Way back in 2018 I coined a saying on the spot during a CNBC interview….
“Apple has turned into an iterator instead of an innovator”.
The comment drew attention immediately as the other panelist on the interview took exception. But the saying is truer today than it was then.
It’s also at the core of why Apple needs a shakeup.
The project's goal was to develop an electric vehicle that could potentially revolutionize the auto industry in the same way the iPhone transformed mobile communications.
This was the company’s more to innovate.
Initially, the focus was on building an entire vehicle, and Apple hired hundreds of experts in automotive design, engineering, and software. However, the project faced significant challenges, including leadership changes, strategy shifts, and layoffs.
By 2016, Apple scaled back its ambitions from designing an actual vehicle to focusing on the underlying technology for autonomous vehicles.
The shift led to a concentration on autonomous driving software and related systems.
Despite being shrouded in secrecy, Project Titan made substantial progress, evidenced by the fleet of modified Lexus SUVs equipped with sensors and cameras that have been spotted testing on California roads.
On February 29, 2024 (yes it was a leap day) Apple cancelled Project Titan.
Apple's decision to cancel the project came at a time when Apple thought the future of electric mobility was less certain.
Global EV sales were forecasted to grow 36% year-on-year in 2024, down from 62% in 2023. That, of course, has happened. But the autonomous vehicle movement may have just gotten a boost that Apple didn’t have the vision to see coming.
In a significant development for the autonomous vehicle industry, companies specializing in self-driving technology recently received a considerable boost from the Trump administration.
The administration announced a series of initiatives aimed at accelerating the adoption and development of autonomous vehicles across the United States.
These measures include streamlined regulations and increased funding for research and development. Such governmental support is seen as a crucial step in fostering innovation and ensuring the United States remains at the forefront of technological advancements in autonomous transportation.
The endorsement not only enhances the industry's growth prospects but also signals a strong commitment to integrating these futuristic technologies into everyday life, promising to transform the transportation landscape significantly.
And Apple is seemingly left out.
Not all is lost…
I, along with millions of others truly enjoy the benefits of Apple’s CarPlay feature in almost all new vehicles.
Of course, Apple doesn’t charge auto manufacturers a licensing fee for CarPlay.
Instead, Apple counts on CarPlay to help lock users into the Apple Ecosystem hoping to increase revenue from licensing and subscriptions of the services used through their phones with CarPlay.
The company that turned from iterator to innovator in the early 2000’s has returned to its iterating ways.
The recent release of the company’s new iPhone 16 – which harnesses the power of Apple Intelligence (AI) has ushered in unimpressive sales.
In the United States, iPhone 16 Pro models have simply met sales expectations. Base models are facing softer demand compared to their more feature-rich counterparts. Analysts believe that upcoming AI-powered features could boost demand for these models later in the year as the holiday season passes.
Despite a positive overall start, there are concerns about maintaining this momentum into 2025.
Competitive pressures and market saturation are now posing significant challenges for Apple.
The early success in specific markets like China and the solid performance of the Pro models in the U.S. provide a strong base, but Apple will need to navigate increasing competition and market dynamics skillfully to turn the company into the growth company that it once was.
With a P/E ratio of 37, Investors have Apple pinned as a mature growth company.
One year performance of Apple reflects a return of 19%, inline with the Nasdaq 100. Gone for now are the days that Apple led this large cap technology index.
Shares of Apple remain in a long-term bull market trend with the stock’s 20-month moving average hovering just below $200.
Investors should beware that any correction in the market – which we are likely to see in over the next three months – will challenge the long-term trend of Apple as fewer people will be actively looking to “buy the dip” on an aging growth company.
That is, until Apple shows signs of innovating again.
