An Apple car? Yes.
Apparently Apple (AAPL) has been working on its own automobile. The fact that the car would be, like a Tesla (TSLA), electrically powered, only added to the surprise. And added to the eye-rolling, if you've got doubts about this.
As an investor, it's easy to mount a case why Apple shouldn't build a car.
— It's an example of Peter Lynch's famous construction, “diworseification”; expanding your business outside your core competency.
— It isn't clear what competitive advantage an Apple car would have over existing vehicles, whether electric or not.
— Automobile business is highly regulated in ways for which Apple has no experience.
— The car business has exceptionally long cycles (typically four to seven years for a given model), too long perhaps for an innovator like Apple to upgrade its products on its usual one-year cycle.
But I don't think these reasons or others ought to prevent Apple from trying. As both a car buff and a tech investor, I'd love to see Apple give it a try. And it's equally easy to make a case for Apple succeeding.
First, Apple has the money. Developing a car — really, a whole car company — isn't cheap. It has been reported that Tesla has spent roughly $1.5 billion in capital expenditure and operating costs to reach its current level of production. But Apple has $145 billion in cash, net of long-term debt. Enough said.
Second, the basic design idiom of a car has been unchanged for 100 years: Four rubber wheels, one or more of which propel the vehicle; a steering wheel; pedals on the floor; side-by-side seating in one or more rows, etc. There is plenty of room for a player like Apple, without any tradition, to offer game-changing ideas and make them real.
Third, recent automotive innovation has largely been outside of the car's primary function: Transportation. Cars have been able to carry passengers down a highway at 60 to 70 mph for about 60 years now.
Almost every improvement since has been through either refinement — air vents becoming air conditioning becoming individualized climate control — or regulation.
via apple - Google News http://ift.tt/1Lisfkc
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