And so it ends. Apple has finally decided not to pursue a move into vehicles. After so many years of teasing the world with the possible launch of an Apple car, the company has decided to pull back and redirect its resources to other priorities. This is big news on so many fronts, short-term and long-term.
Short term
The obvious short-term question is “why?” That answer is the same as everything else in innovation these days: Generative AI. Apple has been left out in the cold on Generative AI with all the running being made by Microsoft backed OpenAI and Google’s Bard. They have reportedly decided to redirect resources to this battle and withdraw from EVs.
Another short-term reason is the market for EVs is starting to falter, particularly at the high-end. The strategy of launching high-end vehicles to fund development worked for Tesla but has started to suffer as Lucid and others struggle with excess inventory. Apple usually takes the long-term view, find markets where it can do something category defining. It may not have been first to virtual reality, but it has been first to adopt game changing screen technologies.
In EVs, it may see that the window of opportunity for this strategy has closed. It has too much work to do to catch-up with Tesla, Lucid, and the many Chinese EV firms when it comes to technology. That will make other high-end brands like BMW and Mercedes feel more secure.
Strategic control
The long-term issues are potentially more significant denying from Apple a new ecosystem that would allow it to replicate its iPhone story.
Start with why Apple became the world’s most valuable company. They were the first to see that the cell phone was not simply a communications device. They understood that the iPhone integrates multiple customer experiences for productivity, entertainment, and a multitude of others things.
They are rare, but whenever a firm owns the integration of a customer experience they have a very high level of strategic control creating opportunities for capturing value. PCs operating systems are another control point, as Apple learned when Microsoft famously out maneuvered them driving the company to the point of bankruptcy in the 1990s.
The motor car is an unrealized point of integration. Until relatively recently it was a device for transporting us from A to B. There was some integration with audio communication and entertainment, but the commercial opportunity was limited. Connected vehicles, advanced satellite connectivity to vehicles via Starlink or other similar systems start to offer the opportunity for the car to be an entertainment system on wheels.
What really changes the game is the prospect of autonomous vehicles. It may be unacceptable to drive your Tesla while using an Apple VR headset, as the BBC reported recently. However, if drivers are freed from responsibility to watch the road, then a battle for the “unallocated minutes” of drive time will begin.
Core wins over Explore
The decision to drop out of the race for vehicles suggests that Apple is giving up the long-term goal to own the integration of consumer experiences in the vehicle. The need to pursue the core business priority of winning the GenAI battle is cancelling out a decade long exploitation into the market of the future.
This may not be an error. Apple may have played too long with automobiles without really figuring out how to win. Sometimes, you just have to pull the plug on an experiment. However, did Apple just pull the plug on experimentation beyond the core as well?
Core business requirements often win out against the need to experiment with future business models and technologies. My colleagues and I have long argued that to manage these tensions successfully a firm needs to have a separate unit that pursues the new, leveraging the assets of the core into new areas. Apple is famously a strongly functional organization with only one “ambidextrous” explore team – the Apple car. This gives the shift in strategy additional resonance.
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Copyright for syndicated content belongs to the linked Source : Forbes – https://www.forbes.com/sites/andrewbinns/2024/02/27/apple-cancels-move-into-electric-vehicles-ending-a-decade-long-saga