apple retail store in sydneyAccording to insider reports, Apple is projecting the release of its first automotive product within five years. That is a very ambitious timeline for many reasons. First, Apple is not a car company. Not even close. While it is a great design company, it’s not a manufacturing company. Most of its manufacturing is outsourced to third parties, a lot of whom are in Asia. Another obstacle to Apple’s automotive ambitions is the product cycle. Five years seems overly aggressive if you are a company that is looking to enter another industry. While Apple has been aggressively recruiting executives from the electric battery industry and the automotive industry, it remains to be seen whether five years is enough time.
With all that said, it pays not to underestimate Apple’s design capabilities. It already has a thriving and conducive environment for design excellence. However, it remains to be seen whether its design efficiencies and design processes can fit a manufacturing process. Designing a car is one thing, manufacturing it is another.
Another wild card that Apple definitely needs to keep its eye on is customer service. There is a world of difference between providing customer support for an iPhone and providing customer support for a car. All sorts of logistical nightmares come to mind. It is no surprise that for the most part, profit margins for automotive products tend to be lower. Most of the profits made from automotive products are actually back-loaded; that is, you make money through parts and service throughout the life of the product. There’s definitely going to be a lot of bumps on Apple’s road to automotive excellence and dominance.