Apple and Google are both interested in autonomous cars, but they're approaching them in very different ways. According to one analyst, Apple's plan is entirely unfeasible.
Two companies, two paths
Since 2009, Google has been working on autonomous cars right out in the open, for all the world to see. Its vehicles have put more than two million miles on their odometers, mostly without the help of human drivers.
Apple, on the other hand, has yet to admit that it's working on anything auto-related beyond CarPlay, despite the fact that mountains of evidence amassed since February 2015 vouch for the company's vaguely secret "Project Titan" division, which is dedicated to creating an autonomous vehicle.
The differences run deeper than that, though. By many accounts, Google has no plans to create autonomous vehicles itself. That may be why the company recently entered into a partnership with Ford Motor Company. It's now believed that Google plans to employ the same model for autonomous cars as it does with its popular Android mobile operating system, supplying the software that makes self-driving vehicles run but letting other companies create the actual cars.
Apple, on the other hand, seems to have plans to build its own vehicles. In fact, news broke earlier this month that the company had selected Magna to build its rumored "iCar".
Last September, auto industry veteran Bob Lutz was asked about Apple's rumored autonomous car. He called it a "gigantic money pit".
Now, analysts Richard Windsor at Edison Investment Research has expressed similar doubts. He points to the 40 percent margins that Apple earns on some of its mobile devices and compares them to the slim margins that come from automobiles--margins that would become far slimmer for vehicles produced in smaller quantities.
Windsor admits that Apple does appear to be working on an autonomous car. However, he thinks that the company is doing so to improve CarPlay and to gather greater amounts of data on users--data that Apple can ultimately exploit by allowing other companies to advertise to CarPlay users.
There's some merit to Windsor's argument. Above all, it's abundantly clear that the profit margins on automobiles can't compare to those on smartphones.
However, there are at least three counter-arguments to consider. They don't necessarily prove that Apple will eventually sell an autonomous car, or that it will be successful if it does. But they do offer food for thought:
1. The auto industry is in the middle of two important revolutions--electrification and autonomization--and Apple sees an opportunity to assume a leadership role. Apple did the same thing when it saw the shift toward digital music in the late 1990s and launched the iPod. It also predicted the increasing importance of mobile devices and created a versatile, pocket-sized computer: the iPhone. It seems natural that the company would want to take advantage of the looming changes in the auto market, too.
2. Who says Apple would need to mass-produce vehicles? Apple could, in theory, produce a limited number of autonomous, electric vehicles, priced high enough to give it the margins it needs. It has legions of well-heeled, rabid fans, and surely several thousand of them would be willing to shell out for such a ride. It wouldn't work toward the same end as Elon Musk's mantra of "electric vehicles for all", but it could make Apple a player in the luxury segment.
3. Apple may need to get its groove back. This week, we learned that Apple's revenue fell in the most recent quarter--the first time it's done so in the past 13 years. Most analysts believe that the company needs to launch a new product that will wow consumers and buff its brand a bit. That product doesn't have to be a car, but then again, there's no rule that says it can't be, either.
What are your thoughts on Apple and its not-so-secret car project? Share 'em in the comments below.