Project Titan, as Apple furtively referred to it, was the tech giant’s foray into owning the automobile. After all, Apple has been creating new platforms for over 10 years; why stop now?
Apple is a juggernaut of a company if for no other reason than it holds over $200B in cash. For context, that’s more than the market capitalizations of General Motors, Ford and Fiat-Chrysler combined.
With all this money Apple could surely build it’s own next-generation car, right?
Apple didn’t think so.
Let’s skip past the part where auto manufacturers trade at a revenue discount, meaning that the value of their corporations is less than the annual revenue they generate. GM recorded revenues of $152.4 billion in 2015 but trades at a market cap of ~$50B. Apple, by contrast, is trading at 3x 2015 revenues.
As Bloomberg reported recently, hundreds of the 1,000-person Titan team have departed over the past months. Changes in vision, direction and leadership undoubtedly contributed to self-doubt within the ranks. Pivots in their scope rendered countless employees useless yet required scores of new ones. By fall of 2017 a more cohesive plan is expected to emerge.
But one thing is clear:
Apple is no longer interested in building automobiles
Why would a company with a seemingly endless war chest step away?
Because it’s not their core.
Apple rationalized that they were not suited to be in the business of building cars, but rather to power the technology platforms behind them. Call it a self-awareness of culture or company DNA, but we have to give someone at Apple credit for drawing a line in the sand and defining core competency.
[bctt tweet=”Saying no can be just as powerful as saying yes.” username=”whatsbusy”]If a company with tens of billions in profits and hundreds of billions in cash can step away from non-core activities, why can’t profit-poor POS and payments companies?
In a continual series of bizarre moves, POS and payments companies are expanding offerings in product directions that make no sense. Why is Heartland/Global trying to build a portfolio of bolt-on products for their POS products when they’re struggling to get POS right? Why do POS companies like Micros and Aloha build reporting tools that perform relatively terribly and cost much more than third party analogues?
It’s not so much that the thought of toeing non-core activities is bad, but rather it’s the execution. Swallowing third parties to serve as bolt-on providers can be incredibly dangerous when you consider the acquirers are drowning the acquirees in non-product culture. This layers on bureaucracy and misaligns performance.
I’m going to guess these third parties were sought out because they weren’t the worst performers in their categories. If they were executing so well why now change their marching orders? If you want to buy them, don’t fold them into your non-product culture. Have you seen how far Facebook has distanced WhatsApp and Oculus?
Please, take a note from Apple before you continue down your current paths.
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