Apple Downshifts Driverless Vehicle Plans

Apple appears to be shifting its driverless car ambitions into a lower gear. Changes in the company's automotive strategy have resulted in hundreds of job cuts and the shelving of plans to build a car of its own, Bloomberg reported Monday.

"Project Titan" -- Apple's internal name for the automotive initiative -- has a new focus, according to the report. It will develop an autonomous driving system that will give the company the option of partnering with an established auto maker or producing a robo car of its own.

The Titan team has until the end of 2017 to prove the feasibility of its self-driving system and to decide on a final direction for the project, Bloomberg reported, citing people familiar with the initiative.

The shift in direction follows months of disagreements, leadership uncertainty, and supply chain problems within the project, they reportedly said.

Tough to Fit In

Rumors of Apple scaling back its driverless car program have been in the wind for some time, noted Roger C. Lanctot, associate director of the global automotive practice at Strategy Analytics.

"We've been hearing about it for awhile," he told TechNewsWorld.

"The whole proposition seemed sketchy from the beginning. With so much innovation and development activity going on, it's difficult to perceive where the need for another car manufacturer like Apple exists," Lanctot said.

It's a crowded field, observed Renee Stephens, vice president of automotive research at J.D. Power.

Apple would have to face "some serious competitors with some serious experience in manufacturing," she told TechNewsWorld. "Companies like Ford and Mercedes are looking to put fully autonomous vehicles on the road by 2020."

Margin Problems

Besides being crowded, it's a field where making money can be challenging, too.

"Apple is a company that traditionally likes to make very high-margin products," said Sam Abuelsamid, a senior research analyst with Navigant Research.

"They don't like to make commodity products," he told TechNewsWorld.

The Project Titan team has spent a significant amount of time over the last two years trying to create something distinctive that Apple can sell at a premium.

"The car industry is a very tough place to make a profit," Abuelsamid said. "Most auto makers are lucky to hit 8 or 9 percent profit margins. Apple typically hits 35 to 40 percent on most of its products."

Ford Needs to Feel Like a Ford

Scaling down its auto making plans might not be enough. Apple might find it difficult to crack into the systems market for autos, too, Abuelsamid noted.

"Auto makers have made it clear that they want to have their own unique user interface and look and feel in their vehicles," he said.

"When you get into a Ford, Ford wants it to look and feel like a Ford," he explained. "They don't want an Apple or a Google look and feel."

That doesn't seem to have prevented some of them from supporting CarPlay, though, which allows a car radio to act as a display and controller for an iPhone.

"Apple has had much greater success with its CarPlay smartphone integration than Alphabet has had with Android auto," Strategy Analytics' Lanctot pointed out.

Playing With Others

Still, if Apple wants to create automation systems for vehicles, it's going to need to play nice with auto makers, which could be a problem for the company.

"Partnering hasn't been something that Apple has been open to in the past," observed J.D. Power's Stephens.

"They haven't been open to providing access to a lot of their coding," she said. "That's something manufacturers are looking for before they will integrate Apple capabilities into their vehicles."

The Right Approach

Apple's approach to the automotive market has been a good one, noted Tim Bajarin, president of Creative Strategies.

"They've researched the idea from every angle and then brought in Bob Mansfield to manage it and pare it down to an offering that is feasible and makes sense for Apple," he told TechNewsWorld.

Mansfield, who led the hardware engineering development of the MacBook Air, iMac and iPad, took Project Titan's helm this summer, The Wall Street Journal reported.

Project Titan will play a significant role as Apple maps out its future.

"It is important to their CarPlay strategy and would help them differentiate themselves within the next generation of smart automobiles," Bajarin said.

"Autos are the ultimate mobile experience," he pointed out, "and tying them to Apple's products is key to their long-term strategy to boost their apps and services business."