Apple has made a potentially disastrous pivot on self-driving cars


  • Tim Cook
    Apple CEO Tim
    Cook.

    Reuters

    Apple is developing AI systems to power self-driving
    cars. 

  • But the tech giant is late to the game and may have to
    blow through a lot of cash to catch up. 
  • Investors could punish Apple if the company doesn’t
    deliver a worthy self-driving product. 

So now we finally know that the Apple car isn’t going to be an
actual car,
based on CEO Tim Cook’s revelation to Bloomberg’s Emily
Chang
.


Instead, Apple is working on the artificial-intelligence-based
self-driving technology. 

We’re focusing on autonomous systems,” Cook told Chang in
an interview. “It’s a core technology that we view as very
important … 
We sort of see it as the mother
of all AI projects.”

With this news, the big Silicon Valley pivot away from
building a brave new type of car and a reversion to what the tech
industry does best is complete.

Google has retired its podmobiles and will henceforth work
with Fiat Chrysler Automobiles on commercializing its autonomous
systems. Wall Street analysts have decided that it would be
foolish to invest in Tesla as a carmaker and would rather buy
into its $50-billion-plus market cap to see if
CEO Elon Musk can create an all-new mobility/data
business
.

You could read Apple’s announcement in two ways. First, as
a company that authentically wants to get in on the alleged
disruption of the transportation industry that you’ve likely been
hearing about, largely because Silicon Valley never stops talking
about it.

Second, as a white flag of surrender. If Cook is for real
and Apple is going to dive into autonomous and electrified
vehicles, the tech giant is so far behind that investors will
pummel the company if it blows through significant cash trying to
catch up.

Are you an optimist or a pessimist?


Uber office logo
Ride hailing services have
captivated investors.

Brendan
McDermid/Reuters


So the optimist’s view and the pessimist’s view. For
popular consumption, Cook is, of course, going to talk up Apple’s
transportation efforts, despite the lack of any sort of
meaningful engagement on this front beyond Apple CarPlay. The
main Silicon Valley company that’s deeply involved in
transportation, Tesla, has seen a nearly 70% appreciation in its
share price over the first six months of 2017. That’s impossible
to avoid.

And yet unlike Steve Jobs, who had a simple plan for making
people happy with easy-to-use computers and sexy
entertainment-oriented devices, Cook has adopted the technocratic
lingo of engineered futurism that now defines the conversation
about transportation tech. It sounds good, but the tech is far
from hitting the streets. 

“You’ve got kind of three vectors of change happening
generally in the same time frame,” Cook told Chang, speaking of
autonomous vehicles, EVs, and ride-hailing. 

What Cook meant is that you have three new or relatively
new (compared to Apple) buzzy tech firms making major noise about
those ideas: Google, Tesla, and Uber. 


apple carplay mercedes
CarPlay has been Apple’s main play up to this
point.

Daimler

It’s frankly odd that Apple would be seriously thinking
about getting in on this action. If the company — at its core, a
design firm — wanted to do cars, it should have just done cars.
Tesla has shown that a seat-of-the-pants automaker can be created
in the 21st century. But Apple serially botched everything about
doing a car and ended up killing what was the original Project
Titan in favor on this different, wonkier concept. 

It’s even more baffling that Apple would go all
hot-and-heavy on AI when the biggest opportunity for it to
actually disrupt an industry would be televisions. It’s entirely
questionable whether anyone would want to buy an Apple car, or
Apple car related services. But a large number of folks would
likely want to buy a proper Apple TV (as opposed to the streaming
box the company currently makes). 

Or maybe a cynic?

Then again, we’ve seen this movie before. Cook has been an
able steward of Apple’s legacy, but he also hasn’t been able to
launch that new world-changing product yet — and every year he
doesn’t, the more Apple must rely on the cash-cow iPhone.

The cynic in me says that Cook is just talking up mobility
because investors are excited about the prospects of self-driving
cars and that for an Apple CEO to embrace the idea sends a
stock-price boosting signal (he did share the news, after all,
with Bloomberg). 

The realist says that Apple will really get out of its
depth here and could start to shift into capital-destruction
mode. The car business is notoriously volatile and
capital-intensive. For Apple to enter it at any level more
intensely than it has so far could be ruinous.


This column does not necessarily reflect the opinion of
Business Insider.


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