61 points by allenleein 6 months ago
"It'll be interesting to see what, if anything, Apple is planning in cars. I'm not entirely sure there is quite the same scope for changing the market size that there was in phones."
I'm not sure if by this he means changing the market size for cars _at all_ seems difficult, or that any change in this market size will not be as big as the one that occurred for mobile phones.
I would probably agree with the latter, but for the former the market size of interest here is not really that of cars but journeys. And I'm quite confident that there's a lot of room left there, especially for shorter trips.
In his article on cars and what Apple could do with them  that he links to in this one he says "Both on-demand and self-driving cars would appear to drive a reduction in car ownership and certainly car use (which means slower replacement).". While I agree with the first point (decrease in ownership) the latter (decrease in use) seems completely wrong. The average car is parked 95% of the time. An on-demand, autonomous fleet would likely invert that relationship with cars being on the go non-stop, thus greatly increasing the rate of replacement (although perhaps still decreasing the number of cars needed as trips per car would be increasing).
However, automation, and better fleet/traffic management, would lead to quicker and cheaper journeys and obviously greater demand. This would also give people more time, time that they could use to take more journeys (although admittedly there is a strong upper bound here). It seems that his thesis on cars and the potential market size is skeptical of full automation (or at least of Apple being the ones to achieve or benefit from this, which I would agree with) and therefore focuses more on Apple selling cars as an item rather than the fleet style benefits that someone like Google will probably capture. But he does make another good point that Apple still does privacy well so they may still carve out some niche in the autonomous fleet space, should that materialize.
I'm a little confused by this comment. Increasing the market for short journeys seems like the kind of thing autonomous cars are really bad at. I already have a car in my driveway+, and I can take it 5-10 minutes to a number of stores and friends' houses for trivial marginal cost. I can't imagine taking more short trips because I don't have to drive 10 minutes here and there.
There is already a big market for long car journeys, and there is where autonomous cars can really beat the competition. But, as you mentioned, there's a pretty hard upper bound here, as the time cost is significant, even if the monetary cost went to $0. Overnight trips could become more common, but people don't seem to like those very much.
I can see automated cars as disrupting the market by being cheaper, since you don't have to own them. I don't see the savings generated from that as going into more car journeys, but maybe that's just my lack of imagination.
+I don't actually own a car currently, but that's beside the point. I have in the past.
The cost for short trips is enormous if you amortize in the cost of your personal vehicle- say at 30% vehicle TCO divided by number of short trips. Roughing up some numbers puts your personal cost at ($40,000 TCO)/(100 trips/yr)/(10 yr service)20% = $8/trip. That's huge!
In addition, all those trips require on site parking which is a huge* community cost and directly increases the cost of whatever service you're consuming.
$8/trip is less than the average Lyft or Uber ride.
The problem with transportation and measuring 'trips' (in the US anyway) is the huge geographical diversity.
My take on Ben-Evans post is that you are fooling yourself to believe that you can predict market demand for certain kinds of disruptive technologies.
I think he was wrong about the Apple watch market size, but I like his argument.
If economics are irrational because humans are irrational. Apple is the primary argument that humans are irrational.
Forming logical conclusions on anything Apple does is dangerous. They overcharge and under deliver(at least on Hardware). They are primarily marketing, not tech.
For this same reason, their valuation is irrational. I don't expect Apple to be above 500M for much longer than a few years.
@dang, it's (2015)
TL;DR: no one has any idea of how big Apple watch's market will be.