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Posted on EVANNEX on November 10, 2021, by Charles Morris
As media pundits (including myself) never tire of telling us, Tesla and Apple have a number of things in common—both grew very quickly on the strength of a revolutionary invention, and each has created an ecosystem of products and services, some of which consumers never knew they needed, until they did.
Ironically, the companies’ respective markets would seem to have very little in common. Cell phones (and computers, for that matter) are commodity-style pieces of hardware—one looks much like another, and it’s the software and associated services that differentiates them. Cars, on the other hand, come in every form factor imaginable, from the smart car to the Hummer, and drivers today give little thought to the underlying software, as long as it works.
There are good reasons to believe that this is going to change. Software is rapidly becoming central to the driving experience, and some believe that, in the self-driving future, the cars themselves will eventually start to look the same. We’re not so sure about that, but it’s plain that automakers fear a future in which they become assemblers of commodity, low-margin products, and they’re keen to establish new revenue opportunities in software and services.
When you look at the auto industry in this way, it seems more accurate to say that it’s the Tesla of the future that resembles Apple. Andrew Dickson, writing in Marketwatch, suggests that Tesla’s situation today resembles Apple’s situation in the early 2000s. In those days, the value chain for phones (and PDAs—remember those?) was dominated by a handful of companies that included Nokia, Blackberry, Ericsson and Motorola. In 2007, industry leader Nokia boasted a 40% market share and a $230 billion valuation.
When Steve Jobs unveiled the iPhone (which, as fate would have it, was just a few months after Tesla first demonstrated the Roadster), he set in motion a wave of disruption that swept these companies away, and totally transformed the mobile phone industry. Among other changes, the variety of phone form factors dwindled—today, pretty much every phone you can buy looks like an iPhone, and the “ecosystem” of software and services is where the action is.
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