Slices of Apple

In social situations, general convention holds that, unless you want to incite a riot, certain topics remain off-limits: politics, religion, and — increasingly — one’s choice of technology. Vocal cords have been inflamed and dinners have been ripped asunder with invectives hurled at Android or epithets tossed towards Apple.

Bob Lutz is on record opining that Apple’s efforts in developing a car are “going to be a gigantic money pit” — and he’s probably right.

Here’s the thing though: Apple has a history of figuring out how to make big profits with products traditionally considered to be low margin. Add this to the fact that Apple is rich enough to spend huge bucks on developing a car, only to drop it all and walk away if they’re unhappy with the project.

Think they won’t?

Years ago, rumours abounded of an HDTV from Apple. Not the hockey puck of a device we know as Apple TV today, but an actual flat screen you could hang on your wall. After months of development, Apple scrapped the whole thing because it couldn’t come up with a product differentiated enough from its competitors that’d justify a sticker price high enough to generate Apple’s legendary profit margins.

Now, it’s a big leap from a flat-screen TV to a four-wheeled iCar that’ll ply public roads. However, and this is critical to understand, Apple’s high-margin/differentiated-product corporate goals will remain, no matter if we’re talking about a phone or a car.

This is not to say that Apple is in the business of throwing money away. Far from it, in fact. But they are in the business of disrupting conventional markets. The telephone’s been around for a hundred years. Apple showed up in 2007, transforming the phone into a social and career hub, to the point many people need the glass and metal iDevices surgically removed from their hands upon death.

The past is rife with examples of Traditional Big Guns underestimating on-the-horizon competition. The newcomers appear, offer a fresh take to a thirsty public, and leave the Big Guns scrambling in their wake. Apple has a history of entering a market, making its competitors look old-fashioned, and proceeding to take a huge piece of the pie while leaving the traditional competitors scrambling for the remaining crumbs.

How many readers are viewing this on a PalmPilot? BlackBerry? Compaq Presario? Exactly.

Look at Tesla. Elon Musk, who has a background in facilitating electronic payments and being a Bond villain, just raised in excess of $300,000,000 virtually overnight in (admittedly refundable) down payments on a car the public hasn’t even sat in yet, let alone driven. Cook & Co. undoubtedly watched this activity very closely, likely seeing it as an affirmation they should plow on, for now, with Project Titan.

Apple fanatics tend to form lineups long enough to challenge the ones seen during Siberian rationing, so its logical to think any vehicle bearing the Apple logo will grab formidable market share.

I don’t know if Apple will ever build a car. What I do know is if they do, you’ll probably pay a premium if you want one in Rose Gold … and you better not talk about it at the dinner table.

[Image: John Mitchell/Flickr]