[beloch]

According to this chart, Apple spent $6B in 2014 and is projected to spend just over $10B in 2016.

For comparison, in 2014 Volkswagen spent $13.5B, Samsung spent $13.4B, and Microsoft spent $10.4B. [1]

Apple has, historically, not been a big spender when it comes to research, tending to favor short-term, tightly focused research over long-term, curiosity driven research. Over the last few years their research budget has ballooned, but only in 2017 (projected) are they going to reach levels that the above companies were spending at in 2014. Has Apple's research focus changed?

Perhaps we're not seeing some monumental project in the works, although an autonomous car would be pretty big. Perhaps what we're seeing is Apple deciding to loosen the purse strings and, instead of stashing away obscene piles of money, they've loosened their research focus and now have a lot of people doing whatever the hell they want, much like MS, just because something useful might someday emerge.

Let's face it, Apple has so much money they could probably launch their own space program if they really wanted to.

[1]http://fortune.com/2014/11/17/top-10-research-development/

[astrodust]

Just imagine how much fun Ive would have designing an orbital space station.

What's interesting is how aggressively they're moving into the car space if that's what's happening. The phone people had no idea, they got blindsided thinking Apple wouldn't have the guts, would never commit the money.

[simonh]

I think the phone industry just didn't think it possible that real ground breaking innovation in their industry was at all possible. They imagined a phone must have a physical keyboard, couldn't run a decent web browser and Microsoft was already selling the best mobile OS it was possible to make.

It wasn't that they doubted Apple's commitment, they just didn't have the imagination. To be fair to them, Apple timed things perfectly. Even a year earlier SOCs weren't powerful enough to run something like the early iOS. They did in software what they did in hardware much later with the 64-bit transition. They pulled off a superbly executed technological coup just at the point when it became possible to do it at all, beating everyone else to the market by years.

If they're planning to do the same with cars, we have interesting times ahead.

[TheOtherHobbes]

Cars are a terrible industry to get into. Building cars is massively capital and plant intensive, heavily dependent on supply chain logistics, and the market is already extremely competitive. The entire industry is well on its way to switching to electric and/or self-driving.

Selling cars requires a huge dealer network rollout with huge up-front costs for training and spares. Doing it DIY would be insanely expensive, and persuading existing dealers to sign up for a franchise is going to be a tough sell considering Apple's historical treatment of resellers.

Apple under Jobs certainly had the imagination to make a good phone - but the phone industry was always fairly crappy, with very clever internals but mediocre UX.

I don't see much reason to think that Apple under Cook has the imagination to break open the car industry in the same way. The possible competitive differentials are much smaller, and Cook isn't the most creative CEO Apple has had.

If the USP is that Car is electric, looks pretty, and may eventually have some self-driving features - that won't be anywhere close to enough. It's going to need to have some wow to get taken seriously, and even if Jobs were alive and in charge there's limited wow space available.

Of course if it flies and/or teleports, that would be something else.

[simonh]

The car industry is about to go through two completely independent revolutions simultaneously. The move to electric power trains, and self-driving. This is the perfect time for an outsider to enter the market because the incumbents have no advantage in these fields relative to a newcomer. In fact as fundamentally hardware companies they have the same issues with figuring out how to develop first class software that the phone companies did.

Apple has huge expertise in both these areas. Not electric motors sure, but electronics design and manufacturing in general and specifically battery technology on the power train side and software on the self-driving side.

But the key to their potential is software. I think the main reason for Apple's success is their super high quality OS core, code libraries and software development tool chain combined with one of the greatest software engineering culture and talent pools on the planet. They have exploited this advantage ruthlessly ever since the 90s. It underlies the success of all their best products - even the iPod if you bear in mind that iTunes was built on these core advantages. Yes iTunes is a mess now, but it made the success of the iPod possible.

The key to success in the coming car revolution will be software. Computers will control and orchestrate every aspect of the internal operation of the vehicle, and that's before you even get to external operations with self-driving. Only Microsoft has the depth of software development competence and the technology platform resources to compete with Apple in this area, but for whatever reason they just don't seem to be able to get their act together when it comes to engineering complete product stacks rather than individual technologies.

[rgbrenner]

the incumbents have no advantage in these fields relative to a newcomer.

Except their distribution network, reputation/brand value, and marketing reach. And their IP in the non-powertrain components. And their manufacturing knowledge which makes the cars more reliable.

And they can fund the move to electric (or whatever) using existing profits. Whereas any newcomer has to raise money and spend time doing all of these things.

While this is probably the best time for someone to attempt to do those things.. the incumbents definitely aren't starting from scratch.. they still have advantages.

[splouk]

Except Apple would already have reputation/brand value as well. Perhaps even more than, say Ford, since they are known as a technology company, and the cars of the future are electric and self-driving.

[simonh]

You are absolutely correct, it will be a tough challenge, but if anyone is ever going to it, it's now.

[kamaal]

>>specifically battery technology on the power train side and software on the self-driving side.

Neither actually.

Battery technology for cars is a very different area of work compared to making battery for phones.

And writing self driving car algorithms isn't exactly the same designing UI on the FreeBSD OS.

[mcphage]

> Cars are a terrible industry to get into. Building cars is massively capital and plant intensive, heavily dependent on supply chain logistics, and the market is already extremely competitive.

That sounds perfect for Apple, though—they've got tons of capital, excellent at supply chain logistics, and used to thriving in very competitive markets.

[WalterBright]

Many car startups have been ground to pieces due to it costing more than their investors ever imagined - Tucker, Bricklin, Delorean, etc.

[ianferrel]

How many of those car startups had the largest market cap in the world before they started making cars?

[givinguflac]

Pretty much everything you just said could have car replaced by the word phone, and you'd sound just like MS BB or Nokia in 2007. "Clever internals but crappy ux" describes pretty much every car ever. Regarding dealerships, ever heard of Tesla? It's definitely possible to diy, and Tesla has nothing compared to Apple's resources.

[forgetsusername]

>Regarding dealerships, ever heard of Tesla?

Tesla is trying this model, but I don't know whether anyone can makes claims as to its success yet. Right now they're pretty low volume and are losing lots of money. Maybe the no dealer model scales, maybe it doesn't.

[Retric]

Tesla has 325,000+ pre-orders for the model 3 a 35,000$ car.

For comparison Acura only sold 167,843 units in 2014 and they have some models for ~10,000$ less.* And they have an extensive dealer network. Honda their parent brand sells well under 2 million cars a year and is a major automaker.

*List price on a new ILX is 27,990 but this assumes people are paying sticker price.

[dpcx]

Tesla also doesn't have quite the clout that Apple does. Apple could literally bully their way in to the self-sales car market...

[mosdave]

> "Clever internals but crappy ux" describes pretty much every car ever.

My '69 Chevelle disagrees.

[groby_b]

So the best company to get into the car space, if any were to try it:

* would have lots of spare capital * would have experience building/running plants * would know how to manage a long supply chain extremely well * carries huge cachet, allowing them to stand out in a competitive market. * Is not afraid to exclusively target the high-margin side of the market. * Knows a thing or two about entire sectors undergoing a revolution. * Has lots of experience building retail networks.

Well, what do you know, that sort of looks like Apple.

As for "not enough wow space" being available - that's what people thought about the phone industry as well.

Would I bet on Apple being a success? Probably not. But if anybody were to take on that market, Apple's one of the more well-placed contenders.

[patrickk]

> Cars are a terrible industry to get into.

Copypasta from a comment I made on reddit about Tesla, many of these points also apply to Apple, especially the battery knowledge...

"You could argue that Tesla is in the battery pack business, and only incidentally in the car business. When electric cars ultimately take off, not only will their vehicles be perfectly positioned, they can sell the know-how to the slow moving incumbent car makers who are struggling to play catch up. They already have a likely unsurmountable lead in battery pack knowledge (things like software to control charging and discharging certain batteries to extend the life of the pack, compartmentalised batteries to reduce fire risk and crucial battery cooling systems), and their fleet gathers more data daily, while the rest of the car industry makes half-hearted hybrids, or technologically inferior, range-limited cars."

"They already own the high end, and once the Gigafactory pumps out batteries in full force, they'll own the low end, at least initially. Not to mention, another industry, solar PV, is growing and growing but badly needs storage tech to reach full potential. Guess who has a market-ready, solar PV-complimenting battery pack, and will soon have an enormous factory churning out battery packs? They are going to sell these packs to the world for decades."

> Building cars is massively capital and plant intensive

Apple has buckets of cash, they need something huge to move the needle and to show the world they're still innovative, and EVs are likely it.

> heavily dependent on supply chain logistics

Tim Cook's specialty. Apple has lots of experience in dealing with a complex supply chain dealing with huge volume.

> and the market is already extremely competitive.

I would argue the market for EVs/autonomous vehicles is quite different from ICE cars. For one thing, existing car makers are only dipping their toes in the EV market, instead of going toe to toe with Tesla directly (e.g. BMW has the i3 and i8, but no high-volume EV version of the 5 series to take on the Model S directly). So it's going to be a landgrab for EV market share. Existing car markers are heavily invested in extremely refined diesel and petrol engines and the associated paraphernalia like turbos, they probably wish EVs would just go away. Also, they rely on service and repairs for a significant chunk of revenue. EVs are mechanically simpler, and will require much less maintenance. So the traditional business model will be disrupted, again something incumbents don't want.

If version II or III of the Apple car offers autonomy, then we can imagine a city car which is designed to be a taxi, which means you only ever rent it. Again, this is an alien concept to existing car makers, who rely on dealer networks selling to end customers. So this would also favour new players not bound by older business practices.

In short, with Apple's battery expertise, huge cash reserves, supply chain experience and the relatively open market for EVs/autonomous vehicles, I'd say now is a great time for Apple to get into the market. They are also betting on the trend of lithium ion batteries getting better and cheaper every year[1]

[1] http://rameznaam.com/2015/10/14/how-cheap-can-energy-storage...

[vidarh]

I don't think anyone didn't think it was possible. Back in '99 I was working on a tablet w/built in phone, and Ericsson had their ScreenPhone around the same time. Both where "tethered" to a base station at home (ours used a custom extension to DECT), I believe, but the intent was always to add proper mobile support.

In fact, when I was first sold on the concept, the guy who started the company talked me through how he imagined a "home base station" that he'd use while there, and how he wanted the device to smoothly hand off to the mobile network if he took it out of the house.

The choice of a tablet over a smaller phone was about a convenient screen size, coupled with the initial devices being tied to the home anyway. But "everyone" around us had PalmPilots, and "everyone" expected PDAs and phones to merge eventually (and they did, sort of, but to see Palm giving in and going with a keyboard was a disappointment).

The challenge was that around the time the iPhone launched, people did not believe the market was there yet, nor that the hardware was ready, largely because "everyone else" had a go too early, failed, and essentially shelved the idea for the next decade as something that was way too early.

What Apple got exactly right and everyone else messed up was the timing.

E.g. we were shopping around our tablet prototype in '99 and 2000 based on a 100MHz or thereabouts 486 clone w/32MB RAM running Opera and a custom UI w/resistive touch. It was a fantastic device at the time, but the combination of not yet being able to provide a proper GSM enabled device, too short battery life, low RAM, slow, horrible resistive touch, and it was a device that would have appealed mostly to a small niche of geeks, but to work financally it needed to be a mass market device.

With the available hardware in 2006 we'd have a great starting point if we had started around then. But when we started in '99 the discussion was never "can these hardware constraints work in a way that can appeal to a mass market?" but "this is the price we need for it to work as a mass market device, and here are the tech specs that can fit within that price" and then we tried to make something that could be mass market from that... way too early.

To be clear: I'm not trying to downplay what Apple did. They made a product that appealed to a vastly larger market because they understood. But it wasn't because nobody else believed in touch enabled smart phones or tablets, but because they approached it from a usability and marketability perspective first, while everyone else were thinking like geeks willing to sacrifice usability for a "imagine if.." ideal of devices that were ultimately quite unfulfilling.

When the iPhone came out, a lot of us were pretty much "so what?" because we still did not understand the significance of that wait. We'd seen full screen touch, and we'd seen PDA's married with touch, and we'd seen larger tablet type devices (basically laptops with pivot screens mostly), and the iPhone to many people who'd been through the first round of hype around these type of devices just seemed like more of the same at first.

Until it became clear just how much of a difference the hardware advances and Apple's design had made to the whole thing.

We absolutely agree about their timing, and I think it's important not to underestimate how important it is to understand when the time is right and not get caught up in constraints that applied last year because that's when you started thinking about it.

It's very possible that we'll see something similar with cars. A lot of people have worked on driverless cars for a very long time, and the question is how much of the current designs are based on preconceptions that seemed to make sense a few years back, but where things can be done better today.

[mcphage]

> The challenge was that around the time the iPhone launched, people did not believe the market was there yet, nor that the hardware was ready, largely because "everyone else" had a go too early, failed, and essentially shelved the idea for the next decade as something that was way too early.

> What Apple got exactly right and everyone else messed up was the timing.

My [perhaps mistaken] understanding is that Apple had been working on it for a while; but rather than try before the hardware was ready, and shelve the idea, they kept working on the idea until the hardware caught up. They had a solid idea of how it should work, and waited until it could, rather than have it just be a thing they tried and gave up on.

[vidarh]

Yes, that's the story I've heard too, and I can absolutely believe that. While the rest of us threw stuff at the wall and got frustrated when it didn't stick, they had a benchmark to aim for.

Here's an early article on our attempt [1], and you can see how far the specs were from a tolerable tablet or from being able to shrink the it down to a phone form factor (the original design actually called for a very small dumb handset for the tablet that magnetically attached to the speaker magnets in the tablet, and induction charged; amusingly Sony finally relased a handset for one of their phablets a couple of years ago - we were over a decade ahead of our time ;) )

[1] http://www.zdnet.com/article/freepad-norways-alternative-to-...

[jdmichal]

> ... while everyone else were thinking like geeks willing to sacrifice usability for a "imagine if.." ideal of devices that were ultimately quite unfulfilling.

As someone who was there on the consumer side, with an HTC Wizard bought in 2006 -- the year before the iPhone was released -- I completely agree with this. I did make the sacrifice of usability, because having the Internet accessible everywhere on a touchscreen was awesome. I didn't understand the iPhone either. From the perspective of the hackfest that was Windows Mobile 5/6, I saw a very limited and locked down device.

[0] https://en.wikipedia.org/wiki/HTC_Wizard

[soylentcola]

Also had WinMo phones prior to the iPhone (and after one Palm Treo). I definitely appreciated the things the first iPhone(s) got right because they were things that always seemed like they should work better on my WinMo devices but were always somehow screwed up (on-chip GPU without the necessary software to use it for graphic acceleration was a big one).

At the same time, it was still a choice between finally getting a more responsive interface or giving up front/rear cameras, GPS, 3G cell radio, third party apps, multitasking, copy/paste, an actual file system I could browse, streaming audio (anyone remember Shoutcast stations? They're still around!), streaming video, hell...even changing my wallpaper or ringtone to something that didn't come with the phone.

I totally get why Apple succeeded and in many ways they deserved to: they didn't try to out-WinMo WinMo. They looked at the things that Microsoft, RIM, Palm, and the rest weren't doing and targeted those things. They saw who wasn't interested in having a miniature version of a laptop but loved simple and responsive electronics (thousands and thousands of regular consumers). That business savvy put them in a really strong position that continues to this day.

Granted it didn't help that you needed to switch carriers to AT&T and spend even more than the cost of existing smart phones to get one but clearly they improved that along with all the rest.

I'm still far from an Apple fanboy and I find using iOS on my iPad to be frustrating at least once every week or two but business/market success isn't about pleasing me. It's about pleasing enough people to make a good profit and clearly they've got that part down.

[tyingq]

>>They imagined a phone must have a physical keyboard

I get that I'm not representative of the market, but my pattern of using a smartphone involves a lot of email. I don't see that going away, as a lot of my communication involves people in other timezones.

I was way more productive in this when I had a blackberry, but, of course, it did suffer horribly when using the web.

It won't change, but I wish there was enough demand to keep up competition for phones with keyboards such that there was a decent physical keyboard android.

[patrickbolle]

I've been a lifetime BlackBerry user (from waterloo) and just got the priv. it's a really great device but having the passport on android would be a gamechanger imo

[tyingq]

Yes...that passport looks great. Android on a BB Passport would fit my definition of a decent keyboard android phone. The wide format looks like a more natural layout.

[chetanahuja]

"Just imagine how much fun Ive would have designing an orbital space station."

Unpossible. Space stations need to be displayed against a black background (albeit one punctuated with twinkling dots of light). Ive doesn't do black background.

[dingaling]

> Space stations need to be displayed against a black background

Depends on your perspective

http://www.spacewallpapers.net/wallpapers/albums/Other/norma...

[iLoch]

Not nearly as much fun as he'd have talking about how he designed it.

[tzaman]

Not nearly as much fun as YouTubers would have remaking his promo videos :)

[mitchty]

You know the word chamfer would factor in somehow. :)

[WalterBright]

I can't imagine how they could keep a car project secret. Too many people would have to know, and you can't develop a car in a locked room.

[ArkyBeagle]

To a first approximation, all car companies are extinct.

[DannyBee]

"Has Apple's research focus changed?"

If it has, honestly, it's because they don't know where to put their money or they've put it all in one thing.

You more or less say the same thing.

"hey've loosened their research focus and now have a lot of people doing whatever the hell they want, much like MS, just because something useful might someday emerge." (This is we have no idea what to spend our money on).

"Perhaps we're not seeing some monumental project in the works, although an autonomous car would be pretty big." (This is we are betting big on this one thing we think has huge potential).

The other option apple has not been fond of is large investments in a small set of things, each of which may be a potential big future.

The first would be quite concerning. If you have companies with large research budgets, and they have no idea what they should spend money on in order to make the next big thing happen, that does not bode well.

[ori_b]

> The first would be quite concerning. If you have companies with large research budgets, and they have no idea what they should spend money on in order to make the next big thing happen, that does not bode well.

Why doesn't it bode well? The transistor, the laser, Unix, information theory, and a giant number of other things which form the underpinnings of modern technology came out of Bell Labs, which is the epitome of a place with a large research budget and no specific "next thing to monetize" that the spending was directed towards.

From what I understand of Apple's culture, it's unlikely that it will ever transform towards this, but that's a separate point.

[DannyBee]

"Why doesn't it bode well?"

For investors, i meant.

" The transistor, the laser, Unix, information theory, and a giant number of other things which form the underpinnings of modern technology came out of Bell Labs, which is the epitome of a place with a large research budget and no specific "next thing to monetize" that the spending was directed towards."

That was research for research's sake. It was, explicitly, not directed at ever making money, but instead, advancing the state of the art. I don't think any of the companies mentioned, or Apple, are doing it for that reason, and for them it does not bode well, because they are hoping to make money.

I could also point out that Bell Labs made any money at all through licensing those inventions. That is also not Apple's business model :)

[ZenoArrow]

> "That was research for research's sake. It was, explicitly, not directed at ever making money, but instead, advancing the state of the art."

Advancing the state of the art can lead to making more money, the research results can be monetised, whether they are or not all depends on the intent of those leading the particular institution.

[neo2006]

This is a naive way to see things. Creating products and advancing technology are two different things and very often the one do not lead to the other. To create that business model based on technologies breakthroughs you need to have "the dare to fail" mindset and be willing to launch multiple fails before succeeding with one product, that's not Apple way of doing things there business model and reputation is based on creating "perfect" products well integrated which oppose to the technology edge and try and fail way of doing things

[neuromancer2701]

If the Apple pattern holds then they will be 3rd or 4th to the mainstream electric car market but it will be marketed as "above and beyond" all products that we have seen to that point.

[ZenoArrow]

It's not naive, you just can't predict the ROI.

[geekery]

He's not wrong about the car. Apple filed a patent in October for MONITORING A MOBILE DEVICE EN ROUTE TO DESTINATION (20160112837) along with a handful of other image processing/camera related patents.

So maybe they are developing a car, maybe they are just amping up their IP for the impending shift of tides. However, MacRumors mentions an electric car possibility: Project Titan http://www.macrumors.com/roundup/apple-car/ so a physical product makes sense.

[tedmiston]

Apple files plenty of IP that never turns into a product.

[shas3]

You are comparing across industries. Apple is a mix of software and manufacturing. As is Samsung. VW is a car company. Further, a better metric is to look at % of revenue spent on R&D.

[simonh]

> You are comparing across industries.

That's the whole point. The argument is that Apple is pivoting into a different industry.

% of revenue spent on R&D would not tell you much here. If a company with $10m revenue spends the same % revenue on R&D as VW, does that mean it's possible for it to bringing out a new line of cars? Setting up to manufacture a car costs a large amount of absolute $, so comparing absolute spend makes sense here.

[hackaflocka]

Elon Musk launched a space program with less than a hundredth of Apple's cash.

[blktiger]

In 2015 Apple had ~234B in revenue. 10B is only 4.27% of that. If you look at the percentage of R&D vs sales that's still actually drastically less than they spent in R&D up until about 2005. It could just be that Apple has decided to spend a bit more percentage wise and they have expanded the amount of things they are researching instead of indicating a focus on one specific thing.