Automotive Industry Reacts to Apple Car Rumours

by Matt Klassen on February 19, 2015

Credible or not, rumours that Apple is poised to enter the car market have gained enough traction over the past week that the automotive industry itself has seen the need to respond. Former General Motors CEO Dan Akerson weighed in on the Apple automobile speculation, saying in an interview with Bloomberg that the Cupertino company would be crazy to wade into a highly competitive manufacturing intensive market with low margins and high costs, adding that if he were a stakeholder in Apple he “wouldn’t be very happy” at the prospect of an Apple-branded electric car.

But if that is indeed Apple’s long term strategy, Akerson offers his own advice: Stick to iPhones! “I would be highly suspect of the long-term prospect of getting into a low-margin, heavy-manufacturing” business, he told Bloomberg. In fact, Akerson notes that if Apple executives are serious about the prospect of becoming an automotive company, they simply don’t know “what they’re getting into.”

Of course you’d likely  expect this sort of response from an industry struggling to reduce its dependence on fossil fuels, scared of the prospect of seeing a popular tech company become its next significant competitor.

Apple has been interested in the automotive industry for years, that much is for certain. In fact, Steve Jobs reportedly saw the car market as one of the next great growth industries for his company, scoffing at other technological niche markets like wearables and phablets that his company has already since embraced.

Recently current Apple CEO Tim Cook even admitted that his company’s in-vehicle CarPlay platform would be a “key to our future” at Apple. Now perhaps Apple’s interest in the car industry begins and ends with its CarPlay interface, it certainly is the safe bet. Apple is hoping to design an industry standard technological interface for the automotive industry, one that would get Apple into the place most of us spend quite a bit of time, our cars.

But then there’s the news that Apple has hired several key automotive engineers from electric car pioneer Tesla, with additional speculation stating that Apple executives even met with Tesla’s visionary CEO Elon Musk to discuss a potential takeover. While Musk acknowledges meeting with Apple, he stopped short of talking about possible acquisition offers, stating only that Tesla is not for sale.

So although Apple has yet to comment on such speculation (nor will they), there certainly is precedent for Apple wanting to control all facets of the production process, as that has been the key to the company’s mobile dominance. If (and that’s a big ‘if’) Apple was interested in entering the automotive industry, it wouldn’t surprise me if the company was looking to do more than simply add its CarPlay interface to existing products.

With virtually limitless resources to fuel its ambitious vision, one might think that there really is nothing that could stop Apple from entering (and succeeding) in the car market if that’s truly the direction it wanted to go. But as Akerson notes, resources and vision won’t be enough, not in the automotive industry anyways. He firmly believes that getting into the car business presents too many insurmountable issues for Apple, a company used to the high margin game of selling smartphones, computers, and other technological doodads, and if Apple pushes forward with this project it will surely fail.

“They’d better think carefully if they want to get into the hard-core manufacturing,” he said of Apple. “We take steel, raw steel, and turn it into car. They have no idea what they’re getting into if they get into that.”

Now if there was anyone familiar with the transition from mobile to automotive, it may well be Akerson, as before assuming the role as GM CEO he spent time as president of MCI Communications Corp. and CEO of Nextel Communications Inc., General Instrument Corp. and NextLink Communications Inc. So if Akerson says Apple has no idea what it’s getting into, perhaps Apple should listen. Of course we all know that this will likely only serve as added motivation for the Cupertino company to push forward with its plans regardless.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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