Apple Automotive – Final shoe

A Titan falls.

• It looks like the final shoe is being dropped on Apple’s automotive aspirations as 190 Project Titan members are being let go or transferred into other roles within Apple (see here).
• It also further indicates that even when a company hires the best names in AI, this does not suddenly transform one into an AI-powerhouse as Facebook has also found.
• This comes as no surprise as when one looks at its execrable autonomous driving performance over the last 12 months (see here) it is easy to see why changes need to be made.
• During 2018 Apple drove 78,605 miles and suffered 69,680 disengagements; nearly 1 for every mile driven.
• This is some 9,787x worse than Waymo and better only than Uber which looks like it will have to go back to the drawing board.
• Apple’s interest in the automobile industry began several years ago with a project to design, build and sell a vehicle called Project Titan.
• This would have been great for revenues (cars are high price items) but terrible for margins as there is no way that Apple would have been able to earn its usual 40% margins on pressed steel, wheels, brake pads etc.
• I have long believed that this realisation led to the restructuring of Project Titan (see here) in September 2016 with the intention to focus on the infotainment unit and autonomous driving.
• This was at least credible, as infotainment had the possibility to deliver these sorts of margins if Apple could get the OEMs to implement its technology in their vehicles.
• However, this too did not work out and this activity was also cancelled with everything being focused on autonomous driving.
• There is no possible reason that I can think of for Apple to be engaged in autonomous driving as it has no route to market.
• It has already failed to get the OEMs to implement its technology outside of CarPlay and so how it would make money from autonomous driving remains a complete mystery.
• This also leads me to think that Apple could also back away from its non-sensical attempt to reinvent the wheel and do its own map from scratch (see here).
• Apple may come to realise that the only opportunity it has in the vehicle is to make iPhone work so well with cars that it drives loyalty to their brand and products.
• The net result is that I think that the end may be in sight for Project Titan.
• This does not require any of Project Titan’s current activities meaning that it may end up being quietly closed down.
• As revenue growth becomes harder and harder to find and with the prospect of a lower price for the iPhone 11 compared to the Xs, every penny is going to count this year.
• Despite these issues, Apple remains undemanding from a fundamental perspective leading to think that it remains a good place to hide from wobbles driven by security and privacy concerns.