The company that brought you the cute Beatle with the flower vase on the dash is in negotiations with Apple Computers to create the “iCar,” among other possible projects. Apple chief executive and co-founder, Steve Jobs, met with Martin Winterkorn, VW’s Chairman, earlier this week at Apple’s California headquarters to discuss the concept. According to a VW official, who was not named, the companies are “in the early stages of talks” and are working on “scores of ideas.”
The vehicle’s concept is based on the idea of building a car featuring advanced entertainment and communications capabilities. Should a deal be struck, there would be two models of the iCar, one for Western markets, including the United States and Europe, and another for emerging markets, including China, Russia, and India.
Apple has been working to enter the automotive market, as has its competitor, Microsoft. Microsoft recently announced that Ford will be incorporating some Microsoft software in future Ford, Lincoln, and Mercury vehicles. As reported here earlier, Nissan has also entered into a venture with Microsoft, as has Fiat. Microsoft recently exhibited a patented automotive “heads-up” display for automobiles.
Apple’s recent announcements, in contrast to those of Microsoft, have been limited to manufacturers incorporating iPod or iPhone capabilities into their new vehicles. Both BMW and Audi have recently announced incorporation of iPhone capability in their new vehicles and iPod jacks are available on a number of new cars.
But both Apple and Microsoft appear to be viewing the automobile as a market for their products. Automotive computer functions have traditionally been handled by the manufacturers or by companies, such as Delphi, who are in the business of making automotive components. The requirements for automotive computers, such as engine management systems, differ from other types of computers because they require less computing capacity, but must be completely reliable.
Apple and Microsoft, however, appear to be aiming at the passenger compartment, addressing areas such as communication and navigation capabilities. Whether consumers will want the creation, however, remains to be seen. In the past, consumers have frequently rejected built-in systems in favor of stand-alone portable systems. For example, though built-in cellphones were popular for a time, they soon lost out to the hand-held cellphone.
People preferred the convenience of one phone and one phone number. In-built navigation systems have clearly lost out to the portable ones, such as Garmin and Tom Tom. A used car with in-built navigation sells for less than the same car without it. Consumers want iPod jacks in their cars, needing only good speakers in the car and eliminating, in many ways, the concept of the built-in CD changer.
Both Apple and Microsoft are companies which have matured. To continue growth, they need to find new markets, and it is clear that both are striving to do just that by getting into the automotive market. Whether they will be able to create new products based on original ideas, however, is not a certainty.