With CarPlay on the Road, Can Tesla + Apple iCar Be Far Behind?

The iCar could be the long-awaited breakthrough that gets Apple back on the pioneering track, as the battle shifts from the cellphone to the car dashboard.

Yesterday, Apple unveiled ‘CarPlay’, days after it emerged that its M&A chief met with Elon Musk about the possible acquisition of Tesla Motors. Will an iCar the ultimate result of Apple’s shift from computing to mobile devices? And with Musk dubbed “the next Steve Jobs”, will it need an ejector seat for Tim Cook?

Ever since the untimely death of Steve Jobs in 2011, we have all asked when Apple will next inspire us with its next breakthrough innovation – something that will match the extraordinary home run of the iPod, iPhone, and iPad. So far, former operations chief Tim Cook has only brought us incremental improvements to existing categories. We still await Apple’s expansion into adjacent – and obvious – new product categories such as TVs and smart watches.

Apple 3.0: The Dream Scenario

One of Tim Cook’s smartest moves so far had appeared to be the appointment of Burberry CEO Angela Ahrendts as Senior VP for Retail & Online Stores. In October, I asked, ‘Can Angela & Tim Create Apple 3.0 – Or Not?’. I defined ‘the dream scenario’ as one where Tim, Angela and design chief Jony Ive work in fellowship and rediscover the old Apple cool and excitement. They find breakthroughs in products and services, and again dream up things we never even knew we needed… not just cheap plastic color iPhones. Together they innovate the next generation of cool customer experiences, with Angela acting as the bridge between the digital world and the latest developments in music and fashion.

Yet given the current slow pace of Apple product developments, I’m increasingly convinced that Angela’s arrival alone won’t be enough to bring about the dream scenario. Rather, it will bring about ‘Apple the customer experience company’: decent enough products and services, that are then beautifully packaged and styled and integrated into great customer experiences.

But if Apple is indeed to go on to be the outstanding company of the next decade and create the most value by far again, it’s going to take another Steve Jobs.

So let’s take a look at what an iCar could add to Apple’s ecosystem – and then ask what it is in the DNA of Elon Musk that makes him a visionary and iconic entrepreneur in the Steve Jobs mold.

iCar: Battle For The Dashboard

Months before the launch of the iPhone in 2007, Steve Jobs symbolically changed the name of his company from Apple Computer Inc to Apple Inc. This signaled the start of the ‘post-PC era’, where we would no longer have to be tied to a desk (or even to a laptop) to get any serious work done, and where connected mobile devices would be with us everywhere to help us live and work smarter.

Apple’s iOS software already powers the iPhone, iPad and iPod Touch. Yesterday, Apple used the the Geneva Motor Show to launch ‘CarPlay’, which, based on iOS, is its first in-car operating system. Initially partnering with Ferrari, Volvo and Mercedes-Benz, drivers will be able to use Apple Maps as in-car navigation, as well as listen to music via iTunes and Spotify. Calls can be made through the system, which will tie into the Siri voice recognition platform so that messages can be read to the driver who can respond by dictating a reply.

The FT reports that, “The deal marks the first time that Apple is embedding its software in devices other than its own branded products. The choice of [launch partners] is seen to be in keeping with the US tech group’s high-end phones… Carmakers are engaged in a fierce battle for control of car dashboards as incumbents fight with technology companies such as Microsoft and IBM to develop the software systems that will power the connected cars of tomorrow.”

The extension of the Apple ecosystem into high-end cars seems like a logical step that looks set to make our iOS devices more useful and central to ever more aspects of our mobile experience. Yet Apple has traditionally prized its vertical integration and its “unique ability to combine world-class skills in hardware, software and services to deliver innovative products”. If it did successfully acquire Tesla Motors, then a full-blown iCar where Apple owned the entire driving experience is not such a leap…

The iCar could combine a beautiful piece of physical hardware (an ergonomic and energy-efficient electric car), the in-car software and dashboard experience (navigation, communications, information and entertainment), connected to an Apple service and battery-charging network. And the ‘iCar 2’ would likely be self-driving…

iCar: A Redefinition Of Mobility

So beyond a shiny new dashboard, what do we really mean when we talk about smart or connected cars? In January, incumbent player and Audi chairman Rupert Stadler, gave a speech at tech conference CES that heralded a new era of “connected cars” that would see automobiles become “the largest social mobile devices we own.”

Stadler said: “we’re entering the fourth era of the automobile. The first one was the creation of the machine, which engineers pushed to its limits in their goggles and helmets. Then came the era of taming the machine and turning it into an everyday tool. The third era is the one we’re still in now: constant refinement and gains in safety, luxury and features. The fourth era is one in which we move from continuous refinements to a redefinition of mobility. Self-driving cars, connected cars.”

Personalization is a big part of the picture. It’s easy to imagine how the Touch ID fingerprint introduced in the iPhone 5s could be used to gain entry to an iCar, adjust the seating, start the ignition and determine what’s displayed on the dashboard. Rupert Stadler showed a concept dashboard for a new Audi TT where the screen was customized for each driver, and what was on the screen changed depending on whether they were stuck in traffic or parking: “Our customers tell us what they expect and they want offerings that allow them to be efficient while they’re driving and want options in situations where driving is more of a chore than a pleasure.”

And drivers may not be the only people with access to the connected car. At the Mobile World Congress last week in Barcelona, Volvo showed off a new digital key system that would allow delivery firms to securely deposit deliveries in the trunk of your car. Car sharing will also come of age – the services pioneered by the likes of Uber, Lyft, Sidecar and Zipcar will help to improve the efficiency and lower the cost of navigating around crowded cities. Apple tends to like to sell us a physical product, but pooled access to an iCar via a subscription service is not inconceivable.

Apple Could Acquire Tesla But Could It Acquire Elon Musk?

The idea that Apple might acquire Tesla was first mooted by analyst Adnaan Ahmad at German investment bank Berenberg. Taking his lead from billionaire investor Carl Icahn, in October he wrote an open letter to Tim Cook recommending the purchase of the electric carmaker. Ahmad argued that Apple was a strong brand with a history of “disrupting” industries, and that it needed an “out-of-the-box” move into a new market. He wrote that a shift into the auto sector could give the company the kind of revenue growth that won't be sustainable from just smartphones and other mobile devices over the longer-term. Otherwise, “the key debate will always be about your ability to sustain these abnormal margins in your iPhone business”.

While Tesla may be better positioned for the future than other carmakers – through its involvement in electric cars – the real attraction in acquiring the company may be Elon Musk himself. Ahmad sees Musk as an innovative presence like the late Steve Jobs, and said: “You could strike up a partnership and obtain a new iconic partner to lead Apple's innovation drive.”

Fortune Magazine named Musk its Businessperson Of The Year 2013, carrying a piece by TED curator Chris Anderson entitled ‘The Shared Genius Of Elon Musk And Steve Jobs’. He wrote: “Jobs and Musk are in a category all their own: serial disrupters.” While, “Jobs created the world’s most valuable company, and along the way transformed at least four industries (computers, music, animated movies, mobile communications), Musk may achieve even greater impact.” Bankrolled by the sale of his stake in PayPal, SpaceX has found a way to slash the cost of rocket launches, Tesla could become the first successful large-scale automotive startup in decades, and SolarCity is now America's leading provider of domestic solar energy.

In trying to define their “unique brand of genius”, Anderson argues that it’s “not just in the diversity and scale of their achievements. It’s also in their thought processes.” He says that they both have a mental trait which he characterizes as “system-level design thinking powered by extraordinary conviction”.

“What they did uniquely was to imagine the broader ecosystems in which those products could become transformative. To do that involved an intimate understanding not just of the technology but of what would be necessary in design, logistics, and the business model to launch those products and make them truly compelling to potential customers. You can describe both men as amazing designers. But their design genius should be thought of as not just an obsession with satisfying shapes and appealing user interfaces. Those matter, but the start point is broader, system-level design. Most innovation is like a new melody. For Jobs and Musk it's the whole symphony.”

Conviction is also key in persuading others to come along. Jobs was rarely first to dream up a completely original idea, but no-one else, “was willing to drive a team of engineers crazy for a year to turn them into a real-world product.” Elon Musk is also known for a employing a similar ‘reality-distortion field’ to produce killer features, such as door handles that would extend as the driver approached and automatically retract to minimize air resistance during motion. Musk reflects, “There were numerous conversations where I had pushback from the engineers. And it's not like they were saying, ‘Oh, this is a challenge’. More like, ‘This is the stupidest thing ever’. But we did it in the end, and yes, I think it's cool – one of the car's signature features.”

So Will An Apple-Tesla Tie-Up Actually Happen?

Elon Musk has confirmed that conversations with Apple took place, and while not ruling it out, is currently saying that an acquisition is “very unlikely”. He told Bloomberg that he wanted to “stay super focused on achieving a compelling, creating a compelling, mass-market electric car”, and that he’d be “very concerned in any kind of acquisition scenario that whoever it is that they would become distracted from that task which has always been the driving goal of Tesla.”

Ironically, it is indeed Apple which has done more than any other company in the last decade to bring previously unperfected breakthrough products successfully to the mass market. And while Apple’s products may not be cheap – they are attainable (at least for those in the West) – just.

Notwithstanding the fact that Elon Musk is probably also too busy shaking up space travel and solar power to join Apple, it sounds like the door is still open. He admits: “if there was a scenario where it seemed like it would be more likely that we would be able to create the mass market affordable compelling car then possibly it would make sense to entertain those discussions.” And when asked what would he tell Apple if they said they wanted to make cars, he replies, “I’d probably tell them that I think it’s a great idea.”

Time For Tim Cook To Take A Back Seat?

For all the comparisons, Steve Jobs was a one-off, and neither Tim Cook nor Elon Musk has Jobs’ charisma or sheer powers of salesmanship and mass persuasion. Yet the comparisons do bring some of current CEO Tim Cook’s deficiencies into sharper focus.

Although Cook is Jobs’ personally-anointed successor, Jobs himself worried that “is not a product person”. I style Tim Cook as a hardworking ‘professional manager’, who, while reliable and well-intentioned, is better at bringing efficiency, processes and connecting systems than doing innovative breakthroughs. By contrast, both Steve Jobs and Elon Musk are ‘corporate entrepreneurs’. They have something to prove, disrupt industries because they believe in a better way of doing things, excel in spotting breakthroughs and making them a reality, and their vision for their company is their vision for life. The last time Steve Jobs chose a CEO for Apple – John Sculley, another professional manager, recruited from PepsiCo – it didn’t end well and Apple nearly went bankrupt.

We can but hope that Tim Cook is about to pull a massive rabbit out of a hat. It’s precisely because Apple products have inspired such delight and loyalty that expectations are so incredibly high. However, recent financial results show that Apple’s growth – particularly in North America – has started to flatline. With other tech giants like Facebook and Google innovating at speed and sucking up emerging competitors like Instagram and WhatsApp through massive acquisitions, my sense is that Tim Cook has lost momentum and is blowing his historic inheritance.

Running Apple is a big job – and there may something learn from Samsung’s approach of having three CEOs. Tim Cook’s best bet is to assemble the best possible team around him, and work with them in trusted fellowship to recreate the old Apple magic. It wouldn’t be a humiliation if he were to step back from the primary CEO role and focus on securing Apple’s future. With Elon Musk responsible for breakthrough products, Tim Cook running operations, and Angela Ahrendts running branding and marketing, there could be the makings of a dream team.

Overall, I’m increasingly convinced that unless Apple is again run by a visionary, iconic entrepreneur – who’s determined to do the impossible and launch with products that we didn’t even know we needed – then my dream scenario for Apple 3.0 is unlikely.

I’m not sure if that person’s Elon Musk, but it could be great for the world if he did indeed combine forces with Apple to make a mass-market electric iCar a reality. I’ll leave you with the words of Chris Anderson, who believes that the qualities Musk shares with Steve Jobs, “must be more than coincidence. Anyone looking to make a truly big impact on our future has much to learn from them." His advice for aspiring entrepreneurs?

Dream big! Don't focus on making money! Work for an idea that's bigger than you are! Broaden your mind! Embrace thinking from outside disciplines! Expose yourself to the world's most inspiring designs and designers! Make things as simple as they can be (and no simpler)! Immerse yourself in science and leading-edge technologies! Don't be limited by what's gone before! Play with radical outside-the-box future possibilities and keep playing until you find something really big that you believe in!”

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Over To You

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Image credits: Apple CarPlay image from Volvo press release; AutoMPH / Sally-Anne Dahl

By Steve Tappin

Chief Executive, Xinfu, Host BBC CEO Guru & Founder, World Of CEOs

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Steve is a personal confidant to many of the world’s top CEOs. He is the host of BBC ‘CEO Guru’, which features in-depth, on-the-record interviews with the CEOs of the biggest and fastest-growing companies. Founder Of WorldOfCEOs.com, Steve is the author of ‘The Secrets Of CEOs’, which interviews 200 CEOs on business life and leadership.