The iPhone has about four more evolutions before it hits what I have called a finite electronic product maturity phase. It is a phase where changes become exceedingly marginal with the implications that customers do not notice much differences from the previous versions of the same products. Whenever that happens, margins fall on the products.
For the iPhone, that will happen before 2026. So, if Apple hopes to sustain its valuation, it needs to find another engine of growth. For all products and services in the world now, Electric Vehicles with autonomous capabilities would make sense for the technology giant to pursue.
The electric vehicle wars are revving up. Apple is nearing a deal with Hyundai-Kia to produce an autonomous EV in the U.S., CNBC reports, citing anonymous sources. The “Apple Car” could go into production in 2024 and the sources add the tech giant tapped Hyundai because it wishes to collaborate with an “established automaker willing to allow Apple to control the software and hardware that will go into the vehicle.” The announcement comes on the heels of Ford and Google revealing a six-year plan for enhancing Ford’s in-vehicle connectivity.
Apple is not playing in the cloud computing space; Amazon and Microsoft dominate that sector which will become increasingly vital for the future of commerce. The cloud business has a lot of growth ahead of it. But Apple is not there. Looking generally, there is nothing else that can bring a generation-shaping redesign like the one smartphones offered to tech companies, if you remove cloud computing and EV autonomous opportunities.
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The astronomical valuation of Tesla is based on this thesis that a shift is about to take place, from fossil-fueled cars, to EV cars with autonomous capabilities, and Tesla is positioned to lead therein. It is that perception that has fueled the surge. If Apple gets into this car, it has a promise. From iPod (Walkman-inspired) to iPhone (Blackberry-inspired) to Apple Watch (pebble-inspired), Apple is not used to starting any category but has a clear record of leading or co-leading once it gets in.
The decision for Apple to pursue an EV future is not a choice: it is the only option because the iPhone cannot carry it forever. Sure, Apple has the iPhone – an exclusive hardware on a proprietary software – but that does not mean it cannot lose margins as the smartphone industry matures. That is why I do think that Apple will pursue an electric car with autonomous capabilities to secure its long-term future. That call will become more evident in the next coming quarters. And as that happens, there would be a signal call to Tesla: be ready.
Expect iCar to be a hit because it will come from Apple with world-class engineering. Tesla space could be secured as there is a clear possibility to have 4 big brands in the EV autonomous space. So, the rise of Apple will not mean the fall of Tesla.
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Comment: “Looking generally, there is nothing else that can bring a generation-shaping redesign like the one smartphones offered to tech companies, if you remove cloud computing and EV autonomous opportunities.” – Ndubuisi
The quote above could be self-limiting, because we do not really know what another decade holds, even with all our predictions and supposed intelligence. Just one event called Covid-19 and look at what our world has turned into. Have three or four Covid-like high impact events, and everything we hold high today could be upended, with entirely new sectors taking centre stage.
On Apple and sustainability of iPhone, well, there’s more to iPhone than a mere smartphone; as long as Appstore remains exclusive to only Apple users, do not expect iPhone to lose significant power in market valuation, until something better comes around; not just about reaching the finite state in electronics.
If Apple manages to come with good EV products, it will still shake up Tesla, because the richest people are on Apple platform, and once it fuses the car with its Store, alongside iPhone and everything Apple; no other brand comes close.
It’s Apple, the master of storytelling, if it clicks, it must resonate.
My Response: “The quote above could be self-limiting, because we do not really know what another decade holds, even with all our predictions and supposed intelligence” – if we wait to know everything, we cannot write. So, based on all that we know, we make calls knowing that the future has not arrived.
“not just about reaching the finite state in electronics. ” – your laptop has reached a finite state even though you have software in it. Windows from Microsoft has reached a stable state that most things are marginal. Apple will get there when the innovations on the services, powered by software become marginal and incremental. It has really nothing to do with the hardware as if you are looking for designs, iPhone hardware is not the winner. So, the electronic is a composition of hardware+software.
I still think Apple, Tesla and 2 others can co-habit as that market typically has 3-4 big brands. I do not think Apple will win it all because no market has one clear dominant car brand. But we will see.
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