The Apple car silent killer
There's been much discussion recently about why Apple finally canceled its Apple Car project. The media consensus seems to be that Apple will have to face a product with too thin margins. This seems quite weird to me. Or you would have to believe that this giant, led by a supply chain wizard, mysteriously never understood how the very well-documented car industry operates.
A more educated discussion was that Apple was investing in a piece of hardware (the car) that would unlock a new stream of high-value services (on-demand ride-sharing and self-driving)... And it may be that the fall from grace of all the autonomous hype played a role in this decision. Not to mention that Apple is blatantly late at the current AI game and might not have been able to deliver level 5 self-driving sooner than current car makers.
But again, I think we're missing the picture...
My point of view is that if you want to understand any Apple product (launched or canceled), you have to forget about it for a minute and start with the platform. Apple's main directive is always about growing their closed garden–what EU regulators have finally been catching up on.
With that perspective in mind, the question to be asked is how the car would sustain its flywheel effect and reinforce customers' network effects. Said differently: if the sunk costs of manufacturing and selling such an expensive 'device' with expectedly bleeding edge technology were well understood from the get-go by Apple, how many more iPhones, watches, music, movies, apps, and games would have been sold with an Apple car? Would this new hardware have been a key contributor to Apple's digital supremacy?
If you can envision a car unlock specifically with an iPhone that would only run Car Play, feed you Apple Music, and connect to your kids' iPads in the back seat, this seems a flimsy boost to these devices and services sales year over year. Imagine a best-case scenario of a million Apple cars sold at some point (for reference, in 2023, Tesla sold 1.8 million vehicles, and Apple sold +54 million watches the same year). How many more adjacent sales would have been unlocked on their platform? And, as importantly, how much lock-in would Apple have had on these sales?
This last point, and possibly the biggest insight on how tech markets are evolving, is that one of the silent killers of the Apple car might have been Margrethe Vestager and the way the EU is forcefully pushing against large online “gatekeeper” platforms with the Digital Markets Act (DMA). And in case you doubt how Europe could have been that influential on how this U.S. giant dealt with tech and markets, remember that it's not only about the European market but also how California and other states are now more and more following up rapidly with Bruxelles regulations...
Philippe MEDA
But to understand all this, you first have to understand that a car is not a product but a full-on digital product embedded (or not) in an always-on platform of online services. Something that, sadly, our European manufacturers are still struggling with.
