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About Avalon: Poaching Tesla

Why not buy Tesla?

Given Apple's interest in transportation and Tesla has the most popular, highest ranked car on the road, many have placed Tesla as an Apple purchase target. Apple's strong balance provides fuel to the fire. With $ 129B net cash, Apple could pay $ 70B + to buy Tesla and immediately become a player in the auto slot.

However, Tesla is not a realistic acquisition target for Apple. More importantly, Apple does not have to buy Tesla to meet its goals. The best way to understand why is to look at the main components of Apple's M & A philosophy:

  • A strong brand and product are not enough for Apple's acquisition. There must be more for an Apple purchase, as well as strong branding and a popular product on the market.
  • Apple does not use M & A to earn revenue. Apple does not use M & A as a tool to increase revenue.
  • Apple does not use M & A to provide users. Apple does not buy companies just to grow its user base. This tenet has become so stronger in recent years, as Apple's user base has grown. Apple currently has one billion users. When considering how the vast majority of users are comprised of premium segments of smartphone and tablet markets, Apple does not need to get what ends up being its own users.

In essence, Apple is not interested in buying into new product categories. Instead, Apple positions M & A as a tool to improve its existing product line or plug holes in the product development process. M & A is used as a complementary tool, not replacing Apple's design-oriented product development process. Consequently, there are two things Apple looks for when buying companies:

  • Apple uses M & A to acquire technology. Apple sees M & A as a tool for plugging holes in its real estate base. Given how Apple continuously works with new products, a hole is often in need of new technology.
  • Apple uses M & A to get talent. An area where Apple is resource-limited is talent. As Apple moves from one industry to another, the company is always on the lookout for talented teams that help increase knowledge and expertise.

A look at Apple's acquisition story demonstrates these core M & A principles. Acquisitions such as P.A. Semi, AuthenTec, LinX and Metaio were about technology and talent. Even acquisitions that included consumer-oriented products like Beats, Beddit and Shazam (pending approval) were ultimately the technology behind the products.


Netflix is ​​a good example of how Apple does not use M & A. In a Netflix acquisition, the two primary things Apple had purchased would be a strong brand and many users and none of them is enough to justify an acquisition. In addition, Apple users already had full access to Netflix. It is unclear how Apple, which owns Netflix, would lead to an improvement in Apple products. Placing Netflix's technology as a basis for an acquisition is quite stretched. Netflix is ​​a media company, and the company's content library is grossly overrated when it goes beyond the 1

5-20 markup series.

Instead of spending $ 100 billion to buy Netflix, Apple chose to poke talent from the entertainment industry and build something on its own. The result is a new division "Apple Studios" supervised by former Sony Pictures Television executives. Apple plans to launch its new Apple Video streaming subscription service sometime next year.

Claims that Apple should acquire Tesla because it has a big brand and popular product on the market is incorrect thinking. Instead, Tesla had to provide resources that could either strengthen Apple's existing product line or plughole in Apple's design-oriented product development process. Some say that Tesla's fleet of human-driven cars ends up being the company's secret weapon when they think about the race for autonomy. I'm not so sure about that requirement. Others believe that Tesla's charging networks or factories represent the company's crown jewels. Both claims are questionable. Instead, these elements could end up being regarded as obligations, which meant that Apple embraced contract production almost two decades ago.


A Tesla resource that Apple may be interested in is talent. In view of Apple's ambition, Project Titan can benefit from the fact that employees with experience have developed cars that people love. However, instead of acquiring Tesla to bring tens of thousands of employees, which would increase many red flags, a better strategy would include Apple selectively seeking talent that would be the best fit for Titan.

For the sale of potential leases on the Titan message, Apple ultimately sells two things: vision and process.

  • Vision. Explain Apple's mission to come up with products that can change the world. Although new appointments are unlikely to be given throughout the country when they joined Titan, the Apple mission can still be telegraphed.
  • Process. Explains the process in place to make vision a reality.

It's not that Apple has necessarily struggled to appeal to Titan's new hiring. Instead, Tesla probably had the stronger the message so far. At the beginning of 2010, Tesla was successful in picking up members of the Mac, iPod, iPhone and iPad teams looking for the next big challenge. At that time Apple's focus was on Apple Watch, a product that eventually had a relatively small development team. Project Titan was still a few years away. Doug Field was one of those employees who always had an interest in the transport space and hoped for the Tesla opportunity.

About the time Apple began to ramp up the Project Titan recruitment in 2014 and 2015, Apple versus the Tesla talent war began seriously. Tesla was much longer together than Titan, with cars already on the road.

However, the environment has changed. The last few months has been a tough stretch for Tesla. The company's long-term goal is to initiate sustainable transport. To achieve such a goal, Tesla had to take a luxurious detour and sell cars to the most willing to pay the top dollar for a high performance sports car (which happens with more than two seats). The problem is that Tesla finds it hard to get back on track. A real mass market model 3 remains lacking in action. Tesla has become a case study of a company led by a product that is visionary and struggling to make vision a reality.

Elon Musk has consolidated power and it is not clear that this is for the better. It is one thing for a product that is visually focused on details. It's a completely different story when a product visionary is stretched too thin. Recent Comments Musk told The New York Times that he was the only person able to solve Tesla's production problems, is worrying.

These challenges can give Apple a potential opening to poke Tesla for talent. Meanwhile, after leadership changes and some shaking times, Project Titan is now in a much more orderly state. Apple would make the case that it has a better process in place than Tesla. It is relatively easy to design a great car. The challenge is to build more millions of that car and then develop new versions over time.

Tesla's problem is ultimately its desire to do everything on its own. While such a decision was made due to the lack of alternatives, Tesla faces less flexibility and financial capacity as a result. This has opened the door of Apple when it comes to appeal to Tesla employees. Other factors may be to be attracted to Apple ideals as protection of privacy and security, which will become a crucial issue in the auto area.

Doug Field

Tesla critics have been quick to point out the growing list of leading departures as a sign of major problems within Tesla. While revenue increases an eyebrow, Doug Field's departure ends.

Felt was Teslas second highest rated engineer behind CTO JB Straubel. The field was responsible for vehicle technology and model 3 production. Back in 2013, his lease from Apple was positioned as a major victory for Tesla. With experience that included Segway's CTO and Mac product design, Field had experience in both personal transport and shipping of consumer products on a scale.

Field's job at Tesla was to make Musk's vision a reality. As recently as April, Musk Field saw one of the most talented engineers in the industry. Accordingly, it says that the field ended up ending Tesla to join Titan. It would be interesting to see if any of Fields deputies in Tesla do the same move. Such a defeat will end up being a big bargain for Titan.

Elon vs. Jony

It will be a role for cars in the new transport paradigm. Two visionaries to keep an eye on are Elon Musk and Jony Ive. Each takes experiences from other industries with the goal of thinking about transport. It's no surprise that Musk has threw some quick comments and jokes Jony's way in recent years.

Two of the more interesting things to see in the car area remain design and production. Instead of asking questions about older engine's program skills, it's more valuable to ask who is Jony Ive? While automakers have a team of talented designers, such talent turns out to override and manages to reduce design risk out of fear of losing sales.

Over Tesla, a company is more focused on engineering than design, music and company. learn the hard realities of auto-production. Many of Tesla's decisions will not be repeated by others.

Meanwhile, Apple's Project Titan becomes a test box of new technology that can be used to drive new vehicle concepts from Apple's industrial design team.

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