Neil Cybart, the author of the Above Avalon blog, pens the most compelling piece that I have read to date about Apple’s next big thing: Project Titan–“a start-up” within Apple focused on the electric car industry.
Meanwhile, Tim Cook has remained very tight-lipped about Apple’s future, which gives the impression that Apple isn’t working on ground-breaking ideas or products that can move the company beyond the iPhone. Instead of labeling this as a mistake or misstep, Apple’s product secrecy is a key ingredient of its success. People like to be surprised. Another reason Apple takes a much different approach to product secrecy and R&D is its business model. Being open about future product plans will likely have a negative impact on near-term Apple hardware sales. Companies like Facebook and Google don’t suffer from a similar risk. The end result is that there is a legitimate disconnect between Apple’s R&D trends and the consensus view of the company’s product pipeline. Apple is telling us that they are working on something very big, and yet no one seems to notice or care.
The increased R&D spending by Apple over the last couple of years is very telling:
Apple is not spending $10 billion on R&D just to come up with new Watch bands, larger iPads, or a video streaming service. Instead, Apple is planning on something much bigger: a pivot into the automobile industry.
The word “pivot” has become a buzzword lately, often misused to simply mean change. In reality, pivoting is actually a sign of strength as a company takes what it learns from one business model in one market and applies it a new one with a different business model. Apple would be taking lessons learned from its long-standing view on the world based on the Mac, iPod, and broader iOS lineup to begin selling an electric car.
This sounds incredibly ambitious and bold, and that is the point. Apple wants to move beyond the iPhone. In this regard, pivot seems like the wrong word to use since the iPhone is a very successful product generating more cash flows than the rest of Apple’s product line put together times two. However, it is this success that ultimately serves as the greatest motivation for Apple management to figure out the next big thing.
If you’re at all interested in Apple and the future product pipeline, I highly recommend reading “Apple R&D Reveals a Pivot is Coming.”