plan to surround us with its ecosystem and make all of its devices interdependent. Unlike Google, whose main goal is always focused on data collection and advertising across its many platforms, or Microsoft, which is desperately trying to unify its many online services, Apple's ecosystem goals are a bit more rudimentary. It's all about selling more devices. If your iPhone works harmoniously with your laptop, as it does with Apple's new Continuity features, you're more likely to stick with MacBooks down the line (or purchase one if you're still on a PC). The same goes for cars: A powerful CarPlay platform will encourage people to get more iOS devices (how about some iPad minis for the kids?), ultimately making them even more dependent on Apple's device ecosystem.
Sure, it's also helpful for keeping consumers within iTunes, but Apple still makes far more from device sales than they do from iTunes. iPhone sales during the last quarter clocked in at over $51 billion (!!), while services revenue, which includes iTunes and AppleCare, only made up $4.8 billion.
A flock of self-driving cars from Minority Report
An Apple Car... but for self-driving fleets
All of the technology enabling connected cars over the next few years will bring about the age of truly self-driving vehicles. We're already seeing baby steps toward that today -- NVIDIA's X1 mobile chip, which is more suited to cars than mobile devices, will also power the company's self-driving car platform. Given the rate of progress so far, it's not hard to imagine we'll have fully autonomous cars ready to hit the road by 2020. Technology won't be the big hurdle toward a self-driving future; instead it'll likely be government regulation and public perception.
"A cursory read of the news clippings at the dawn of the 'horseless carriage' more than 110 years ago can help open the mind [around self-driving vehicles]," Morgan Stanley analyst Adam Jonas wrote in a note last October, appropriately titled Death of an Auto Analyst. "Widespread cynicism of these noisy, cumbersome, dangerous and highly expensive contraptions contorted popular thought. Where could you find mechanics, fuel and roads in good enough condition to allow such devices to be anything more than toys for the gilded-age rich? And after all, why would any rational person want to replace the assuredness of that hot horse body trustily pulling your comfortable carriage with an unreliable, oil-spurting heap of gears, belts and chains?"
We've seen much of the same criticism against electric and self-driving cars over the past few years. How will you charge a car that only has a range of a few hundred miles? Will a computer choose to save its passengers even if it means plowing into pedestrians? It's easy to get lost in the weeds when discussing major technological shifts, even to the point where we end up ignoring its obvious benefits. A self-driving car will never get tired, drunk or angry, for example, which alone could reduce the amount of accidents every year. In 2013 alone there were more than 5.6 million car accidents reported to the police, resulting in more than 32,000 fatalities and 2.3 million people injured, according to data from the National Highway Traffic Safety Administration. Even a slight reduction in those statistics would be a huge achievement for public safety.
Now just imagine how much things are going to change when self-driving vehicles are the norm. Owning a car could eventually be a thing of the past (if they can drive themselves and are available on-demand, why would you need to?), and the idea of driving "manual" would take on an entirely different meaning (assuming the car even has a steering wheel). With safe and accurate self-driving technology, riding in a car of the future could be more like relaxing on a luxury train with your own private room. And you can bet there'll be a huge demand, so whoever is first to supply fleets of these smart vehicles could win big. With all of that in mind, is it really that surprising to hear that the most valuable company in the world is thinking about cars? Apple would be irresponsible not to.
"The application of Moore's Law, compute power and mobile computing on the traditional motor industry is not unlike the application of motorized transport to the horse and buggy industry," Jonas added in the same Morgan Stanley note. "We would be very surprised if technology firms like Google and Amazon or ridesharing firms like Uber, Lyft and Hailo were not designing or manufacturing (either in-house or via contract manufacturing) unique vehicles over the next engineering cycle."
It may seem hard to envision fleets of autonomous cars hitting the road, but we're already seeing widespread vehicle deployment in some of today's startups. Zipcar, for example, has its rentals spread out throughout many cities. And newer companies like Car2Go regularly deploy hundreds of vehicles whenever they launch in a new market (last year it brought 400 on-demand Smart Cars to Brooklyn)
If Apple does go down this route, I wouldn't expect anything that resembles a traditional car. Instead, look at concepts like Mercedes' F 015 that we saw at CES, or Google's cute self-driving car, and extrapolate how Apple might offer something similar. Don't forget, Apple is rarely first to a new market (Microsoft and BlackBerry were making smartphones long before the iPhone). Its talent is in unlocking the potential of new technological frontiers by focusing on design and user experience (and also tightly controlling its supply chain so those miracle devices make it tons of cash).
An Apple Car that competes with traditional cars
This is the possibility that seems to be hanging up many Apple watchers, and for good reason: On the face of it, it doesn't make much sense. Sure, Apple could eventually make its own Tesla-like car. But it would take years of development, tons of manpower and untold amounts of cash (which, admittedly, it has readily on hand) to create something that's competitive in an already tough auto market. An electric car from Apple would be cool, but it wouldn't be nearly as transformative as the iPod was in the music industry, or the iPhone was for mobile. And by the time such a car hits the road, it may already feel antiquated. Does that sound like Apple to you?
Given where we're headed with the future of transportation, it seems more likely that Apple is focusing on a purely self-driving car. And it may even be the same vehicle that eventually ends up filling self-driving rental fleets. City-dwellers may not have to worry about owning a car in a decade, but they're still a necessity for those in the suburbs and more rural areas. Now just imagine how much easier an hour-long commute to work could be if you didn't have to worry about driving. You may not even have to deal with parking -- in an ideal self-driving future, you'll just have to step out at the curb while your car does the grunt work of finding a spot.
Another, far more out there, possibility? Perhaps there's something to those rumors about Apple acquiring Tesla. If it happens, it probably won't be for the enormous $75 billion price that internet entrepreneur Jason Calacanis predicts, but it would have to be significantly more than Tesla's $25 billion market cap today. Apple's already hard at work poaching Tesla engineers with $250,000 signing bonuses, according to Tesla CEO Elon Musk. Eventually, it might make sense to just gobble up the entire thing. Such a move would give Apple access to all of Tesla's electric car and battery innovations (though Musk may have to backtrack on his promise to keep Tesla's patents open). And, perhaps most intriguingly, it would put Musk in a position of prominence at a company that worships big thinkers.
Apple has historically been cheap with its acquisitions though -- its $3 billion Beats deal was its most expensive yet -- which makes a massive Tesla purchase hard to fathom.
Get ready for a tech invasion in transportation
The smartphone era was about connecting people and tying our lives into the internet. Companies like Postmates and Amazon are connecting us to physical objects. The inevitable next step will be about connecting us directly through space. That may be why investors can't get enough of Uber: The on-demand taxi company is now valued at more than $41 billion and is raking in revenue not because it's created a groundbreaking technology, but because it's made the simple act of getting around as simple as tapping a button on your phone. (And of course, it's done a great job of strong-arming all of its competitors.)
Google popularized the concept of self-driving cars, but as we've learned time and again just having the technology doesn't necessarily make for a good consumer experience. Just look at Android's transformation from an ugly, disorganized interface into something that's actually elegant. Knowing Apple, it's working hard to crack the issues around self-driving that most companies won't even be thinking about for years.