3 Reasons Apple Won’t Buy Tesla

12 Mar 2015 | Author: | No comments yet »

3 Reasons Apple Won’t Buy Tesla.

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.Two Apple shareholders suggested to CEO Tim Cook earlier this week that the tech goliath buy the electric automaker, amid unconfirmed rumors that Apple is developing an electric car of its own.

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’s statements came in response to a proposal put forward by the National Center for Public Policy Research that would have required the company to disclose the potential risks of its investments in alternative energy projects. “Apple has undertaken expensive alternative energy investments,” National Center Free Enterprise Project Director Justin Danhof noted in a press release, “and alternative energy investments can be risky.” (RELATED: Green Apple: Company’s Environmental Agenda Scrutinized) “Federal, state, and/or local policies subsidizing such investments, and upon which company business plans rely, can be repealed or altered,” Danhof explained. “The shareholders deserve to know how much of Apple’s business plan relies on these taxpayer subsidies, and how much shareholders would be hurt if government policies were to change.” According to the proposal, even “the Securities and Exchange Commission has recognized that climate change regulations, policy, and legislation pose a business risk to companies,” a stance that came in handy for the National Center when the U.S. 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.

Mac Observer reported at the time that Cook responded angrily, saying, “I don’t consider the bloody ROI … If you want me to do things only for ROI reasons, you should get out of this stock.” “We kind of called him out last year in an ‘emperor has no clothes’ moment,” Danhof told The Daily Caller News Foundation, so “I didn’t expect to hear word one from Cook” at this year’s meeting. (RELATED: Apple CEO Tim Cook’s Coming Out Party is Laced with Hypocrisy) Yet Danhof claims that during a presentation about new Apple products, Cook “went out of his way while introducing one product to look right at me and say, ‘for those you looking for ROI, there isn’t one.’” “He was clearly amused with himself, very petulant, and felt the need to attack me and anyone who dares raise questions about what is essentially liberal philanthropy,” Danhof added. “It makes very little business sense to attack your investors, especially when you don’t have to,” Danhof opined, but “dissenting opinion is not welcome in Tim Cook’s world, [and] he has chosen two years in a row now to keep the liberal lemmings happy.” The proposal was rejected by shareholders, with only 1.58 percent voting in favor, but National Center Chairman Amy Ridenour said that, “this is OK.” “Management opposed this, and institutional investors, most shareholders, and Apple fans do as management suggests,” she elaborated, adding that, “These proposals are usually about raising issues for discussion, and it was done here.” Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. 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. Toyota has so far refused to go along with Apple’s plans to install CarPlay in any of its models, noting that it prefers to use its own technology in its vehicles, Jalopnik reported. “We may all eventually wind up there, but right now we prefer to use our in-house proprietary platforms for those kinds of functions,” John Hanson, Toyota advanced technology communications manager, said.

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. 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. To achieve this, Tesla keeps a tight grip on its business — refusing, for example, to franchise its stores despite opposition from dealership groups in certain states.

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