Will Apple be the Mobility Giant of the Next Decade?
Mobility is a $10 trillion market. Let that sink in. After initially coming across this statistic, I was blown away too, but it’s now becoming apparent why Apple recently disclosed that it’s working with Kia/Hyundai to build autonomous vehicles in West Point, Georgia. This announcement is notable, as it signifies Apple’s reversion to the core competency the company was built upon — creating exceptional products in areas of new and emerging technology, rather than taking the virtually the same product and making in marginally better with an annual product release.
The Chip Shortage
I find the timing of this development especially interesting, with news about the new Apple Car being produced stateside surfacing at the same time as the global auto chip shortage. Ford, GM, and many other major car manufacturers have been forced to slash production estimates for 2021, as global semiconductor manufacturing has been unable to meet the unprecedented demand for chips over the past year.
The pandemic has seen an increase in gaming devices, laptops, and other personal electronics, all while remote work (and virtual life, generally) has required a boom in computing services and the data centers needed to power them.
Amidst this global chip crisis, Apple announced that it was breaking its 15-year partnership with Intel. Apple has been increasing its R&D as a percentage of sales over the past 10 years, and while many have wondered where this spending could possibly be going, it is now clear that they are building out their in-house semiconductor expertise. With this steady investment in chip design, Apple is now handling nearly all steps of its chip production in a vertically-integrated ecosystem — replacing the third parties it once relied on and creating chips that are more efficient and offer better performance.
Enter autonomous vehicles — the category which will require the most computing power over the next era of Industry 4.0 tech, as vehicles absorb vast amounts of data and must make decisions by processing that data instantaneously through edge computing centers. So that begs the question, has this been Apple’s play all along? Apple started Project Titan (the name of their internal AV project) in 2014, but leadership issues and other problems led to rumors that they had shelved the project entirely by 2016. Then they hired Tesla engineer Doug Ford in 2018, a sign that maybe they hadn’t scrapped the problem, as we had initially thought.
Looking Ahead
As we connect the dots, could it mean that Apple is pivoting to become a major player in the mobility arms race? Just as the smartphone has been their star product for the past decade, the Apple Car has potential to be the next star product, as smartphones approach an asymptote in innovation.
As they’ve built out their in-house hardware and software integration, along with their exceptional services division, I see Apple surpassing their existing competitors in the automobile market. And while global chips can’t be produced fast enough, with exponential growth in use-cases, Apple has nurtured its relationship with Taiwan Semiconductor Manufacturing Co., the global chip manufacturing leader (more than half of all chip production in the world is handled by TSMC).
With this crucial relationship with TSMC and leading technical talent, compounded by Apple’s stellar track record of product design, imagine the next era of Apple — a company creating all-encompassing mobility products (across hardware, software and services), taking on existing ride-hailing, transportation, and auto giants all at once. Imagine a global fleet of autonomous electric Apple vehicles (ranging from taxis, drones, and more), seamlessly integrated into its smartphone platform to allow for ease of product delivery, transportation request, and payment with one simple application. It’s a bold vision, but remember how crazy the first smartphone was?
We talked about the potential for Apple to overtake Uber back in 2019, and this doesn’t seem out of the realm of possibility (Apple even invested $1 billion in Chinese mobility giant Didi Chuxing). Returning to the original idea of market size, Apple’s current star product is its iPhone — 1/3 of the roughly $500 billion market. Apple would need only about 2 percent of the projected $10 trillion mobility TAM to match their iPhone’s revenue. If the company’s storied history, exceptional brand value, and passionate consumer base tells us anything, I don’t think this is out of the picture, and it could be a sign of what’s to come.
