By Jason Snell

February 25, 2015 12:24 PM PT

The Apple Car: Destination unknown

Note: This story has not been updated for several years.

Did you hear the one about Apple getting into the car business? Pretty funny, right?

I thought it was a joke. People link Apple to all sorts of crazy things. Bad reporting on Apple is a cottage industry.

But then the reports piled on. The Financial Times. The Wall Street Journal. 9to5’s quite reliable Mark Gurman tweeted “the car is happening” while linking to a Jordan Kahn story about Apple’s many auto-industry hires.

Revealed: Apple’s crack team building an electric car (the car is happening) w/ @jordankahn http://t.co/134tvyNEfz pic.twitter.com/yiALaszTTi

— Mark Gurman (@markgurman) February 19, 2015

Could the joke actually be true?

What’s next?

Apple, like Google, has massive resources and a keen awareness that the graveyard of the tech industry is full of companies that were utterly dominant in an area that became irrelevant. IBM used to be the go-to example here, but now it’s probably Microsoft, a company whose dominance in operating systems is unstoppable and increasingly irrelevant¹.

A smart, self-aware tech company that understands its current sources of revenue may fade away someday would be wise—especially if it’s rolling in dough—to spend some time investigating future areas of opportunity and threat. Better to be your own replacement than resist the inevitability of change and become irrelevant.

I believe this is what Google is doing with all of its wacky secret and not-so-secret programs, from self-driving cars to mysterious robotics endeavors. Google’s got all the money right now, but it has to know that its current revenue streams won’t last forever. So while part of Google focuses on squeezing as much money out of the market as possible, the other part is placing bets on possible future directions where Google could dominate.

Apple does this sort of thing, too, but it doesn’t do it in public like Google. The company prefers to do it all behind the scenes, with nobody knowing anything until the product is unveiled—though with the amount of scrutiny that Apple gets, that’s basically impossible.

Investigation phase

So if you’re an Apple executive, and you know that the only constant is change, you’re probably constantly asking yourself and your colleagues what areas of future technology are worth investigating. The Apple Watch has been on the drawing boards for years and is now finally on the verge of being released. But what’s next? Apple’s assets are visible in its current products: hardware design, including all the components that go into building computers and mobile devices; design; tight integration of hardware and software. In which areas could those skills be applied in a way that would allow Apple to create a product that stands out from the crowd?

Already the auto industry is increasingly reliant on software, sensors, batteries, and user-interface design. It’s entirely reasonable that an Apple executive would try to imagine the auto industry of 20 or 30 years from now and see those trends lead to a logical conclusion: A fleet of vehicles with electric engines that feature deep integration of hardware and software, possibly up to the point of being self-driving or at least with optional auto-drive capabilities in some circumstances.

It’s not a big jump to assume that hypothetical Apple executive would then look at the competition in that industry—a bunch of legacy car companies that are struggling to transform to this new reality, and Tesla—and think that there’s really an opportunity for Apple to do something.

The next step in this process isn’t hiring a thousand people and planning a release date. It’s probably setting up a team to investigate all the issues involved in entering this field. Is there something here? What are the issues with entering a new industry? What do we need to create ourselves and what do we buy from suppliers? Do we do this ourselves or with partners? Should we buy someone or invest in someone? Are we really building a car, or just subsystems for a car? And is this all a bad idea that we should forget ever happened?

Now, the reports we’re seeing about Apple hiring loads of people could be an indication that this investigation phase is happening, or it could mean that the investigation is over and they’re gearing up a much larger team to make things happen.

What’s the need?

If I perform that same visualization exercise and try to imagine the auto industry in 20 years, I have concerns. It seems to me that cars are going to need to become much smarter, much faster, and that the auto industry doesn’t have a great track record when it comes to a lot of this stuff. I’ve never seen a car whose interior control interfaces felt integrated. Car entertainment systems are usually afterthoughts from a separate vendor. My mother’s late-model sedan has several different power buttons on the dash, all turning off totally separate systems.

Then there’s the future of sensors and intelligence that affects how our cars drive. We’ve already got self-parking cars, and smart cruise control, and more powerful autodrive features are inevitable. Will the automakers be able to evolve and innovate as quickly as a new entrant into the field? It’s not impossible, but I’m skeptical. As someone who worked for a print media company that struggled for decades to transition to digital, let me tell you—you can have incredibly talented people and an organization-wide understanding of which way the wind is blowing and still not make it. That’s the gravitational pull felt by most companies with long histories.

But the automotive industry isn’t alone. There are probably very few categories of consumer product that couldn’t be improved by a company entering with an Apple-like focus on usability and design². Apple can’t solve everything or be everywhere. It needs to pick its spots.

And that’s my biggest concern about these rumors: Even a company such as Apple only has so many bets that it can place. A hundred billion dollars in cash buys a lot, but the attention span and focus of Apple’s executives are still a limited resource. Does Apple really think it can revolutionize cars? Are Apple’s skills well matched for the auto industry of 2020 or 2035, or a mismatch?

I suspect there are whole groups at Apple working on figuring out the answer to that question. And the answer may well end up being “no.” The iPhone emerged after a team inside Apple tried to make a touchscreen tablet, and discovered it was just too early to make it happen. The lessons Apple learns in investigating the car market might lead to a strategic partnership, or an unintended product, or an investment, or an outright purchase. Or they might lead to a quiet disbanding of the team after a realization that it’s just not the right move.

If that happens, the information will inevitably leak out and it’ll undoubtedly be spun as a failure on Apple’s part. But looking hard at a potential product category and deciding it’s not for you isn’t failure—it’s success. Releasing a product that doesn’t make any sense, that’s failure.

If you appreciate articles like this one, support us by becoming a Six Colors subscriber. Subscribers get access to an exclusive podcast, members-only stories, and a special community.