It’s been more than eight years since I first drove one of BMW’s MINI E electric prototypes around downtown Los Angeles. One of the first characteristics I noticed about that car was the extremely aggressive regenerative braking that enabled driving virtually without touching the brake pedal. While BMW has persisted with that strategy as the only control mode on the production i3, other automakers have provided similar abilities only when shifting the transmission to Low mode. After driving the new Chevrolet Bolt EV from Tesla’s Silicon Valley backyard into the heart of San Francisco, I think all Bolt drivers should consider driving this way all the time.
It’s been a decade since General Motors finally gave up on trying to stake out a claim in the minivan market and then trying to recast its vans as pseudo-SUVs. In 2006, GM launched an all-new platform for full-size crossover utilities that was known internally as Lambda and ultimately spawned four nameplates, Buick Enclave, Chevrolet Traverse, GMC Acadia and the now-defunct Saturn Outlook. Having achieved some notable success with the platform with steadily growing sales of more than 200,000 units annually since 2010, an all-new second-generation Lambda is now ready and hit the streets in 2016 under a redesigned version of the Acadia.
When I first started speculating on the idea of an Apple car last February as rumors about Project Titan emerged, I was enormously skeptical that it would ultimately happen. However in the days since Apple’s most recent media event where they announced the iPhone 6s, I’ve begun to rethink my assessment. I now see a way that might lead to Apple’s entry into the car business based on their latest approach to selling smartphones.
As the discussion about a possible entry of Apple in the car business continues, yet another wildly premature question arises. How would Apple go about selling these totally speculative vehicles?
Developing and building a modern car from the ground up is a vastly more complex problem than anything that Apple has previously attempted. Elon Musk, Henrik Fisker and countless others before and since can certainly attest to this. However, that is largely an engineering problem with basic technical issues to address and regulations to adhere to. Aside from scale and the nature of the engineering challenges, it’s an area that Apple is somewhat familiar with.
The Franchise System
The network of independently-owned franchised car dealerships was established in the early years of the industry. In those days, it was hugely beneficial to all of the startup automakers by providing them with an inventory buffer and some extra working capital. With a system of franchises, automakers don’t actually sell product to the end consumers that drive around. Vehicles are purchased by independent dealers who maintain the inventory and sell to end consumers. Even when a customer special orders a vehicle with a particular configuration, it is still sold twice, once by the factory to the dealer and then by the dealer to the consumer.
In the early years of the industry, this system benefited manufacturers because they sold franchises to aspiring retailers and them sold them the product shortly after it came off the assembly line. It also benefited the dealers that could charge a healthy markup and also make money selling parts and service. Finally, the system benefited the consumer because with so many independent dealers that could charge whatever they liked, there was an opportunity to shop around for the best price or to find the exact car they wanted.
However, as dealers became more wealthy, they would increasingly wield their influence over state legislators to get laws passed to prevent automakers from competing by selling directly to consumers. Until the import brands started arriving in force in the 1960s, this all worked well with dealers only competing with each other for sales. However, the imports seeing the thousands of dealers selling the cars at a discount had a different idea.
While they didn’t try to go against the franchise laws, they also realized that by selling fewer franchises, their dealers wouldn’t be undercutting each other as much, selling more vehicles per store and earning higher profits. Until GM and Chrysler went through bankruptcy in 2009, all efforts by the Detroit automakers to cull their dealer networks or compete directly had been firmly rebuffed. Even now with 20-25 percent of their dealers shut down during the bankruptcy process, the Detroit three still have several times the number of franchises of their import brand competitors.
Tesla and the company store
Having seen the success that Apple had with its company owned retail outlets since the first opened in 2001, Tesla decided to eschew the franchise model for its fledgling lineup of battery powered vehicles. Starting in California and a few other states with more lenient regulations that allowed carmakers without any existing dealer network to sell direct to consumers, Tesla has opened several dozen stores modelled on the Apple boutique concept.
Unfortunately, Tesla’s attempts to expand beyond that initial retail footprint have been largely rebuffed by the legislatures and courts. In fact laws against automakers selling direct to consumers have been made even more strict in a number of states including Texas and Michigan.
So what might Apple do?
As with everything else about a potential car program, we can only speculate at this point but Apple’s history and some emerging technology provide some clues. Prior to the opening of the first Apple Store in April 2001, Apple’s products had been sold through third-party retailers including CompUSA, Best Buy and a range of independent stores. In the larger stores, Apple products were often relegated to a remote corner and rarely given much support.
Automotive retail is a very different environment where the vast majority of stores are dedicated to a single brand. However, because they are independently owned and operated, automakers have very limited control over what the stores look like or how they are configured. Automakers have resorted to a carrot and stick approach to getting dealers to follow certain guidelines, such as providing support payments to remodel or withholding allocations of certain models if dealers don’t tow the line.
In lieu of a franchise system for the computer business, Apple just went into direct competition with their third-party resellers. By providing a halo experience for customers where they could show off their latest products, Apple was able to grow their sales dramatically. While many independent resellers went out of business, most of the larger chains like Wal-Mart, Target and BestBuy saw the increasing attention that Apple brought to its products as a boon. By advertising that they had the same products, they were able to draw in consumers that also needed other products.
There was one significant distinction here from the auto industry. Apple has always sold its products at premium prices and virtually never discounted anything, thus avoiding one of the major concerns from franchised car dealers. They also discouraged third-party retailers from discounting Apple products. In this way, they avoided the appearance of undercutting third-parties and competed on providing a better retail experience.
With its huge cash horde and influence, if Apple chose to take on established car dealers to set up their own retail network, the tech company could potentially lobby and win over state legislators that have so far done the bidding of dealers. Apple already has nearly 300 stores in the U.S. and has shown a record of playing nice with those third-parties which could help if it does go after changes in franchise laws. Apple would likely have a better chance of success with its polite and well-mannered CEO Tim Cook than the outspoken Tesla CEO Elon Musk.
It’s also entirely possible that Apple could go the traditional franchise route. There is probably no shortage of potential dealers willing to put up a multi-million dollar franchise fee to give the brand a shot.
My own personal guess is that we’d actually see a mix of both independent dealers, stand-alone Apple car stores and some support from the existing Apple store network. Given that existing Apple stores largely live in malls and are often overcrowded as it is, Apple could provide a virtual reality introduction to its vehicles from the existing stores.
Imagine walking into your local Apple store, walking over to the car section across from the new watch counter and slipping on a set of Oculus Rift goggles. You could sit down in a mock driver’s seat and reach out to experience the entire Apple automotive user interface. When you are done, one of the Apple geniuses could set up an appointment for a physical test drive at a nearby Apple car store or third-party store or even pull up the loan application on an iPad and arrange for your new car to delivered right to your driveway.
If anything, Apple taking on the car buying experience may end up being far more disruptive to the industry than any Apple-branded car. As the old curse says, “may you live in interesting times.”
Over the last couple of days I’ve been having some further discussions with people about what sort of car Apple might create if indeed they are developing one. As I said in my first post on the topic the other day, if Apple is going to build a vehicle, it will almost certainly be a premium EV in direct competition with the Tesla Model S and Model X. For any company getting into building cars for the first time today, this is probably the only rational course.
In recent days, the speculation that Apple, Inc. has embarked on an effort to develop and produce cars has blown up all over the internet. If indeed Apple is doing this, they come at this market segment as the industry may be entering the most transformational period in its near 130 year history. I believe Apple can do some very interesting things in this field in the near term, but it’s not at all clear if the company behind the Mac and iPhone has the traits to succeed in the long run. Even if Apple does succeed in the near-term, Tesla is likely to be the first automaker to feel the pain.
The era of personal vehicle ownership may be coming to an end
Apple failed to respond in a timely manner to request for permission to show its logo in a video so with a deadline looming the producer opted to blur the logo and move ahead. After finally responding and seeing its logo eradicated Apple then demanded that the video be removed.
I understand the need to protect a trademark, but can you actually protect against the absence of a mark?
Post imported by Google+Blog for WordPress.
Mike Daisey is right about not being a journalist, but that doesn't mean he's not influential.
When his tale about working conditions in Chinese consumer electronics factories exploded onto the headlines it raised awareness about the human effect of the products we buy every day. Despite the exaggerations and fabrications in Daisey's version of the narrative, the reality is that China has a manufacturing advantage over the United States because of generally poor working conditions and low pay.
The flexibility and responsiveness that Apple likes to tout from its Chinese suppliers comes from having tens of thousands of workers living in crowded dorms adjacent to the factory that can be pulled in day or night and put to work. That sort of behavior would never be tolerated here and should not be tolerated in China. Cranking up production of a new phone or tablet is simply not so important that humans need to be abused in this way.
The blowback against Daisey's actions may well inoculate companies like Apple, HP and Dell as well as suppliers like Foxconn so that people ignore the problem that is all too real.
#China #chinesefactories #apple #foxconn #mikedaisey
Reshared post from +Dan Gillmor
Mike Daisey "undermined the cause he purported to advance. That's the real scandal."
Worse Than Kony2012: The Tragedy of Mike Daisey's Lies About China
consumers can't do much for Central Africa or Afghanistan, but they
have real power to improve Chinese labor abuses. Will they be less
inclined to believe the next person who tells them ho…
Google+: View post on Google+
Post imported by Google+Blog. Created By Daniel Treadwell.
If you haven't already read the two pieces in the NY Times last week about Apple and its manufacturing operations in China you should.
One of the recurring reasons that Apple executives give for using Chinese manufacturing is speed and flexibility at the Chinese plants. They adamantly deny that it is about low wages and benefits paid to the hundreds of thousands of workers in those Foxconn factories. Unfortunately if you know anything about modern high-volume manufacturing this simply doesn't ring true.
The authors of the articles provide an anecdote about the weeks leading up to the launch of the original iPhone. The late Apple CEO Steve Jobs had made a last minute decision to switch from a plastic to a glass screen. As the first glass panels were arriving at the factory in China, 8,000 employees were roused in the middle of the night from their dormatory, given a biscuit and a cup of tea and put to work. The only way to get the kind of instant flexibility to change direction in a manufacturing operation is to use masses of human labor to do the assembly.
This sort of work could definitely be done in the US and it could also be done by automation. However, in the US labor regulations would make it much more difficult to get people working multiple 12 hour shifts and living in dorms where they could be sent to the assembly line at the drop of a hat. Automation requires more effort to program for such drastic changes. Both are substantially more expensive than "disposable" Chinese laborers.
Apple simply could not get the sort of flexibility they like to tout if Chinese labor were not so cheap. It really does come down to money and nothing more and that's why Apple is sitting on a $100 billion cash horde.
#apple #china #cheaplabor
Apple, America and a Squeezed Middle Class
Building Apple’s iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies.
Google+: View post on Google+
Post imported by Google+Blog. Created By Daniel Treadwell.
If the US Patent and Trademark Office grants this patent to Apple (and based on past experience, they almost certainly will) then we know the system is irretrievably broken and all software related patents should be utterly disregarded and related court cases should be dismissed.
#apple #patent #uspto #android #faceunlock
Apple Applies For “Face Unlock” Patent – Sounds Awfully Familiar
I don’t want to anyone to dismiss this post as simple Apple bashing troll post but this is getting a bit ridiculous. Apple has recently applied to the USPTO for yet another patent on a technology not only currently in use today — but a main feature in Android 4.0; Face Unlock. Apple’s application describes the patent as a brand new technology that allows a user to unlock a device by using the features of their face. It’s not so much that I hate Apple and there’s no question Android is their s…
Post imported by Google+Blog. Created By Daniel Treadwell.