3 Reasons Apple Won’t Buy Tesla

12 Mar 2015 | Author: | No comments yet »

3 Reasons Apple Won’t Buy Tesla.

Most of the buzz at the Apple press conference Monday was over a new watch, but Apple CEO Tim Cook also provided an important update for everyone who is tired of screaming at their dash because the system that connects the phone to the car’s stereo system doesn’t work well. Days after the launch of the Apple Watch, Apple’s annual general meeting was dominated by a push from shareholders of the Californian technology company to buy or partner with one of its Silicon Valley neighbours, electric car maker Tesla.Anyone paying attention to their social media channels during Monday’s keynote from Tim Cook that launched Apple’s latest products will have spotted Cupertino dominating the prime advertising positions on Twitter.

Cook said that “every major car brand has committed to delivering CarPlay” and added that the software will be available on 40 models by the end of the year. “We may all eventually wind up there, but right now we prefer to use our in-house proprietary platforms for those kinds of functions,” said John Hanson, Toyota’s advanced technology communications manager, to Jalopnik. You could argue that this was Apple finally ‘getting’ social media advertising and using it to best effect, but there’s another view… Apple had no choice if it wanted to stop its rivals hijacking the event. A year ago, some investors were voicing frustration over Apple’s lagging stock and activist Carl Icahn was pressing Cook to return more cash to shareholders. Given that the stock is up 65 per cent in the past 12 months and has more than doubled since he took over from Steve Jobs, it’s a fair assessment to suggest that they mood was generally content and there weren’t a lot of tough complaints to stickhandle. “We’re very focused on Car Play,” Cook said, referring to Apple software used by several automakers. Though Apple’s $178 billion cash reserves are more than enough to afford Tesla — which has a roughly $24 billion market cap — the move is highly unlikely, analysts told The Huffington Post. “It doesn’t necessarily match,” Neil Cybart, an independent analyst who founded the firm Above Avalon, told HuffPost. “The playbook that Apple typically relies on wouldn’t be used or wouldn’t be followed if they went out and bought Tesla.” Apple buys other companies to absorb their technology.

For example, the company launched its own maps application in 2012, two years after buying and shutting down mapping startups Poly9 and Placebase. “They tend to buy technologies that they then develop and make into other things that they’re doing,” Jan Dawson, the analyst behind the firm Jackdaw, told HuffPost. In essence, Apple looked at Twitter and thought ’buy the spots or somebody else will.’ With such an intense focus on the wrist-based wearable, diverting even a small percentage of eyes and thoughts could prove valuable to a smaller player. It’s an intriguing thought, as the two companies are easily two of the hottest names in Silicon Valley that — for the moment anyway — don’t ostensibly compete with each other. Releasing an Apple car would be a huge deal, and the firm would likely not put its brand on something that was entirely developed outside of its control. The ability to attach Tesla’s name and talent pool to Apple’s war chest and tentative steps into the automotive space for a relatively paltry sum of more than $25 billion (Tesla’s market value on Wednesday morning) is too tantalizing to dismiss outright.

Just last week, Tesla co-founder Elon Musk, who owns about a quarter of the company, told skeptical investors and analysts on his company’s earnings call that he foresees his company being worth more than Apple within a decade. I would argue that Pebble (which is likely the current smartwatch leader thanks to over one million sales of its Pebble watches) was already spoiling to be the counter-programming with the successful launch of its Kickstarter project for its next generation Pebble Time and Pebble Time Steel. That’s part of why it chose to locate its Gigafactory, a massive battery-making facility currently under construction, in Nevada — it’s close enough to easily ship lithium-ion packs westward for use in cars. Two speakers, civil rights leader Jesse Jackson and a black Apple shareholder who did not provide his name, urged Cook to improve diversity in Apple’s leadership and board.

Hellbent on igniting an electric car revolution, CEO Elon Musk has kept a tight grip on Tesla’s supply chain in hopes of ensuring relative perfection with each model. Cook has vowed the new wearable gadget will change the way people use the Internet, as previous Apple products including the iPhone and iPad have done. He praised Cook for releasing workforce demographics statistics as several other top tech companies have done, but urged Apple to follow Intel’s lead in setting more specific goals.

While Tim Cook is not going to need that sort of suppression for some time, the continued back and forth in many areas of business and marketing will feel the same pressure every day, no matter the company or the product involved. Later in the meeting, he introduced two Apple vice presidents who are black women: Lisa Jackson, the former US EPA administrator who now runs Apple’s environmental programs, and Denise Young Smith, the company’s top human resources official. As for future projects, Cook acknowledged that iPad sales are down but said he’s “extremely bullish” on Apple’s partnership with IBM to create new iPad business software and “other things in the pipeline.” An iPad with a larger screen is rumored to be in development.

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