Apple’s work on an autonomous vehicle, dubbed Project Titan, is such a major source of conjecture, rumor-mongering, and clickbait that Motor Trend just ginned up a wholly speculative iCar, pretended it had some inside line on the subject, and slapped the image on the internet with the provocative #MTAppleCar. Debating the question “is the iCar real?” has become a favorite barroom distraction for auto- and tech journos alike.
That question has a straightforward answer: yes, the so-called iCar is real. But it’s also not that simple: The car itself is “real,” in that it’s being built and tested, but it’s not “real” in the sense that you will be able to trade your hard-earned money to own one. That’s not the point of the car. Apple is not getting into the business of manufacturing automobiles.
But they are getting deeper into the auto industry: What the Cupertino, California-based consumer electronics behemoth has done is staffed up with experts in robotics, electric propulsion, and EV battery technology. “[Apple CEO Tim] Cook has hired lot of people with infotainment and control system software experience—ex-Ford guys, people from Mercedes and other European carmakers—as well as battery experts from [battery maker] A123,” says John Ellis, former head of technologies for the Ford Motor Company and now managing director of Ellis and Associates, a boutique technology consulting firm. All these staffers report to former Ford engineer and current Apple product design vice president Steve Zadesky, who was an integral part of the teams that created the iPod and iPhone.
“No one assembles such an established and expensive group of superstars if they aren’t dead serious about the mission,” insists Ellis.
So what, then, is the mission? It’s not, as many have posited, to disrupt the car industry; becoming the next big automaker makes no sense for Apple. Remember, this is a company without manufacturing expertise—Foxconn or Flextronics builds hardware like iPhones and iWatches. What Apple does brilliantly is learn everything it can about a product and industry, then improve the design to such an extent that the Apple version is seen as a generational leap. Then they market the hell out of it. Apple disrupts, it doesn’t build.
“Could Tim Cook become the next Henry Ford” Ellis asks, rhetorically. “Sure, he has the money to do it. With $175 billion in the bank Cook could toss a couple hundred million dollars at the project every year for the next decade and not diminish the company’s bank account one cent. But why?” Ellis makes the point that the company is unlikely to wade into the manufacturing sector—which requires building an infrastructure to support production, service, and sales—starting with an automobile, a massively complex device with more regulations, restrictions, and legislation than any other mass-produced consumer product on the planet.
No, what Apple wants instead is to learn everything they can about the future of the automobile so they can holistically—if forcefully—integrate themselves into that experience. Apple is likely building a future-proofed test mule (as much as such a thing can exist) to study the in-cabin environment of cars of the near future; this way, the company can better understand how to best integrate Apple products into that environment, including the infotainment system, environmental controls, and perhaps eventually, the performance aspects. This could also provide an insight into creating products or software that will improve the next generation of digital service ecosystems.
Apple would almost certainly also use the opportunity to create and license a portfolio of “essential” patents, based on their research, to the OEMs. “The royalties would be worth billions,” Ellis says.
(To better understand how this works, just look at the Microsoft-Android relationship: it’s been estimated that the Seattle-based software giant makes $5 to $15 on every Android device sold—an annual windfall of about $2 billion—simply because it holds three patents, including one essential to the standard FAT file system, for technology within the handsets.)
Josh Campbell, founder of Magic + Might, an interactive design and consulting firm that works in the automotive industry, agrees that Apple’s role in the automotive space is more of a patent troll than a traditional automaker.
“Apple’s thing is learning everything it can about an industry and the product within it,” says Campbell. “Then, it forces that industry to re-think the way it does things, and in the process makes the products better.” He uses the iPhone as an example: “Apple didn’t create the smartphone, but it surely designed one that is easier to use, looks better, and has all of these cool extra features that allows us to share life’s ‘moments’ with friends and family.
“And [Apple] doesn’t actually build the iPhone,” Campbell says. “An independent contractor does that.”
Plus, the major automakers are not equipped to handle their immediate programming needs, let alone for five or 10 years down the road. This means companies with prodigious programmatic and data capabilities like Apple and Google are poised to dominate the space.
And the software needs for future generations of vehicles will go far deeper than simply programming infotainment systems. “Software is the big revenue play in the auto industry,” says one high-ranking auto industry executive with one of Detroit’s Big Three automakers, who wished to remain anonymous. “For the most part, mechanical systems—engine, suspension, brakes, steering—are the best they have ever been. The only way automakers can differentiate automotive systems, or make them better [and] more efficient going forward is by optimizing the software that controls those systems.”
Consider fuel economy. Pretty much every carmaker is looking for fuel efficiency gains by employing engines with smaller displacements, turbocharging, and maximized fuel-injection. But fuel injection “is more about the code than the hardware,” says the industry executive. “In an internal combustion engine, the ratio of fuel to air injected into the cylinder’s combustion chamber dictates how much energy is extracted from the explosion event. We use 1s and 0s to calculate the best mixture to balance performance and efficiency, not hardware.”
There’s also the question of data, which is where a company like Google, with its own autonomous-car program, fits in.
“[Google] has made its fortunes by bringing context to data,” says Campbell, noting that the company uses the richness of its data—what people are searching for, what they share with friends on Google+, what games they download to their Android phones—to rake in more than $30 billion each year in advertising revenue. By entrenching itself in the car business, Google, and perhaps Apple, as well, can exponentially increase the amount of data collected while remaining hyper-aware of individual habits.
“It’s about reaching a single person, rather than a region of people,” says Campbell. “The deeper the context, the better; the more data it can gather, the better.”
Despite the public’s desire for sexy, trend-setting Silicon Valley giants like Apple and Google to reinvent the automotive industry, the end game is probably as predictably commercial and self-interested as any corporate push into a new market. Apple will stick to its area of expertise—software design—and influence the industry not by building some utopian ideal of the car of the future, but by partnering with established automakers who do all the heavy lifting in terms of actually building and selling the cars.
Apple isn’t getting into the carmaking business—but it is entrenching itself further into the automotive business, and in a big way. You can believe that.